The questions about audits seem irrelevant due to the fact that it was
reported that the COO or Interim Supt., whatever his position at the
time of finding out, acknowledged that he was aware of the problem,
asked someone to straighten it out, but apparently didn't follow up to
find out if it had been done. Audits can point out problems but if the
executives responsible don't make sure that it gets fixed, the audits
are a waste.
Dan McGuire
Ericsson
Steve Brandt wrote:
Mark Hanson asked if Minneapolis Pulbic Schools has an internal audit
department or an outside auditor.
I do not believe that MPS has an internal auditor. The district does have
internal controls, as many large organizations do. These are designed to
provide a measure of internal check on uwarranted expenditures. But their
effectiveness depends on the controls, how well the finance and budget
departments are staffed, and whether higher-ups heed what these departments
recommend. Outside auditors have told the district previously that it is
understaffed in the finance area, and I believe there were some hires there
earlier this year.
An internal audit is no substitute for an outside audit. The difficulty with
outside auditing, as I understand it, is that it is an effort to check on
typical transactions on a sample basis. The goal for an auditor is to be able
to say whether these representatrive transactions indicate that the financial
statements either fairly represent the finances of the organization, or that
the auditor is not confident that they do. Auditors also suggest procedures
that will strengthen financial controls or financial health. State and federal
auditors also audit grants to the district.
Just like reporters, auditors also benefit from tips on things to look into. My strong
impression is that previous outside audits didn't uncover this issue. I'm confident
that Deloitte Touche, the district's outside auditor, is now aware of this issue. The
internal memo that raised the issue about Audrey Johnson's health insurance premiums was
written in May of this year. The audit for that fiscal year ended in June typically is
presented in December or January. Often, related party transactions involving the
officer or director of a private corporation are disclosed in SEC or other filings, and
the same obligation is imposed on government agencies, according to accountants whom I
consulted. However, the threshold for mandating the reporting of them is
"materiality," which can be a slippery concept.
Those who want to view the district's most recent outside audit may do so at: http://financeandbudget.mpls.k12.mn.us/Annual_Financial_Report.html
Steve Brandt
Star Tribune
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