Audit: Teachers Stealing Cash Fees Collected at Adult Schools

by Andrew Walden

An Audit Report Report on DoE’s Community School for Adults System was on the agenda of the Feb 5, 2013 meeting of the BoE Audit Committee.  The full text is available online >>> HERE.  The Audit Report, completed by the DoE’s own Internal Audit department shows that teachers at the DoE’s 11 Adult Schools may have been stealing everything: Tuition money, textbook fees, lab fees, and fixed assets.  They were also being paid for hours not worked and being paid for hours in excess of the contracted maximum.  One school lost its $1000 petty cash. 

The DoE’s non-existent school level accounting controls have been exposed by recent criminal embezzlement prosecutions of DoE administrative personnel and an August, 2012 Ethics Commission ruling in which a 23-year Mililani HS tennis coach was fined for taking payment for ‘tutoring’ from her students.  The Audit Report demonstrates that these behaviors are much more widespread than the prosecutions suggest.  The word ‘ubiquitous’ comes to mind. 

Here are the details excerpted from the report:

Prior to July 2012, there were 11 Community School for Adults.  Due to budget cuts, it was decided that the 11 community schools would transition to a two (2) administrative center structure.  As part of the transition, Superintendent Kathryn S Matayoshi requested Internal Audit (IA) to perform a limited review to provide a cut off point for the 11 school system…. (p3)

Based on IA’s testing, we noted that there is alack of accountability for procedures at the community schools….  There is lack of regard for following the process as evidenced by procedural errors at the schools…. (p6)

Cash receipts, including collections made outside of the school business office, were not deposited intact daily for four (4) of the 11 schools…. (p13)

Four (4) of the six (6) schools selected for testing had instances where the amounts reported on the WIZ receipts/applications did not agree to the Cash Receipts and Refund Revenue Listing reports nor the validated deposit slips….   All six ( 6 ) schools selected for testing had instances where cash receipts were not deposited in a timely manner….  All six ( 6 ) schools selected for testing had instances where applications for students were not registered into the LACES system.  Refunds were not provided for those students.    (p15)

For one (1) out of six (6) schools selected for testing, the custodian of the petty cash was the previous Principal and the…school did not have the $1000 in petty cash available to count….  Instructions have been sent to the school to reimburse and close the petty cash fund.  The CABM should follow up[ with the school to ensure that procedures have been completed.  (p18)

Payment information was not captured in the LACES system as of June 30, 2012 for 10 of the 11 schools.  The system was used for student registrations only….  Five (5) of the 11 schools responded ‘no’ when asked if there is a way for the office to know if a student is paying the teacher for a class but the teacher is not turning in the money. (p19) 

Five (5) out of 11 schools did not prepare the official receipt…immediately for all cash collections…for sale of textbooks.  Two of the four schools only issue receipts upon request….  Books were not inventoried for four out of the 11 schools. (p20)

Lab fees were collected by the instructor and receipts were not given for lab fees for one of the 11 schools…. Lab fees are not turned into the office…instead, instructors used the money collected to buy supplies for their class(es). (p20)

Four (4) of the six (6) schools selected for testing had instances where employees had multiple hours of unrecorded leave.  No leave time was entered into Time and Attendance and no correction have (sic) been made as of July 31, 2012.  Two of the six schools selected for testing had instances where the hours on the timesheets were different from the hours recorded into Time and Attendance.  (p22)

Four (4) of the six (6) schools selected for testing had instances where the hours on the timesheets were different from the hours recorded into the Casual Payroll System…. Three (3) of the six (6) schools selected for testing had multiple instances where certificated casual employees worked more than the maximum hours allowed.  Maximum hours for certificated casual employees are 17 hours per week.  (p24)

Four (4) of the six (6) schools selected for testing had instances where fixed assets were not recorded….  Three (3) of the six (6) schools selected for testing had instances where the same decal numbers were used for multiple fixed asset items. Six (6) of the six (6) schools selected for testing had instances where old fixed assets … were disposed of but not removed from the inventory system. (p26)

Agenda: STATE OF HAWAII BOARD OF EDUCATION AUDIT COMMITTEE Feb 5, 2013

FULL TEXT AUDIT: Community School for Adults December 27, 2012 (Discussed Feb 5, 2013)