Mid-Central Educational Cooperative lawyer Scott Swier sends to the media the forensic audit of MCEC conducted by Eide Bailly. Swier accompanies this audit with a press release from MCEC declaring the audit “very positive.”
Mid Central Educational Cooperative (MCEC) is pleased to share a very positive report from the independent accounting firm hired to conduct a forensic examination of MCEC’s use of Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) funds.
Eide Bailly LLP, a top 25 CPA firm, recently completed its forensic examination of MCEC’s accounting and financial records related to GEAR UP. The examination covered the time period of July 2013 through October 2015. The purpose of the examination was to:
- Account for and examine the expenditures submitted by MCEC for reimbursement through GEAR UP;
- Account for GEAR UP reimbursements paid directly to MCEC by the South Dakota Department of Education (SD DOE); and
- Identify potential questionable activity, if any, related to MCEC and GEAR UP.
Eide Bailly examined thousands of records consisting of bank records, credit card statements, monthly claim forms, vouchers and other supporting documentation to verify the receipt of GEAR UP reimbursements with the expenditures submitted by MCEC to the SD DOE for reimbursement.
Through a reconciliation of this information, Eide Bailly was able to account for all GEAR UP reimbursements paid to MCEC.
Eide Bailly identified a limited number of expenditure issues and discussed these with MCEC. MCEC identified these expenditures as being compliance-related such as missing signatures on documentation, paying sales tax on invoices, or paying for disallowed expenditures. MCEC has since hired its own Certified Public Accountant to provide additional oversight regarding these compliance issues.
MCEC initiated the forensic audit after the death of MCEC Business Manager Scott Westerhuis and his family in September.
“MCEC is pleased to receive the positive findings from Eide Bailly’s forensic audit,” said Board Chairperson Pamela Haukaas. “MCEC provides an exceptional educational experience for its member school districts, and we are committed to doing everything possible to earn and keep the trust of those school districts.”
Eide Bailly’ audit report is 201 pages and 7.5 MB. We have some reading to do….
Update 10:44 CST: Among the items of interest:
- Eide Bailly finds that from October 2012 through September 2015, MCEC deposited $6,905,900.13 in GEAR UP payments into its bank account.
- The top 20 recipients of MCEC’s GEAR UP expenditures from October 2013 through August 2015 are as follows:
- Eide Bailly interviewed two people: MCEC exec Dan Guericke and MCEC interim business manager Stephanie Hubers.
- [11:25 CST] The majority of GEAR UP reimbursements issued to Scott and Nicole Westerhuis are labeled “Match/Support.” A clean-up note “Match/Support – Due to the correction in how indirect is calculated, we are charging the grant for Scott & Stacy’s time spent on the grant rather than using the indirect fees we collect. Therefore, their time will not be used as match for 2013-14.”
[11:46 CST] Angela Kennecke notes that while the audit says MCEC’s payments to vendors and reimbursements from the state match up, it “doesn’t tell us if there were conflicts of interest, opportunities for embezzlement or if federal funds were being co-mingled or rules of match for the grant were being followed.” Bob Mercer says the audit shows “spending patterns that will likely come into question.” Pat Powers says nothing about GEAR UP, but reminds us that Rep. Kristi Noem is doing fine work giving local entities more flexibility in using federal education dollars.