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Audit flags questionable expenses at Anchorage School District

  • Author: Devin Kelly
  • Updated: April 29, 2018
  • Published April 29, 2018

A recent city audit found that a handful of Anchorage School District employees misused charge cards to pay for staff appreciation gifts, food and clothing, which officials say led in some cases to disciplinary action.

Auditors also flagged the purchase of an $180 Nordstrom sport coat for a program that prepares students for job interviews, which a district official later said was "excessive."

The improper or questionable transactions on the charge cards made up a tiny fraction of roughly $15 million in purchases during the 2016-2017 school year, according to the audit. The cards — known as procurement or "p-cards" — are like debit cards, linked to a lot of different accounts.

But auditing charge card purchases is a way to make sure taxpayer money is spent appropriately, said Michael Chadwick, the head of the city's internal audit department.

"They're still working out some of the kinks in the program," Chadwick said. "They're doing pretty good but there's certainly room for improvement."

The school district disciplined a handful of employees who were found to have used the cards improperly, among other conduct issues, said Jim Anderson, chief financial officer for the school district. Discipline can range from pulling an employee's charge card to firing, he said.

The school district launched the charge card program in 2012 as a way to streamline low-dollar purchases and save money. Roughly 1,150 cards are in use at the moment.

The school district first asked for an audit in 2013 after employees monitoring the program began flagging questionable and prohibited purchases. A 2015 audit dinged the district for unapproved purchases like a $2,500 faculty lunch.

The latest audit, released in February, also revealed a string of missing or inaccurate descriptions for charge card purchases, as well as donations to several charities, like the Alaska Zoo, that weren't on an approved list.

A list of purchases that auditors flagged as "questionable" included transactions made with a pool of money drawn from fundraisers, donations and other non-taxpayer money, like snack machines. An employee's charge cards can be linked to the account, which is known as a "student activity fund."

In one case, parents at a charter school raised about $1,400 to rent a Girdwood condo for a staff retreat. At a different school, employees used a charge card to order an $850 Keurig coffee machine, auditors said — including international shipping — with money raised by a parent-teacher association.

While the purchases were in line with what the money was intended for, the school district had no separate policy for money generated by fundraisers or donations, Anderson said.

At the time of the audit, school district policy barred any kind of spending on teacher and staff appreciation gifts, regardless of the funding source.

School district officials are in the middle of writing a new policy, so those kinds of purchases don't pop up in future audits as "questionable," Anderson said.

The audit also laid the groundwork for a sweeping transformation in the way the school district keeps track of its receipts and financial documents, Anderson said. Until recently, receipts and documentation for purchases were kept in manila folders in offices. It was easy for administrative assistants to lose the records, Anderson said.

Last week, the school district launched new accounting software designed to keep digital records of receipts and documents. Anderson said the system was designed to make it much easier for district officials to search transactions and identify problems, and also speed up the approval process.

"It really helps us look for those purchases that we clearly need to look at," Anderson said. "We won't have to wait for an external auditor to find it."

Anderson said he hopes the new software will stop questionable purchases from ever going through in the first place.

An example of a purchase that led to a talking-to: A $180 sport coat from Nordstrom.

The coat, paid for through a student activity fund, stemmed from a program through King Career Center, according to records reviewed by the auditors. The program provided job interview clothing to students that couldn't afford it.

But in that case, the price tag was excessive, Anderson said.

"No one expects an 18-year-old kid to have a $180 sport coat going into their first job interview," Anderson said.

Anderson said he and his finance team talked personally to staff at the school. That program now uses a gift card with a price limit, and a retailer that is much more affordable, Anderson said.

In general, Anderson said district officials will run multiple training programs to make sure staff understand new policies.

"We need to not have improper transactions, so we have a little bit of work to do," Anderson said.

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