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Auditor General Wagner’s Special Investigation Finds Weak Controls Over $11.5 Million in Computer Inventory at Bethlehem School District
Investigators Also Find Faulty Oversight of District-Ordered Investigation of Principal
HARRISBURG (Oct. 7, 2009) – Auditor General Jack Wagner said today that a special investigation found that the Bethlehem Area School District maintained inadequate controls over more than $11.5 million of laptop computers. Wagner’s investigators also faulted administrators’ oversight of an internal investigation related to the drug arrest of a former middle-school principal that cost the district $52,726.
“Bethlehem Area School District’s failure to exercise reasonable control and oversight over the district’s computer inventory and over an internal investigation undermines the confidence of residents and taxpayers in the district’s ability and willingness to conduct its business affairs properly,” Wagner said. “The repeated lack of oversight adds to the overall picture of weak management in the daily operations of the district, and must be corrected for the sake of taxpayers.”
Wagner provided copies of his report to the Pennsylvania Department of Education, the U.S. Department of Education, the Pennsylvania Office of Attorney General, the Office of the District Attorney of Northampton County, and the Bethlehem Police Department for their review and whatever further action they deem appropriate.
Wagner said the referrals to law enforcement agencies relate to the potential theft of missing computers, and the referrals to the education agencies are due to the district’s potential mismanagement of state and federal grant funds for the district’s SKILL21 program. The SKILL21 initiative was designed to place a laptop into the hands of every student of the district.
Wagner’s investigators placed the total number of missing laptops at the district at 80, valued at $84,400, based on four reports the district filed with the Bethlehem Police Department from March 2007 to August 2007.
Wagner said that inadequate inventory controls -- including a failure to develop the district’s own inventory schedules; a failure to compare purchase orders to invoices, and a failure to develop a comprehensive information technology policy and procedure manual -- contributed to the mishandling of laptop computers. He also noted that the district failed to immediately report missing laptops and delayed the filing of police reports for 18 months, which ultimately made it difficult for the police department and the Department of Auditor General to determine who, if anyone, stole the missing computers.
Wagner said the district failed to adequately involve school board members in the oversight of the independent investigation of the middle-school principal, and paid investigation expenses without board approval. Wagner said that his investigators found that the district’s outgoing superintendent and a former school board president controlled the investigation, delayed and disguised the final payment, and then publicly praised the results of an investigative report that produced more questions than answers. The district also failed to use a competitive selection process for hiring a firm to conduct the investigation.
Wagner made 10 recommendations to fix the problems concerning computer inventory weaknesses, including that the district should:
Wagner’s six recommendations for improving the district’s oversight of district internal investigations include that the district should:
Wagner commended school board President Loretta M. Leeson and Vice President Judith A. Dexter for requesting his investigation. “We appreciate the board’s cooperation and its positive response to this report, and we urge it to ensure the implementation of all of our recommendations,” he said. “We also hope that the District’s new superintendent will embrace the primary message of this report, which is the need for greater accountability, oversight, and transparency by the district.”
A full copy of the investigation report, including the district’s response, is available to the public at www.auditorgen.state.pa.us. Wagner’s office is currently completing its report of a second investigation of the district, regarding the district’s use of derivatives to finance the capital projects.
Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the Commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts more than 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s Web site at www.auditorgen.state.pa.us
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