BROOKSVILLE - An audit of the Hernando County Education Foundation's finances last year found the nonprofit misreported its assets by tens of thousands of dollars, used restricted donations for general expenditures and did not keep required financial records.
The foundation, which raised $202,000 last year in support of public education, had no one on staff who "understands financial reporting and generally accepted accounting principles," according to the audit by Oliver & Company.
The findings are the result of a lack of leadership and general understanding of accounting rather than any ill will or criminal activity, according to Hernando school district and foundation officials.
"I think it's a matter of change for staff, and in conjunction, our finance staff has been down as well this year," said Joyce McIntyre, manager of accounting for the Hernando County School District. "I don't think it was impropriety, it was just a lack of personnel to do the proper documentation."
The audit shows:
?? The foundation's net assets, which can be spent on general operation expenses, were understated by $51,988 ??Nearly $4,000 in donations designated for a specific purpose were used for operational expenses ??As much as $46,988 in donations was over-reported ??Other assets were overstated by $13,448 and liabilities under-reported by $5,000.
??One of two checking accounts were overstated by $20,463; however, those missing monthly bank statements were later located in the second account "well after" the audit's completion.
The audit also found monies received by the organization last year were documented only as "revenue," and monies spent as "expense," without specifying what liabilities might have been associated with donated funds.
The auditor was never able to find any of those records, the report shows, and without those details it's impossible to evaluate how much money was spent, and whether any of that money should be returned to donors.
The audit was scheduled for completion August 2013, but the auditing firm did not receive any information until a month later. That information was incomplete and "serious problems" were revealed during the initial stages of the audit, according to the audit.
"I'm glad our audit didn't come out like this," said Deb Schroeder, operations manager for the Tallahassee-based Florida Education Foundation, which is the direct support organization for the Florida Department of Education. "I wouldn't say it was typical, but I could see where these types of issues would come up. It's just a matter of training, so someone knows the meaning between restricted and non-restricted funds within a foundation, because we have a similar set-up here."
Many of the financial miscalculations in the audit, and the nearly $4,000 in donor funds spent on operations not intended by donors, can be attributed to the same factor: The organization spent the better part of last year with no executive director, said the foundation's executive director Tammy Brinker.
"There was dollars put into the system but not categorized, and I believe was not recognized as being restricted, even though we know what our restricted dollars are," Brinker said. "So it is deceiving. It looks like it was there but it wasn't."
Although the organization had a certified public accounting firm all last year and the private auditing firm that conducted the study, about seven months went by with no executive director at the helm until Brinker decided to resume her role in the position, she said.
Former-superintendent Bryan Blavatt agreed to replace Brinker as executive director during the summer, but left the post after two months on the job.
School Board member Gus Guadagnino, who served as past president for the organization and currently serves on its board of directors, said part of the record keeping problems stemmed from teachers who received grant funding from the organization, but did not returning receipts so the organization could document grant amounts and types.
However, the audit showed six checks in the organization's "Capital City checking account" that failed to clear, noting someone within the organization should periodically follow up on outstanding checks.
"We ran into a glitch," said Guadagnino. "It's a matter of having continuity from one person to another, not that there was money misappropriated. We're not trying to hide anything."
McIntyre viewed the audit and said the organization did not designate the amount of donations received or for what specific purpose.
"To me it looks like things weren't recorded correctly," she said. "It's really just bad record keeping, crossing your T's and dotting your I's kind of stuff, and I don't think they've done a bad job, they just had a change of officers."
The school district has experienced similar administrative headaches, which might have played a role in the foundation's scrambled record keeping.
The district's chief financial officer, who helps the foundation with accounting, left the district unexpectedly last year. After a lengthy search for a qualified candidate to replace her, the person hired for the job had to leave unexpectedly for family reasons.
The school district reopened its advertisement for the CFO position, and finally hired someone for the job nearly a year after the vacancy originally opened.
"We had a bad year," said McIntyre. "At this time they have corrections in place to fix this."
Many changes are being made and mechanisms put in place to make sure this year's audit doesn't look like last year's, Brinker said.
Someone from the foundation will now work in the district's offices and the district will offer oversight and assistance to the organization. The foundation's monthly reports will now be submitted to the district's finance department.
"We have an executive director and administrative assistant, and we have hired on a CPA firm to complete our monthly financials," Brinker said. "We have a finance and audit committee that we have not had before, so we're doing a lot of things we have not done during that audit period."
Hernando Today is one of the foundation's major donors, according to Brinker.