Friday, September 9, 2016
In order for school boards and their employees to protect, maximize and monitor school resources with due diligence, it is essential that all school operations and practices be reviewed and analyzed independently and constantly. The most effective way to begin and maintain such a process is to form a community-based Forensic Auditing Committee (FAC). One of its primary tasks would be to ask critical questions of the school board. The reason for asking the questions is to determine quickly and easily whether board policies and school practices are protecting and maximizing school resources effectively, efficiently, and ethically and that they are free from the ravishes of potential or actual corruption.
Fortunately, a trend toward the establishment of groups akin to forensic auditing committees (FACs) seems to be gaining momentum. School officials in Mesa, Arizona, have proposed creating a public school audit committee that would “independently review the district’s books.” Unlike audit committees formed by neighboring school districts, “Mesa’s committee would be composed entirely of community volunteers with expertise in accounting and education.” (Arizona Republic August 6, 2006) Also, the Arizona Tucson Unified School District’s governing board is seeking people to join an audit committee to strengthen the school district’s internal financial controls. (Arizona Daily Star, August 3, 2007)
The reality is that some degree of corruption is likely to be found in most school districts. However, it takes critical questioning and diligent forensic review and analysis to determine whether corrupt acts have taken place, are taking place, or could be committed with relative ease. In this regard, it is vital to understand what is meant by the term “corruption”:
“breach of trust, bribery, crime, crookedness, deceit, deception, dishonesty, exploitation, evil, extortion, fraud, graft, malfeasance, nepotism, payoff, profiteering, tainted, unethical, untrustworthy and unscrupulousness”
Typically, boards will be defensive and deny that corruption is a malignant and institutionalized problem and will provide a reason that should never be accepted: school accounts are audited regularly so there is no reason to be concerned about or suspect any wrongdoing. Although it appears to be a very credible answer, it does not withstand verification because routine school audits are not designed to uncover the three categories of corruption: cheating and deceit, waste and mismanagement, or even fraud and stealing.
If the audit were conducted with generally accepted auditing standards (GAAS) — and therefore incorporated Standard #99 (Consideration of Fraud in Financial Statement Audits) — it still would not identify waste and mismanagement issues or cheating and deceitful practices.