New Mexico State Auditor, Tim Keller, states that the allegations against a charter school manager for mishandling $700,000 indicate a larger pattern of poor oversight. According to Keller’s investigation, Julieanne Maestas, La Promesa’s former assistant business manager, diverted more than $475,000 from La Promesa into her personal bank account from June 2010 to July 2016. In addition, she deposited about $177,000 worth of checks that were payable to the former executive director – her mother, Albuquerque Public Schools board member Analee Maestas – as well as to her boyfriend, who was a school maintenance vendor. The La Promesa Early Learning Center was audited annually, but the audits did not discover any evidence of fraud or embezzlement throughout the six years of alleged mishandling.
In Fiscal Year 2017, federal agencies reported $8.8 billion in confirmed fraud, according to a new report by the U.S. Government Accountability Office. The GAO report looks at progress made by federal agencies and OMB to reduce fraud risks since Congress enacted the Fraud Reduction and Data Analytics Act of 2015 (FRDAA). That Act requires agencies to establish financial and administrative controls for managing fraud risks, creating a Fraud Risk Framework in the process.
One leading practice described in the Fraud Risk Framework is using the results of monitoring, evaluation, audits, and investigations to improve fraud prevention, detection, and response. In its new report, the GAO said that about 86 percent of agencies indicated that they use results of monitoring, evaluation, audits, and investigations to manage fraud risk, but only 54 percent did so on a regular basis.
The federal agencies’ reports of their fraud risk management activities is illustrated below:
Areas of risk include grant fraud, defined as when award recipients attempt to deceive the government about their spending of award money outside the parameters of the grant. Other high risk areas described in the report are payroll, beneficiary payments, large contracts, and purchase and travel cards.
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Maintaining integrity should be a key goal of educational leadership. One scandal can mar a system’s reputation irreparably and derail its mission. Knowing the signs of a compromised organization can help school board members reduce risks to reputation. This is more important as the educational landscape becomes increasingly competitive, and families find more options.
One red flag is the deafening silence of underlings in the presence of their supervisors, particularly when questions are directed at them. Employees who don’t speak up are often afraid of retribution. While effective school board members know that day-to-day management should be left to the school leader, they shouldn’t shy away from speaking with staff at every level. Such information is critical for effective oversight. Beware of supervisors who prohibit that.
To learn the signs of a compromised organization click here
By Emily Richmond of the Education Writer's Association
There’s an old saying that To a Hammer, Everything Looks Like a Nail. To an auditor,
everything can look like an audit—even when it’s not an audit, but a subrecipient monitoring review.
For example, one state’s Single Audit found that the pass-through entity improperly determined that subrecipients were low risk despite negative publicity and significant leadership turnover. Auditors disagreed with the pass-through entity that only subrecipients who distribute grants are high risk.
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