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School Board Reviews Forensic Audit Report

By Eugenia Jones

Bonnie Graham of Brustein & Manasevit PLLC met with the McCreary County Board of Education via video teleconferencing during a special called meeting to review the results of a recent forensic audit and answer questions concerning her report. Superintendent Keith and the Board requested the external forensic audit after a KDE monitoring team visited earlier this year and discovered numerous deficiencies from prior years.
The forensic audit focused on the fiscal years ending in June 2018 and June 2019 prior to McCreary County School Superintendent Corey Keith taking office in July 2019.
According to Keith, the district was notified in December of 2019 that the county would receive a Kentucky Department of Education (KDE) monitoring visit focusing primarily on grants and federal funding. A team arrived in January 2020 with KDE’s final report arriving in April 2020. The final report indicated an inordinate amount of deficiencies-particularly in the handling of federal funds. As a result, the Kentucky Department of Education placed the following conditions on the district:
-Required additional, more detailed financial reports
-Required additional project monitoring through regular meetings between KDE and Central Office staff.
-Required professional development
-Established additional prior approvals for program expenditures.
Additionally, the district was required to pay back more than $190,000 of federal grant money because expenditures did not match the grant’s allowable and non-allowable purchases. While purchases were school related, they did not meet the guidelines of the grants and funding in question.
KDE’s monitoring conditions were put in place for one year beginning May 1, 2020 running through April 30, 2021. At the end of this month, KDE will evaluate the district’s progress. If the district has successfully met standards, the conditions will be lifted. However, if unsuccessful, KDE can extend the restrictions or go so far as to temporarily withhold cash payments to the district or terminate the district’s federal award.
During the meeting, Superintendent Keith noted the District was pro-active in trying to “clean up the ship and prevent future problems.”
Proactively, Keith hired a Director of Federal Programs to deal specifically with federal and grants funds, worked on internal controls, and recommended the Board approve an “outside” forensic audit to find any and all problems that might not have been found during the KDE monitoring visit.
The law firm conducting the forensic audit for the district identified fifteen observations of concern. Graham especially noted an inordinate amount of journal entries and overrides that, in theory, should only have been done by the finance officer. However, during the course of their audit, the firm did not find sufficient evidence to support or conclude the actions take by prior District officials were the result of intentional improper or fraudulent actions.
Keith said the District has been diligent in working with KDE and is optimistic the district is on track to be released from KDE monitoring next month.

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