The 2005-2006 auditor's report gave some indication that Humboldt Unified School District had some "issues" that could lead to a 90-day noncompliance letter.
However, it is unclear who received a copy when the box of 10-15 copies arrived sometime before the end of March 2007.
Current Financial Director Cynthia Windham came across the audit reports when putting her office in order this summer. Windham, whom the board hired at the end of July, said she found a box of the 2005-2006 reports from Heinfeld, Meech and Co., PC, the independent auditing company with which the district contracts, while organizing the office.
She said she didn't know if board members or Supt. Henry Schmitt ever received their copy.
Former HUSD Financial Director Kirk Waddle said Tuesday he did send out electronic copies. And he and his staff discussed the audit.
Schmitt and the board members "were completely unaware of the existence of the audit reports when I met with them to discuss my initial assessment of HUSD's internal control structure," Windham said.
Waddle said, "There were a lot more findings than in 2004-2005, especially in student attendance."
Windham said the audit pointed out "significant deficiencies in the design or operation of internal control over financial reporting."
All Arizona public school districts have a regular audit. At the conclusion, the auditors will sit down with the financial director and review their findings, Windham said. The financial director then has the opportunity to challenge any of the findings. The auditors are not 100 percent right all the time, she said.
The actual physical audit documents and findings get sent to the Auditor General's Office, which determines districts' compliance.
"If you're in compliance, that's the end of the story. You don't get a letter saying 'Good job,' you just don't hear from them," Windham said.
The second possible response from the AGO is called "marginal compliance" where it feels that maybe a district was in noncompliance, but it is questionable.
"It puts you on notice," Windham said. "Then there's the 90-day letter to address that says, 'You need to straighten up your procedures.'"
She is uncertain if the information in the auditor's 2005-2006 exit interview went any further than then-financial director Waddle.
Nevertheless, the audit report did mention the possibility of a 90-day letter regarding reporting and recording student enrollment numbers.
"Because the district received State equalization assistance on ADM (Average Daily Membership), the amount of state funding received could be affected. In addition, because similar findings were noted in the area of ADM in the previous year, the issuance of a 90-day letter is possible," the report states.
The report also said that the tremendous growth in student population and the opening of two new schools caused the number of transactions to increase, but there was no corresponding increase in administrative personnel, which resulted in an increase in errors.
Waddle said he was glad to see the district hire an accountant (internal auditor) to help with the increased transactions in the business office, especially with the B Bond work going on now.
The auditor's report said the turnover in attendance secretaries within the district and insufficient training of replacements also contributed to inconsistencies in reporting procedures.
Waddle said they sent attendance secretaries to the AGO's training course to get them up to speed with what the state required.
Waddle also said the district made a decision to get the problem with the attendance software program fixed for this year and not go backward to correct the error in 2005-2006 because it was too costly.
Winham said the district already has implemented many of the recommendations, including adding personnel and training, and working with the attendance software program.
District personnel also worked with the Arizona Department of Education to clarify some confusion with full-day kindergarten students' numbers.
Windham said she met individually with HUSD board members in the fall to give them "an honest assessment of where we were which led to getting another individual in here." The board hired Kaye Schrenk as Internal Audit manager in October, prior to the district's receipt of the 90-day non-compliance letter.
"I know what needs to be done, but I'm only one person. Hiring an internal audit manager helps to fast track us into compliance. We didn't know that we were going to get a letter, but it didn't really matter. There were areas we needed to address," Windham said, adding that the AGO probably would have issued a 90-day letter after the 2006-2007 audit if the district hadn't already been working on the issues outlined in the 2005-2006 report.
"Why should we wait to get a letter? We already know this needs to be fixed so we might as well be on it," she said.
Ninety days is a short time frame to rectify everything, but she said she feels good having a little bit of a jumpstart.
"We have an opportunity now to show the AG that we have turned it around. That will speak well of us."
The 2006-2007 audit is complete and the district expects to have the written report within the next few weeks, Windham said. Jennifer Shields, audit partner with Heinfeld, Meech and Co., said the statutory deadline for 2006-2007 audits is March 31.