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District Prepares for Forensic Financial Audit

The McCreary County Board of Education voted earlier this week to employ Brustein & Manasevit, PLLC to guide the School District through a forensic audit of District finances as part of their effort to get a more complete look at Federal grant programs.

By Eugenia Jones

The decision to conduct a forensic audit and to hire Brustein & Manasevit PLLC came in this month’s regular McCreary County Board of Education monthly meeting held Monday evening and follows a Consolidated Monitoring Visit by the Kentucky Department of Education (KDE) earlier this year. During their monitoring visit, KDE conducted a review of federal grant programs in the district, and later, released a report documenting several instances where District spending was not aligned to needs and materials had been purchased that were unallowable with federal funds.
As a result of the KDE visit and report, the District eliminated several positions in the District, implemented recommendations from KDE to prevent similar occurrences in the future, hired a Director of Federal Programs to oversee all federally funded programs, and agreed to pay back nearly $200,000 of federal grant money because some of the funding had been spent inappropriately. It is important to note there was no indication of illegal activity or embezzlement.
During the Board meeting, McCreary County School Superintendent Corey Keith explained to Board Members that a routine audit of District finances (conducted yearly) is currently underway. However, the pending forensic audit will be in addition to the current audit. Keith explained routine yearly audits typically examine random transactions whereas a forensic audit looks at every “every piece of paper.” Keith stressed the results of a forensic audit will give the District a good understanding of federal programs and how they should be implemented.
“This is not a black eye to the District,” Board Chairman Dustin Stephens noted. “We are doing our job. It’s the right thing to do and needs to be done.”

In other action, the Board received an update on the District’s pending submission of an IMPACT Aid Grant application. IMPACT Aid is federal assistance designed to assist local school districts that, among other reasons, have lost property tax revenue due to the presence of tax-exempt Federal property. According to the Office of Secondary and Elementary Education website, slightly more than 5 percent of IMPACT aid assists school districts that have lost significant local assessed value due to the acquisition of property by the Federal Government since 1938. School districts use Impact Aid for a wide variety of expenses, including the salaries of teachers and teacher aides; purchasing textbooks, computers, and other equipment; after-school programs and remedial tutoring; advanced placement classes; and special enrichment programs. According to Superintendent Keith, McCreary County District-wide Services Coordinator Dr. Jason Creekmore has worked closely with Dwight Ross, McCreary County PVA, to complete the grant application.
The McCreary County Board of Education meets regularly on the fourth Monday of each month at 6:00 PM. Due to the current COVID-19 state of emergency and related restrictions, the District has been streaming Board meetings live on YOUTube in lieu of public meetings.
Brustein & Manasevit, PLLC is recognized for its federal education regulatory and legislative practice and regularly counsels clients on federal grants management requirements. The attorneys also conduct mock monitoring visits, internal controls reviews, draft policies and procedures and provide audit defense to its clients.

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