- The Washington Times - Tuesday, July 31, 2001

The District's school system was given a clean bill of financial health yesterday by the city's inspector general, who cautioned that "deficiencies" remain and urged the school system to address them.

The inspector general reviewed private auditor KPMG's reports and found the school system to be in compliance on its financial statements with generally accepted accounting principals, city officials said.

But auditors also said they found troubling practices that they recommended the school system correct in order to improve the financial management infrastructure.

These include: being delinquent in filing single audit reports for fiscal years 1998 and 1999; failing to maintain key documents in employee personnel files; failing to properly record property leases since 1997; failing to adequately staff the internal audit division; failing to institute inadequate internal controls over payment processing; circumventing emergency payroll procedures; using the restricted Central Investment Funds inappropriately to pay emergency payroll checks; failing to allocate payroll in a timely manner to appropriate funds; continuing to monitor expenditures inadequately; and failing to perform a comprehensive physical inventory of all personal property during fiscal year 2000.

The last finding is of particular concern to city officials: The school system failed to correct inventory practices even after the inspector general found deficiencies in accounting for donated computers last year.

The school system has come a long way from the days when two sets of books and phantom employees were the norm. But problems persist, including employees not being paid punctually or correctly, procurement procedures not being followed, and financial information incorrect or missing.

But school officials said they are addressing these issues and others and called the report a "springboard for improvement."

"It gives me direction," said the school system's chief financial officer, Bert Molina, who replaced Donald Rickford three weeks ago. "There are quite a few things to address, and hopefully we can improve things with a focused effort. I look forward to working with auditors to make positive changes for the future."

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