Almost $7 million in assets unaccounted for at LAPS

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By Carol A. Clark

“I’m flabbergasted and I’m speechless,” said school board member Alison Beckman of the $6,671,129 in capital assets discovered missing from the district by independent auditors.

The audit finds Los Alamos Public Schools does not have sufficient detailed records to adequately track capital assets for the year ended June 30, 2007.

The schools did not maintain a detailed capital asset inventory listing that was reconciled to the general ledger, according to the auditor’s report. The ending capital assets balance for the prior year’s end did not agree with current year beginning balances resulting in a restatement amount of $6,671,129.

“We’re not saying the assets went out the door or were lost - it’s just poor accounting,” said John Wolfe, LAPS director of business services.

“Are we staying on top of it now, John?” School Board Vice President Joan Ahlers asked Wolfe.

“We are working hard on it,” he said. I’m not saying we’re perfect, but we’ve come a long way,” he said.

LAPS is writing off the $6.6 million loss.

Wolfe inherited the tenuous financial situation last year following the abrupt departure of business director Peter Garcia and comptroller Sean Trujillo.

Both men quit March 12, 2007 citing personnel problems and a lack of support from the top.

Garcia blamed high turnover, too.

“Not counting Hugh Miller who worked for 10 years, when they replace me there will have been seven directors of business services in just over three years,” Garcia said at the time. “There have been 11 different comptrollers in the last 13 years and six assistant comptrollers. That speaks to severe problems with the staff in that department that the administration has allowed to fester for far too long.”

Garcia also complained that the state changed the chart of accounts from 22 characters to 35 characters, which he said caused major software problems.

“There are over 5,000 different account streams in just the operational fund alone,” he said. “All together there are some 12,000 account streams and it has been extremely difficult converting the existing system to the new one.”

Wolfe responded to the audit findings in a July 30 letter to Secretary of Education Veronica Garcia.

“The schools hired an appraisal company that completed a physical inventory,” he said. “Another consultant was hired to update the accounting system with tag information, current book values of fixed assets, and has assigned a depreciation scheduled to each asset.”

Wolfe assured Secretary Garcia the district is tagging all assets costing more than $5,000. Computer equipment costing more than $500 is tagged and tracked according to state audit rules, he said, adding the comptroller has received fixed asset training and staff is insuring that fixed assets are properly tracked and updated in the accounting system.

“Additionally, the auditors indicate that $6,671,129 in adjustments had to be made from the prior year, but this was exacerbated by incomplete or missing working papers from the audit firm’s FY 05-06 audit,” Wolfe said.

The school’s audit ending June 30, 2007 wasn’t submitted to the Office of the State Auditor until Feb. 20 of this year.

Wolfe agreed turnover of key financial personnel contributed to the lateness of the audit saying cross training of personnel has occurred to insure short-term absences of key people won’t impact schools.

In his letter, Wolfe also provided assurances to six remaining findings:

• Untimely deposits — 12 of 40 receipts were not deposited within the required 24-hour period;

• Cash balances — the schools’ total cash balances per the trial balance did not agree to bank reconciliations;

• Preparations of financial statements — the financial statements and related footnote disclosures were not prepared by the schools;

• Insurance withheld and matched at rate lower than salary range indicated — during the year ending June 30, 2007, the district was not in compliance with the New Mexico Public Insurance Authority requirement that insurance premiums be based on a set amount determined by the employee’s salary range;

• Exceeded budget authority — the schools designated cash appropriations in excess of available balances; and

• Deficiencies in internal control structures design, operation, and oversight — school board not exercising oversight of internal controls and financial reporting processing.

Wolfe told Garcia the schools concur there were issues with the previous financial staff, but said the district disagrees the school board is not exercising proper oversight.

“Our board is actively involved with the financial management of the schools and requested on numerous occasions additional financial information, which was not provided by the previous financial staff,” Wolfe said. “That is not the case with the current staff, as all requests from the board are being met.”

School board member Jody Benson especially acknowledged member Alison Beckman who during that time frame frequently expressed financial concerns and frustrations and demanded specifics from staff, most often to no avail.

Wolfe oversees 13 employees.

His hiring last year brought significant education and financial experience to the district. He has been a chief financial officer and controller with more than 20 years of leadership experience in government, education, military and gaming environments.

Wolfe was chief financial officer for Santa Fe Schools and the internal audit manager, responsible for conducting audits on all areas of the taxation and revenue in New Mexico. He has a master’s degree in business and management and a bachelor’s degree in accounting.

The board unanimously approved Wolfe’s audit response letter 5-0.