Investigation of. A Dollar for Haiti Fundraiser in Barton Elementary School

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1 Investigation of A Dollar for Haiti Fundraiser in Barton Elementary School December 9, 2011 Report #

2 MISSION STATEMENT The School Board of Palm Beach County is committed to excellence in education and preparation of all our students with the knowledge, skills, and ethics required for responsible citizenship and productive employment. E. Wayne Gent * Superintendent of Schools School Board Members Frank Barbieri, Jr., Esq., Chair * Debra Robinson, M.D., Vice Chair Marcia Andrews Monroe Benaim, M.D. Karen Brill Jennifer Prior Brown, Esq. Chuck Shaw Audit Committee Members Gregory S. Daniel, Chair Richard Roberts, CPA, Vice Chair Max Davis Michael Dixon, CPA Carrie Hill Noah Silver, CPA David Talley Representatives * Dr. Susan Atherley, Principal Representative Debra Wilhelm, CTA President Sheryl Wood, Esq., General Counsel

3 Investigation of A Dollar for Haiti Fundraiser in Barton Elementary School Table of Contents PURPOSE AND AUTHORITY 1 SCOPE AND METHODOLOGY 1 BACKGROUND 2 CONCLUSIONS 1. Were All Donations Collected Properly Accounted For? 3 2. Did the School Principal Obtain Any Personal Gain? 4 3. Were District s Staff, Property, and Supplies Misused? 4 4. Did the Fundraiser Comply With District Procedures? 5 APPENDIX 6

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5 THE SCHOOL DISTRICT OF LUNG CHIU, CPA E. WAYNE GENT PALM BEACH COUNTY, FLORIDA DISTRICT AUDITOR SUPERINTENDENT OFFICE OF THE DISTRICT AUDITOR 3318 FOREST HILL BLVD., C-306 WEST PALM BEACH, FL (561) FAX: (561) M E M O R A N D U M TO: FROM: Honorable Chair and Members of the School Board E. Wayne Gent, Superintendent of Schools Chair and Members of the Audit Committee Lung Chiu, CPA, District Auditor DATE: December 9, 2011 SUBJECT: Investigation of A Dollar for Haiti Fundraiser in Barton Elementary School PURPOSE AND AUTHORITY In response to a complaint received by the Central Area Superintendent and subsequently referred to us concerning the A Dollar for Haiti fundraising activity in Barton Elementary School, we have investigated the fundraiser activities during January 20, and February 5, The primary objectives of the investigation were to determine if (1) donations collected were properly accounted for, (2) the school principal received any personal gain from the fundraiser, (3) District assets (staff time, property, and supplies) were misused, and (4) the fundraiser complied with DOE Rules and District guidelines. SCOPE AND METHODOLOGY The investigation was performed in accordance with Generally Accepted Government Auditing Standards by Susan Miller, CIA, during May to August 2011, and included; Interviewing school staff Reviewing related DOE Rules and School Board Policies Reviewing fundraising documentation Reviewing financial documentation provided by the fundraiser sponsor Draft conclusions were sent to the school for review and comments. Management response is included in the Appendix. We appreciate the courtesy and cooperation extended to us by District staff during the audit. The final draft report was presented to the Audit Committee at its December 9, 2011, meeting. 1

6 BACKGROUND Subsequent to the January 12, 2010, Earthquake in Haiti, the principal of Barton Elementary took the initiative to organize a charitable fundraiser, A Dollar for Haiti. This fundraiser was intended to raise monies for the earthquake victims and involve students and staff throughout the District. Staff at Barton Elementary prepared packets of information for every school including a fundraiser cover letter for school principals, a half-page flyer for students and staff members requesting a one-dollar donation, and a letter to school bookkeepers with instructions on how to handle and transact the collected funds. The fundraiser packets were delivered to all the schools through the District s inter-office mail system (Pony). On January 13, 2010, the principal ed the proposed fundraiser plan to her supervisor (Chief of Staff at the time), who forwarded the information to the Public Affairs Office. The Public Affairs Office ed District employees outlining this fundraiser event. A press release about A Dollar for Haiti was sent to the media on January 19, 2010; and the related news article was printed by local newspapers shortly after. The principal initially formed a for-profit corporation, Haiti Cherie, Inc., for the fundraising activities. However, banking rules prohibit a fundraising account be opened with a for-profit corporation. With the assistance from a local non-profit organization, Haitian Citizen United Taskforce, Inc. (Taskforce), a new bank account was opened at Wachovia Bank by the school principal under the name of Taskforce. Complaint. The complaint was comprised of several allegations in personnel and financial issues: Personnel Related Issues Discrimination in Hiring Favoritism Bullying / Intimidation Improper Evaluations Misuse of substitutes Financial Issues Related to the A Dollar for Haiti Fundraiser Fundraiser monies not accounted for Personal gain by the school principal Misused District property and supplies for the fundraiser Personnel related issues of the complaint are being addressed by Employee Relations and Area Offices. Our investigation addressed only the financial issues related to the A Dollar for Haiti fundraiser. On November 29, 2011, our conclusions were forwarded to Employee Relations and Area Offices for reference. 2

7 CONCLUSIONS 1. Were All the Donations Collected Properly Accounted For? Conclusion. Because detailed fundraiser documentation was not maintained during the fundraising activities, we were not able to determine if all the donations collected were properly accounted for and deposited into the fundraiser account. Records were not maintained in enough detail to identify all sources of donations; and summary totals did not agree with those reported as collected. Results. The District s Records Retention Schedule requires that receipt/revenue records, both in detail and summary, be retained for five or ten years (depending on the record) or until the applicable audit has been performed. School Board Policy Responsibility of Principals states in part that the principal has administrative responsibility for records and reports. The principal should ensure that complete records were maintained in accordance with the District s Records Retention Schedule. The bank account signature-card for the fundraiser account and some related bank statements were initially provided by the president of the Taskforce for our review. According to the signature-card, the account was opened on January 15, 2010; however, the earliest bank statement provided to us for review was for February 2010, with an opening balance of $ The bank statement for January 2010 was not provided. Barton s principal indicated that all deposit information was kept in a binder at the time of the fundraising; however, the binder could not be located during our investigation. Subsequent to our initial request, the principal provided the Audit Department with duplicate copies of bank statements for the audit period and copies of bank deposit tickets provided by the bank. The copies contained handwritten notations as to the sources of donations. Approximately $5,500 Was Raised. A $5,000 donation check was made from the fundraiser account payable to the Missionary Flights International. The $5,000 donation was acknowledged by the recipient with a thank-you letter. A balance of $ remained in the fundraiser account after the donation to Missionary Flights International. Since March 31, 2010, a monthly bank service charge of $12 has been deducted from the account. As of June 9, 2011, the account remained open. The available bank records indicated that the only withdrawals from the bank account included the $5,000 donation to the Missionary Flights International, and the monthly bank charges. We did not find any evidence indicating that checks were written payable to the principal. 3

8 2. Did the School Principal Obtain Any Personal Gain? Conclusion. The principal s act of fundraising for the benefit of earthquake victims appeared to have the best intent. However, by involving school district equipment, personnel, and students, the fundraising would be subject to the requirements of DOE Rules and District procedures for documentation. Due to the lack of detailed collection records, we were not able to determine if the school principal obtained any personal gain from this fundraiser. Results. The complaint alleged that the school principal organized a for-profit fundraiser. In her initial attempt to open a fundraiser bank account, the principal established a for-profit corporation (i.e. Haiti Cherie, Inc.) without knowing that banking rules require a non-profit corporation be established in order to open a charitable account. For expediency, the principal partnered with a local non-profit organization, Haitian Citizen United Taskforce, Inc. to open the bank account for the fundraiser. The new fundraiser bank account was entitled Haitian Citizen United Taskforce, Inc. For Haiti Cherie, Inc. and not in the name of the fundraiser, A Dollar for Haiti. By not naming the account the same as the fundraiser, it gave the appearance that donations collected for the fundraiser might have been comingled with the Taskforce s funds. During the investigation, we did not find any evidence indicating that the school principal obtained personal gain from the fundraiser. 3. Were District s Staff, Property, and Supplies Misused? Conclusion. There was no dispute that staff time and school photocopiers were being used in handling this fundraiser. However, due to the lack of documentation and records, we were not able to determine the extent of costs associated with staffing and District property and supplies used for this fundraiser. Results. The fundraiser packets were prepared by school staff of Barton Elementary, utilizing the school s photocopiers. Although the fundraiser appeared to be supported by the School District, it should not have utilized District resources because the fundraiser was not to benefit student related activity. Moreover, employee time records were not maintained to document that non-district hours were spent on preparing the fundraising packets. Also, there was no documentation to prove that non-district supplies were used for the fundraiser. According to staff, the supplies (such as copier papers) used for the fundraiser were donated by a local office supply store. However, no records were maintained by the principal to document the donation. 4

9 4. Did the Fundraiser Comply With District Procedures? Conclusion. The monies handling process was inconsistent with DOE Rules and District procedures. Results. DOE Rules (Department of Education s Financial and Program Cost Accounting and Reporting for Florida Schools, Chapter 7)and District Bulletin P CAO/COO require that all funds handled by school board employees during normal working hours be included in and become part of the Internal Funds of the school. Interviews at participating schools revealed that, as directed by the instructions contained in the packet, monies collected were to be taken directly to the bank by school employees and the bank deposit receipts be sent to Barton Elementary. Each fundraiser packet sent to the schools contained a bank deposit slip pre-printed with the fundraiser s bank account number and a plastic courier bag. Bookkeepers were instructed to (1) keep the donations in the plastic courier bag, (2) complete the deposit slip with the total dollar amount collected, and (3) deliver the courier bag to any Wachovia Bank branch for deposit. The completed top portion of the deposit slip was to be returned to Barton Elementary by Pony with an enclosed envelope. The monies handling process in this fundraiser was inconsistent with DOE Rules and District procedures. Moreover, those school employees who were responsible for handling the collection of monies and taking the monies to the bank for deposit could be at risk. This could result in unwarranted liabilities to the School District. : Please see pages 6-16 for details. End of Report 5

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