The tone when it came to finances in the Niagara Falls school district seemed laid back in recent years, according to a certified public accountant who has served on the School Board since 2000.
"[It] was just not to worry about this stuff, and kind of failed to put the right amount of importance on it . . .," Christopher H. Brown told The Buffalo News. "It was just run much too loosely."
Brown began to address financial management in the district more earnestly two years ago, when he convinced his eight fellow board members it was a good idea to create a district audit committee.
The committee's workload has increased this year, after state auditors cracked open the district books and discovered some serious failures. The auditors' work culminated Tuesday, when the state Comptroller's Office issued a blistering 66-page report that found the district made several questionable spending decisions in recent years.
The state audit found misuse of district credit cards, granting of too much vacation pay, and failure to go to bid for purchases because proper procedures were not followed.
Arguably the most serious finding: overpaying 272 workers more than $500,000.
Auditors said they found the district auditor did not understand his role, duty or authority, and Comptroller Thomas P. DiNapoli concluded, "The school district let the taxpayers down."
Superintendent Carmen A. Granto, who said he shoulders the blame, has repaid vacation pay inappropriately given to him. Meanwhile, James J. Ingrasci, the district business manager, retired in August after the district was notified of the spending improprieties, though school officials will not say if his departure is related to the audit.
Brown defended the volunteer School Board, which is supposed to help oversee finances.
"You hire people who are professionals and pay them a lot of money and benefits to follow your practices and procedures and safeguard district assets," he said. "You have faith in those people that that's being done. So unless something comes up that tells you otherwise, you don't know there's a problem.
"We had many policies and procedures in place for the financial department that basically were ignored -- whether intentionally or unintentionally, I don't know," he added. "People were assigned to follow those policies and procedures to prevent mistakes from occurring and you expect them to do that. But when you have more than one person not doing what they are supposed to, they override the system -- no matter how good its is -- so there are no checks and balances . . . and you can't rely on your internal controls. . . . That's what happened here."
Now that the state comptroller has rebuked the district, the audit committee will play an important role in addressing 33 changes state auditors have recommended. Some already have been addressed, district officials said in the wake of the audit's release.
The committee is designed to keep tabs on district business operations, detect problems and direct changes where necessary. Brown is chairman of the committee, which is made up of all nine board members. It has been addressing other problems as well as those cited in the audit.
Brown said he had no idea what was coming when the state began its audit and he was asking fellow members to create the audit committee.
"I just thought it was a good practice for any organization that big to have an audit committee," said Brown, who noted he was speaking for himself and not for the rest of the board. "An organization should have an audit committee so members have an easier time seeing what's happening internally with finances."
While Brown was not aware of all the contents of the audit prior to Tuesday, he said the board was given a preliminary draft of it last January, saw some of the problems, and, through the audit committee, started addressing them.
For example, he said, the board has recovered the overpayments made to all but nine of the 272 employees the district overpaid, and is going after that money through legal means. It also has set a new computer software program so it can easily monitor district financial transactions.
The committee is working to tighten up controls over district finances to make sure district policies and procedures are followed so mistakes like the overpayment are never repeated, Brown said.
With the progress made so far, Brown said he feels that a state audit of the past year would turn out to be significantly better than the one publicized Tuesday.
"Now our internal auditors [who] report to the audit committee are charged with reviewing and revising our internal controls so the board can take steps to make sure this doesn't happen again," Brown said.
He said the audit committee has made it known to district employees from the top down that district policies and procedures are mandated and workers must follow them -- "or there will be consequences."