Oklahoma City, OK – Oklahoma State Auditor Steve Burrage is again citing too much authority given to one employee and lack of oversight for possibly resulting in the loss of at least $270,000 from Wagoner Public Schools.
An investigative audit of cafeteria sales for the period of August 1, 2005 to April 30, 2009, identified an average annual loss of about $67,000 over almost four years. The amount collected at six Wagoner school nutrition sites did not match the deposits prepared by former Food Service Director Mary Gaylor in 43 of 44 months reviewed.
"This was a 15-year employee of the district with too much control and too little oversight," Burrage said. "Ms. Gaylor gathered up all the paper documents every day. We believe she then rewrote the deposit slips and fraudulently inflated the number of free and reduced meals the district was serving to conceal the discrepancy. Breakfast, lunch and snack sales didn't match deposits and fund balances couldn't be reconciled in any of the records. Unfortunately, it appears no one knew the fund was short."
Bank deposit slips that were prepared daily at each nutrition site, but turned over to Gaylor each day, were missing. Investigators were able to compare computer-generated daily sales reports prepared at each site to the actual bank deposits made by Gaylor in order to identify the fund balance discrepancies.
"We documented annual losses ranging from more than $58,000 to almost $81,000 for the four years that records were available," Burrage said. "We were unable to determine when the misappropriation may have begun because we could only go back to 2005, even though Gaylor had been there a lot longer than that."
The investigative audit was requested by the Wagoner School Board after an audit of the Child Nutrition Free and Reduced Meal program by the state Department of Education raised questions about the number of meals reported by the school district. The audit shows that the number of meals recorded by the six nutrition sites did not match the numbers submitted by Gaylor for federal reimbursement.
"It's important to mention that our investigators noted that before the audit was completed, Wagoner Schools had already started taking steps to implement internal controls to safeguard cafeteria funds," Burrage said. "I recommend every school district take a close look at cafeteria funds, activity funds and every other activity where cash is received to make sure every penny collected is deposited and accounted for."
The discrepancies may have gone unnoticed because of prior accounting practices at Wagoner Public Schools. Food Nutrition funds were deposited and held in one account throughout the school year while all food service costs were paid from the district's general fund. The funds in the child nutrition bank account were eventually transferred in one lump sum to the district's general fund at the start of a new fiscal year. Any discrepancy in the fund balance may not have been as easily detectable once the money was added to the $18 million general fund account.
Investigators did note that the amount of cash deposits to the Food Nutrition account increased dramatically following Gaylor's suspension on April 6, 2009.
From August 1, 2008 to April 6, 2009, Gaylor deposited a total $3,800 into the Food Nutrition account. In the two months following her suspension, cash deposits totaled $11,965.71, a 214% increase over the preceding eight months and one week.