Many of you have raised questions about financial audits for Hoover City Schools. There are two sections to this post: the quick primer on requirements for financial audits for schools and more details.
The Quick Primer
Here is Section 16-13A-7 of the Code of Alabama delineating what the law requires for school district audits.
Yearly audits of school systems are required to be performed as soon as possible after the end of the fiscal year (September 30).
Auditors are required to check for accuracy of the books as well as federal compliance issues. This includes grant money from the state as well.
County school systems are required to be audited by the Department of Examiners of Public Accounts (“Examiners”). Tuscaloosa City and Birmingham City are also required to be audited by the Examiners. In addition, any city school system that has been taken over by the Alabama State Department of Education (ALSDE) for financial reasons is required to be audited by the Examiners for the three years following the intervention.
Otherwise, city school systems are free to hire their own Certified Public Accounting (CPA) firms to conduct their annual audits.
Auditing services are not required to be put out to bid, as they are considered “professional services”, not subject to the bid law.
Audit findings are required to be presented to the board each year.
Hoover’s FY12 audit is the most recent available. It was dated March 26, 2013. All posted prior years’ audits are dated in March, so it would seem that the FY13 audit would be completed right now. No presentation has been made to the board, nor is the audit available online.
Hoover has used Carr, Riggs, and Ingram to audit their books for 22 years.
The same partner, Brian Barksdale, has been in charge of the audit for more than 7 years. I have tried twice to contact Barksdale to ask him questions about Hoover’s audits, once on January 27 and again on March 18. I found inaccuracies in the FY09 audit and wanted to know who is responsible for the inaccuracies, his firm or Hoover’s Chief School Financial Officer. He has not returned my calls.
I wrote about school systems and their audits for the Alabama School Connection in August 2013: Why Do City School Systems’ Audits Cost Almost 3 Times More Than County Systems? Worth a read if you want to learn more about school district audits.
I dug out the cost of the audits from available financial statements for all Alabama school districts and plotted enrollment and cost of an audit on the chart below. (Click on the image to make it larger.)
To review Hoover City Schools’ available audits, click here. Click on the folder entitled “Archived Audited Financial Statements”.
To look at the Examiners’ recent audits, click here. Type “board of education” in the search box.
The last time the audits were publicly questioned was in 2008. Board member Donna Frazier took my concerns about auditing costs to the board table. She was the lone “no” vote to approve Carr, Riggs, and Ingram as the auditor that year.
The most recent vote to engage Carr, Riggs, and Ingram as Hoover City Schools’ auditing firm was in August 2011, reflected in the Minutes of the August 8, 2011 Regular Meeting.The last check that was made to Carr, Riggs, and Ingram was check #9258, for $7,000, in February 2014. The reason given was “Accounting/Auditor”. Here’s the February 2014 check register.
I have asked Communications Director Jason Gaston to help find the latest engagement letter and hope to share it here soon.
This article is from 2008, the last time the audit costs were written about in the local media.
In-house work to trim school audit costs
Birmingham News (AL) – Wednesday, November 5, 2008
Author: TIFFANY RAY News staff writer
The Hoover school board recently voted 4-1 to hire the Carr Riggs & Ingram accounting firm to conduct the school system’s yearly financial audit.
Board member Donna Frazier, who served as president of the board last year, cast the no vote after questioning Superintendent Andy Craig on whether the school system might save money by transferring its audit work to the state’s Department of Examiners of Public Accounts.
Board members also asked about other options, such as shopping around for a better price or using a Hoover firm.
Cathy Antee, chief financial officer for the school system, estimated the audit would cost $50,000 to $65,000. She said it was only an estimate because the work is performed at an hourly rate. Last year’s audit, also conducted by Carr Riggs & Ingram, cost about $75,000, she said. This year’s cost should be lower because school personnel were doing more prep work in-house in advance of the audit, Antee said.
Carr Riggs & Ingram is based in Enterprise and has an office in Birmingham. Antee said she wasn’t aware of any Hoover firms that specialized in school audits and that Carr Riggs & Ingram is well-respected
Craig said moving to another firm would cost more because a new firm would be unfamiliar with the school system’s processes. He said Carr Riggs & Ingram has handled audits for the school system for about 17 years.
Craig told board members the Department of Examiners of Public Accounts is a ”political” body and that auditors already had begun preliminary work. During a visit to Spain Park High School last week, Craig indicated using the same auditing firm provides continuity. He declined to answer additional questions.
State law requires that public school systems be audited annually and that audit reports be provided to the state superintendent and to the public upon request. Auditors are required to present their findings to the school board in a meeting.
By law, the Department of Examiners of Public Accounts audits all of Alabama’s county school systems and the Birmingham and Tuscaloosa city systems. It handles audits for other city school systems by request.
Mike Scroggins, director of county audits for the department , said the state will bear the cost of all but a portion of the audits.
That portion, which involves federal programs, typically runs between $3,000 and $6,000, he said. Any public school system can request an audit, which is essentially the same as an audit by an outside firm, except that the department may examine compliance issues more closely, he said.