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Auditor Stands By School District Finances

Audit firm Mauldin & Jenkins defended its "unqualified" opinion of the Cherokee County School District's fiscal year 2011 audit.

Auditor Stands By School District Finances
The firm who performed the Cherokee County School District fiscal year 2011 audit is not backing down from its stance on the district's finances.

Representatives from Mauldin & Jenkins appeared before the School Board on Thursday to review the audit for the fiscal year ending June 30, 2011. The audit received an unqualified opinion from the firm, meaning the district's financial reporting practices are in compliance with governmental accounting standards.

The report has come under scrutiny from District 1 member Kelly Marlow, who has accused district staff of mismanaging millions of dollars. 

Adam Fraley, a partner at the firm, noted both he and his fellow partner Joel Black both stand by the "clean" opinion the company issued to the district.

He did note the firm listed six findings in the audit, which the district outlined in a frequently asked questions document on the audit: restatement of opening equity balances, reconciliation of cash accounts, year-end financial close-out procedure, collateralization of deposits, schedule of expenditures of federal awards and procurement and suspension and debasement. 

Board members thanked both Fraley and Black for taking the time to appear before the board. Board member Patsy Jordan asked Fraley if the firm had noticed any type of fraudulent activities or taxpayer dollars that were unaccounted for. 

Fraley said the firm had no such inkling, and it would have had to report such a finding to management or to the board. 

"The financial records were in error and we had to propose audit adjustments to make sure those were stated correctly in order to give a clean opinion," he added.

Board member Michael Geist added he had concerns as to why one audit firm would have findings one year and another would not report any findings from another fiscal year. 

Geist asked Fraley why the district's fiscal year 2010 audit would not have any findings, but its fiscal year 2011 audit could end up with six. The district had Williamson & Co. Certified Public Accounting perform its 2010 audit. 

Fraley noted he could not speak to another audit firm's practices and findings.

Mauldin & Jenkins has performed fiscal year audits for over 200 local entities across the southeast, mainly in the state of Georgia, Fraley said. The firm currently has the Cherokee County government and the cities of Woodstock and Canton as clients.

Marlow took a more direct approach in her questions to Fraley. Marlow asked the auditor how he would classify the bookkeeping of the district's financial management office, but Fraley did not respond to that specific question.

Marlow asked Fraley if a layperson should be concerned about the findings.

"Why did that happen?" she asked. "What would cause so many adjustments to be made?"

Marlow then asked how was it possible that the district had two individual accounts — which were both school funds raised through activities  — that would remain at a local bank without being collateralized. Both accounts had not been collateralized at Cherokee Bank, which is required by state law. The district eventually moved those accounts to Wells Fargo. 

The board member asked what would be the right word to characterize a staff member who "left the funds" at the bank "illegally."  

"Risky?" She asked. 

"Noncompliant," Fraley responded with.

Candler Howell, the district's assistant superintendent for financial management, reminded board members the district has received an unqualified opinion for its financial accounts for the last 26 years.

He added fiscal year 2011 was the first time the district had received findings in its audit.

"It’s as good as you can get," he said, referring to the unqualified opinion.

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