HOLDEN, Mass. — The Business and Finance Subcommittee voted to recommend a full forensic audit of the Wachusett Regional School District's finances for the past two years in the wake of financial errors that led to the firing of its business manager.
Last Monday, the School Committee voted to terminate the contract of Business Manager Peter Brennan after it was reported that an error in the fiscal year 2012 budget led to an over-expenditure to the tune of $1.2 million. Furthermore, there was an additional $1.4 million shortfall in employee benefits and insurance for FY13.
According to a letter from the school district's auditor, Richard Sullivan of Powers and Sullivan, while closing out the FY12 books it was discovered that "information contained in a spreadsheet relied upon by the Business Manager was incorrect." Expenditures for debt service had been under-reported on the spreadsheet.
As a result, the "perceived available balance in this appropriation was transferred and used to fund other budget line items," with the error being caught when the spreadsheet was reconciled to the year-end MUNIS financial system balances, Sullivan wrote.
The cause of the error "appears to be due to the fact that the internal spreadsheet used by the Business Manager to monitor budgetary spending was not routinely compared and reconciled to the MUNIS system" and management decisions were made utilizing the perceived available budget amounts based on the incorrect data, he wrote.
The letter raised concerns from School Committee member Julie Kelley, who was frustrated to see that Brennan had effectively been maintaining two sets of books, and that the superintendent had made management decisions based on Brennan's spreadsheets rather than the MUNIS system.
"The school committee was never told the spreadsheets provided to us through his monthly report to the superintendent were not MUNIS generated or reconciled," she said.
For this reason, Kelley strongly supported a more independent audit, explaining that the only option the committee should consider would be to immediately conduct a full forensic audit dating back to FY11, including operating funds, special revenue and revolving funds and federal and state grants.
Though torn about the potential costs tied to an independent audit, subcommittee members voted 6-3 to recommend the full forensic audit, hoping it would get to the bottom of the errors and help restore confidence from the community.
"My first gut instinct when we first found out this was going on was we have to have a full blown audit right now," Chairman Rob Remillard said . While he was reluctant to spend a lot of money, he said he believed "the taxpayers out there deserve to know where every penny went, or was overspent. I understand that mistakes happen, but this was a huge mistake."
Members Jim Mason, of Sterling; and Duncan Leith and Erik Scheinfeldt of Holden voted no, citing questions of the audit's cost.
Mason suggested that the cost of a full-blown forensic audit could potentially reach $300,000.
"It's not because I feel we shouldn't have one," Scheinfeldt said. "I do think we should have one, but I have no idea how much it's going to cost, and I think it's financially irresponsible to make a recommendation when you have no clue as to how much something is going to cost us. Maybe it's $100,000, maybe it's $200,000, or $300,000 — and maybe when I find that out I'll be able to vote on a recommendation. But for now it's for a lack of information that I can't vote yes."
The full committee will consider the recommendation on Aug. 6.