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Superintendent replies to oversight concerns

By Staff | Feb 5, 2009

One week after Lee County School Board Member Robert Chilmonik sent a letter to the state outlining his concerns over questionable district practices, Superintendent James Browder forwarded a memorandum last week to the same officials replying to allegations that the district is being lax with how it conducts business.
Chilmonik’s letter discussed irregularities with record keeping, the bidding selections process and a potential for fraud. Browder, on the other hand, contends that all of the issues had been dealt with and no fraud has been discovered.
“Every issue he refers to has either been investigated or audited by the Board Internal Auditor, the Auditor General or outside independent auditors, or the district’s Professional Standards Department,” said Browder in his memorandum. “During the past six years as superintendent, no findings of fraud have been identified in any official report or document provided to the school board.”
According to Chilmonik, former board auditor Julie Nieminski expressed concerns of watered-down audit reports, past fraud and destruction of public records. He also said 1,320 vendors were missing valid social security numbers in the district’s Master Vendor System.
“These statements and concerns were never stated in an official report or document provided to the school board by the board auditor with the exception of the statement regarding the destruction of public records,” said Browder.
Nieminski, who now serves as City Auditor in Gresham, Ore., said via telephone Thursday night that her findings supported the potential for fraudulent activities but not that fraud was occurring.
“I never said there is fraud because I didn’t have the records to substantiate it, I can’t write that into a report,” said Nieminski.
Documentation in the district’s vendor system, such as name, address or tax identification numbers, was entered into the system and thrown away. There also was no record of who authorized the vendors, and Nieminski said it would be easy for someone to manipulate the address or divert payment to another vendor.
She also found social security numbers starting with 9 — numbers that have not been issued by the Social Security Administration — from private citizens and some with the same last names.
On the other hand, Nieminski stressed that these problems were occurring two years ago when she was board auditor. She added that the district subsequently underwent a cleansing of the vendor system.
She also said the computer overhaul with PeopleSoft “will have great control.”
According to Chilmonik, while many of the record keeping issues were addressed two or more years ago, nothing had been changed and as a result these are still issues today. He said two reports dated 2008 from Cuthill and Eddy concluded that district paperwork continued to lack documentation and backup for change orders.
Browder said inconsistencies resulted from contractors having different bookkeeping methods, and that the district has made improvements in later audits.
The superintendent also admitted that in 2006 a contractor deducted $148,000 worth of light fixtures from a bid to a subcontractor who wanted the materials for another job not involving the district.
“This is the only time this has occurred,” said Browder. “Bartering is not illegal and is often practiced in the private sector.”
Browder said in the memorandum that all district contractors and subcontractors have been told that bartering is not permitted on any school district project.
On Thursday night Chilmonik said he is concerned with the bartering incident because there is no invoice to go with the exchange of materials. Instead, the barter was ascertained from a purchase order rather than a formal contract, where $148,000 was deducted from the total cost of $1.42 million, he said.
“We don’t have anything to say that it existed other than an invoice. There is no legal proof,” said Chilmonik. “What happened to all of that money, did we get what we ordered in that school? We’ll never know.”

Superintendent replies to oversight concerns

By Staff | Feb 5, 2009

One week after Lee County School Board Member Robert Chilmonik sent a letter to the state outlining his concerns over questionable district practices, Superintendent James Browder forwarded a memorandum last week to the same officials replying to allegations that the district is being lax with how it conducts business.
Chilmonik’s letter discussed irregularities with record keeping, the bidding selections process and a potential for fraud. Browder, on the other hand, contends that all of the issues had been dealt with and no fraud has been discovered.
“Every issue he refers to has either been investigated or audited by the Board Internal Auditor, the Auditor General or outside independent auditors, or the district’s Professional Standards Department,” said Browder in his memorandum. “During the past six years as superintendent, no findings of fraud have been identified in any official report or document provided to the school board.”
According to Chilmonik, former board auditor Julie Nieminski expressed concerns of watered-down audit reports, past fraud and destruction of public records. He also said 1,320 vendors were missing valid social security numbers in the district’s Master Vendor System.
“These statements and concerns were never stated in an official report or document provided to the school board by the board auditor with the exception of the statement regarding the destruction of public records,” said Browder.
Nieminski, who now serves as City Auditor in Gresham, Ore., said via telephone Thursday night that her findings supported the potential for fraudulent activities but not that fraud was occurring.
“I never said there is fraud because I didn’t have the records to substantiate it, I can’t write that into a report,” said Nieminski.
Documentation in the district’s vendor system, such as name, address or tax identification numbers, was entered into the system and thrown away. There also was no record of who authorized the vendors, and Nieminski said it would be easy for someone to manipulate the address or divert payment to another vendor.
She also found social security numbers starting with 9 — numbers that have not been issued by the Social Security Administration — from private citizens and some with the same last names.
On the other hand, Nieminski stressed that these problems were occurring two years ago when she was board auditor. She added that the district subsequently underwent a cleansing of the vendor system.
She also said the computer overhaul with PeopleSoft “will have great control.”
According to Chilmonik, while many of the record keeping issues were addressed two or more years ago, nothing had been changed and as a result these are still issues today. He said two reports dated 2008 from Cuthill and Eddy concluded that district paperwork continued to lack documentation and backup for change orders.
Browder said inconsistencies resulted from contractors having different bookkeeping methods, and that the district has made improvements in later audits.
The superintendent also admitted that in 2006 a contractor deducted $148,000 worth of light fixtures from a bid to a subcontractor who wanted the materials for another job not involving the district.
“This is the only time this has occurred,” said Browder. “Bartering is not illegal and is often practiced in the private sector.”
Browder said in the memorandum that all district contractors and subcontractors have been told that bartering is not permitted on any school district project.
On Thursday night Chilmonik said he is concerned with the bartering incident because there is no invoice to go with the exchange of materials. Instead, the barter was ascertained from a purchase order rather than a formal contract, where $148,000 was deducted from the total cost of $1.42 million, he said.
“We don’t have anything to say that it existed other than an invoice. There is no legal proof,” said Chilmonik. “What happened to all of that money, did we get what we ordered in that school? We’ll never know.”