Dover – State Auditor R. Thomas Wagner, Jr. releases an inspection report on Bridgeville Senior Center (BSC). BSC relies heavily on the approximately $158,000 in Grant in Aid funding received annually, as it accounts for 70% of BSC’s total revenues.

BSC’s accounting records were unreliable with more than $350,000 in errors. The widespread errors were compounded by a lack of the most basic controls. The environment is such that no reliable financial information is available.

According to State Auditor Wagner, after determining that the books and records were unreliable, staff used the bank statements for the six checking accounts to proceed with the review. Unfortunately, there were a wide variety of issues that reflected ongoing fiscal mismanagement. The inspection report is filled with numerous irregularities in almost every area of operation.

Our Office is working with the Controller General’s Office to determine what changes may be needed to the Grant-in-Aid process for these types of organizations. We certainly do not want to overburden these entities with excessive administrative requirements, but it is obvious something must be done to encourage these organizations to improve operations and fiscal governance.

A copy of the complete report can be found at: Bridgeville Senior Center Inspection Report.

For more information, please contact Kathleen Davies, CPA-PA, CISA, CGFM, CGAP, CFE Chief Administrative Auditor, at 302-857-3919 or Kathleen.Davies@delaware.gov.

Dover, Del. – On July 1, 2015, State Auditor R. Thomas Wagner, Jr. hosted American Legion Auxiliary Girls State Auditor, Governor, Lt. Governor, and Insurance Commissioner for the day.

Upcoming high school senior, Megan Reynolds, from Archmere Academy, was selected as the 2015 American Legion Auxiliary Girls State Auditor. State Auditor Wagner also hosted Emily Whaley, Girls State Governor, from Sussex Technical High School; Isabel Arellano, Girls State Lt. Governor, from Middletown High School; and Christine McNeill, Girls State Insurance Commissioner, from The Charter School of Wilmington. American Legion Auxiliary Girls State is an annual program that teaches high school students how government works and helps them to develop leadership skills.

After the selection process, the Girls State officials spent a day shadowing the Delaware State Auditor, where they learned about the duties and office of the Auditor of Accounts.

State Auditor Wagner stated, “I’ve participated in the Girls State program for 27 years as Delaware State Auditor. I look forward to it every year because I think it’s a great way to get young people involved in public service.”

Ms. Reynolds stated, “Girls State has been such a wonderful opportunity so far, and it’s been great to have a glimpse into our State Government and to spend the day with Mr. Wagner.”

Ms. Whaley added, “Girls State has given me the wonderful opportunity to learn about how the government works in the State of Delaware.”

Ms. Arellano commented, “Girls State has opened the doors to allow me to see the Delaware State Government…and the only Lt. Governor in ‘office’ currently.”

Ms. McNeill also stated, “My time here in Dover has allowed me to make lasting friendships, share many laughs, and learn abo

ut State Government. Thanks so much to Mr. Wagner for showing us around Legislative Mall. I will remember this experience for the rest of my life.”

For more information, please contact Kathleen Davies, CPA-PA, CISA, CGFM, CGAP, Chief Administrative Auditor, at 302-857-3919 or Kathleen.Davies@delaware.gov.

Dover, Del. – State Auditor, R. Thomas Wagner, Jr., regrettably reports on another charter school’s major fiscal mismanagement which went undetected for several years.

As part of this inspection, we looked at the State’s operation and oversight of charter schools that would allow such practices to continue. Several factors combined to create a perfect storm of poor internal controls, which allowed the former school principal to (1) purchase personal items worth $127,866 using AOD funds, (2) pay legal fees for lawsuits alleging sexual harassment, (3) reimburse employees for purchases in violation of State policy (e.g. alcohol purchases), and (4) reward teachers with stipends and bonuses without adequate justification, board approval or equitable distribution. There is also an additional $129,458 that could not be validated as either a school or personal purchase. It is likely that these practices go back further than our investigation; however, the older the occurrence the more time it takes to investigate and the more unlikely we are to get answers about exactly what was purchased.

A major concern is the hands-off approach taken by oversight parties including the board of directors, DOE, the independent auditors, Innovative Schools, the Charter School Accountability Committee (CSAC), and Division of Accounting (DOA). This report outlines questionable activity and an operating environment that allowed widespread mismanagement. Until August 2014, nothing in the Statewide process or the ongoing financial audit drew attention to the mismanagement at AOD. In fact, the CPA firm auditors, contracted by AOD, reported clean opinions (Unqualified Opinions) with no findings on internal controls during Fiscal Years 2012 and 2013 for both the financial statement and single audits. Also of concern is that the financial statement auditors cited compliance with Generally Accepted Government Auditing Standards (GAGAS), which require more stringent procedures due to the public accountability of entities receiving government funding (GAGAS Section 4.47).

In addition, the Board was not adequately trained or adequately involved in day-to-day operations.  During this time, neither AOD personnel or the Board had knowledge of its complete failure to evaluate risk and develop an internal controls environment that would help protect the School against fraud, waste, and abuse. This left a culture that put one person in almost complete control of all aspects of the School’s operations and a culture where no one dare report such matters including the firm contracted to do the financial audit.

In general terms, all Charter Schools should utilize the Committee of Sponsoring Organizations (COSO) internal Control Framework as a guide to developing strong internal controls that support good fiscal operations that helps to deter fraud, waste, and abuse.  Further, the process used to establish and train Charter School Boards should be reviewed and revised to ensure appropriate oversight.

An additional concern impacting charter schools and school districts throughout the State is that many in the State take the position that “local funds” may be used as the school deems appropriate. The report includes instruction in which the Department of Education, Division of Accounting, and Office of Management and Budget reflect this view. The term “local funds” describes how the funds are collected yet local funds are still a part of state operations, particularly when School Districts are a part of primary government. There is no reason these funds should be exempt from the same rigors that are applied to other funds in the State.

A copy of the complete report can be found at: Academy of Dover Inspection.

For more information, please contact Kathleen A. Davies, CPA-PA, CISA, CGFM, CGAP, Chief Administrative Auditor, at 302-857-3919 or kathleen.davies@delaware.gov.

Dover, Del. – On June 16, 2015, State Auditor R. Thomas Wagner, Jr. hosted the American Legion Boys State Auditor and Budget Director for the day.

Upcoming high school seniors, Thomas Gilmore, from Polytech High School, and Derek Golembrosky, from Delaware Military Academy, were selected as the 2015 American Legion Boys State Auditor and Budget Director, respectively. American Legion Boys State is an annual program that teaches high school students about government structure and operations.

After the selection process, both Mr. Gilmore and Mr. Golembrosky spent a day shadowing the Delaware State Auditor, where they learned about the duties and office of the Auditor of Accounts.

State Auditor Wagner stated, “I’ve participated in the Boys State program for 27 years as Delaware State Auditor. I look forward to it every year because I think it’s a great way to get young people involved in public service.”

Mr. Gilmore adds, “Shadowing Auditor Wagner to learn about a typical day in his position gifted me immense knowledge of government processes in a short period of time. The cordiality, sociability, and knowledge Auditor Wagner exhibits allowed me to gain insight into the political world and to meet several important figures in the state government that is impossible from simply researching.”

Mr. Golembrosky also stated, “Experiencing what Auditor Wagner goes through on a day-to-day basis gave me a lot of insight into how our state truly runs. You can do research and go online, but shadowing him was a completely different and valuable experience. Also, Auditor Wagner was extremely informative in not only his position, but other positions and committees, such as the Office of Management and Budget, which will help me a lot as Boys State goes on.”

For more information, please contact Kathleen Davies, CPA-PA, CISA, CGFM, CGAP, Chief Administrative Auditor, at 302-857-3919 or kathleen.davies@delaware.gov.

Dover, Del. – State Auditor, R. Thomas Wagner, Jr., released the Paramedic Reimbursements Agreed-Upon Procedures report for State Fiscal Years Ended June 30, 2013 and 2014. Overall, the outcome was very favorable and only minor findings were identified. As in previous years, findings included late budget submission documents from the counties that did not contain all of the required information. In addition, one reimbursement package out of six tested was missing a Line Item Summary of Expenditures, and another reimbursement package was missing a statement certifying the expenditures submitted were for direct operating expenses. Also, out of 120 expenditures tested, two expenditures which were reimbursed for $5,962 were not adequately supported. For complete details, see the report at: Paramedics AUP

Although Paramedic units in Delaware are a part of county government, each county receives 30% of total operational costs for paramedic services on a reimbursement basis from the State of Delaware. These funds are provided through the annual Grant-In-Aid Bill and are distributed by the Department of Health and Social Services, Division of Public Health, Office of Emergency Medical Services (OEMS). OEMS is responsible for the coordination of training, certification, financing, and oversight of the State’s paramedic system.

The State of Delaware contributed $9,569,945 and $7,845,357 in fiscal years 2013 and 2014, respectively, toward the operational costs of the Paramedic units. Paramedic units provide Advanced Life Support services for ill and trauma patients, medical support at large events, community outreach and educational programs, emergency disaster preparedness, and medical support to law enforcement activities. Auditor Wagner extends his sincere appreciation to the men and women providing these services to their communities.

For more information, please contact Kathleen Davies, CPA-PA, CISA, CGFM, CGAP, Chief Administrative Auditor, at 302-857-3919 or kathleen.davies@delaware.gov.