Ephrata audit finds error

EPHRATA — A state audit of the Ephrata School District found the district did not properly administer grant funds according to the required timeline.

The state conducts audits on governmental entities, examining financial reports, accountability and compliance with state laws, according to the report. The auditors examined the district’s records between Sept. 1, 2006 and Aug. 31, 2008.

The district received $986,480 in State Fiscal Stabilization Funds during the 2008-2009 school year under the American Recovery and Reinvestment Act. The grant money can be used to pay the salaries of teachers, staff and administrators incurred after April 1, 2009.

The district’s business manager prepared a journal entry to allocate grant money to base salaries for teachers at two elementary schools. The district did not follow the grant’s 40-day time requirement when coding teachers’ salaries, according to the audit report.

The audit reported the grant money applied to the two schools was significantly greater than possible expenses in the period from April 1, 2009, to the end of the fiscal year. The error meant at least $215,000 in grant money could have applied to teaching salaries before April 1, 2009, which is outside the allowed grant period.

The district’s Business Manager Rebecca Montgomery was able to justify the spending upon further review, she said.

“We don’t dispute the findings, but we attribute them to an accounting error rather than a procedure error,” Montgomery said.

Montgomery found all the grant money had been spent properly when she pulled in teachers’ salaries for other schools in the district. She determined the 40 days of teachers’ salaries needed to be claimed district-wide, not just at the two schools because of the 40-day window established for the grant.

“We more than spent all the grant and used the money the way it was intended; unfortunately I just had not coded it correctly,” Montgomery said. “I’ve been doing this for 20-plus years and this is the first year the auditor’s office ever reported a finding.”

District management stated because the State Fiscal Stabilization Funds program was a new source of funding, they were not fully experienced in how to allocate grant money. The district approached the grant funds as a replacement for the reduction in other state funding.

“The grant was confusing because it came late in the year and the guidelines changed a couple times,” Montgomery said. “In hindsight, I should have stepped back and reviewed spending procedures more carefully.”

The auditors recommended the district establish procedures to ensure they comply with federal grant requirements. Failure to do so may jeopardize the district’s eligibility for future federal assistance, according to the audit report.

“We’ve set out procedures to make sure we are careful about grant periods and are clear on specific start and end dates,” Montgomery said. “This should have no future impact on our ability to receive grants.”

The auditors acknowledged the district’s efforts to solve the problem and establish policies to limit future errors, according to the audit report.

The full audit report is available at the auditor’s Web site, www.sao.wa.gov.