SMITHVILLE — State Auditor Nicole Galloway announced Sept. 1 the results of a citizen-initiated audit of the Smithville R-II School District. The auditor’s office gave the district a “good” rating.
While the district received the second highest audit rating possible, the auditor team did make recommendations to improve accounting controls and oversight in the district as well as compliance with the Sunshine Law.
“The results of our audit conducted by the State of Missouri’s Auditors Office verify we are acting as good stewards of taxpayer dollars,” said Denise Harwood, interim superintendent. “The Smithville R-II School District works every day to maximize every cent to provide high-quality teaching and learning. We are taking excellent care of our resources and continue to place our students first.”
Auditors did find instances where teachers were compensated nearly $17,000 in total in additional pay during the 2019-20 school year that was not included in board-approved salary schedules. Most of the pay went to educators teaching dual-credit courses. District controls and procedures regarding donations, event sales, budget amendments and record preservation and retention also were found to need improvement.
Wayne Krueger, a consultant for the Smithville School District and retired assistant superintendent of support services, said the funds were not unaccounted for. Teachers, he said, were given stipends from universities for dual-credit teaching work as well as 1099 tax forms, similar to what is given to contractors, to account for the pay.
“It was doled out and they got a 1099,” he said. However, as a result of the audit, he said, the district will now run that type of pay through the district’s payroll department.
“For employees, IRS regulations require employers to report compensation on W-2 forms and withhold and remit income and payroll taxes,” the state audit reports.
On a call Friday, Sept. 2, Krueger and Robert Hedgecorth, executive director of support services, discussed the audit findings.
“Right now, we are looking at around $65,000 at least for our cost of the audit,” Krueger said. “Putting that into perspective, we could pay salaries of two support professionals. We received good feedback, but these resources could have been used in other areas.”
The audit also found the board had not developed procedures to adequately track changes made to attendance records and recommended limiting the time when attendance changes can be made. District officials also do not review changes made to current school year attendance records, according to the audit.
“We use PowerSchool for our attendance,” Hedgecorth said, addressing the audit findings. “In the latest update of this program, PowerSchool now has a time stamp added that shows when editing has taken place. It is compatible for our recording processes to get those numbers to the Department of Elementary and Secondary Education. They added that functionality to show when it has been modified.”
The audit also recommended better oversights of cashflow operations like ticket sales to school activities. Hedgecorth said online ticket sales have been a boon and are the best way to facilitate tickets to extracurricular events.
“Initially, this was going to be part of an effort in 2025, but we addressed it sooner,” he said.
Kruger and Hedgecorth also spoke of findings that examine other processes of the district. Auditors suggested the district seek more bids for large-scale construction projects. Currently, the district employs use of a master building plan that allows leadership to contract with firms that previously did work in the district.
“A big concern is how we handle building construction and architects,” Krueger said. “We set up a 10-year master building plan. We have continuing projects. We have not violated any processes. There is so much value in understanding our history. As a matter of fact, we had three firms interviewed by panelists.”
Hedgecorth said extending out the bidding process on these two significant aspects – architects and construction teams – as auditors recommend would add time to project timelines and that firms currently used by the district are already familiar with district facilities.
“These teams understand our district and if new teams came in, they would be billing the district because they have to catch up,” he explained.
Another area discussed was Sunshine Law compliance. The audit states the school board did not “document members absent in open and closed meetings or the vote to close meetings as required.
“The board discussed some items in closed meetings that do not appear allowable under the Sunshine Law or were not cited as the reason for closing the meeting. Minutes for closed meetings did not include sufficient detail to ensure some topics discussed were allowable,” reads the audit findings.
Kruger said Sunshine Law concerns were related to the board’s use of electronic voting. During meetings, board members vote on computers on action items like whether to go into executive or closed session. Each board member’s vote is recorded and displayed for the public electronically during the meeting.
Hedgecorth said the state auditor reviewed meetings for the past 10 years and found one error form when the board first began using the system.
“There was no malice or intent,” he said of the mistake.
Board member Denney Fales, who served as board president when the citizen-led petition began, told the Courier-Tribune last week when audit findings were released he had not had a chance to dig into findings.
“However, I can say two things,” he said. “First, the results of a good audit are from hard work at the district level. Two, the online ticketing that has now been implemented is an improvement from some of the findings that came out of the audit.”
According to a release from the district, the Smithville Board of Education acknowledged the recommendations provided by the state auditor’s office and has indicated most or all recommendations have already been, or will be, implemented. The report does not identify any fraud, misappropriation of funds, material violations of state law, governance issues, employment concerns or disregard of district policy or best accounting practices.