District must repair credibility

A former Cedar Rapids school district employee's embezzlement of more than a half-million dollars is an embarrassment. It also tears at public trust in an institution charged with educating nearly 17,000 of our children.

The embezzlement of $587,784 by former accounts receivable clerk Jamie May between 2002 and 2009 is one of the largest school theft cases in Iowa, according to the State Auditor's Office. Its report blamed lack of oversight and found several weaknesses in the district's accounting procedures, including:

l May, who won't be prosecuted because she died in November, was the only employee with primary responsibility for receiving and depositing much of the district's receipts. She also was the only one requesting and processing change funds for certain events.

l According to district staff, May, hired in 1999, never was away from work for more than a day or two at a time.

l Insufficient records, lack of controls and limited documentation also were cited in the report. “If sufficient records had been available, it is likely additional misappropriated collections would have been identified.”

l Even so, district records did show certain accounts consistently came in under budget, yet no one investigated. Instead, the next year's budget was trimmed.

“Clearly, there was a weakness in internal controls,” Steve Graham, the district's executive director of business services, which includes the accounting department, said at a news conference Friday.

Clearly.

All these red flags, yet the thefts went on for seven years and apparently no district supervisor caught or challenged discrepancies. Nor did the district's audit committee. What about the private firm hired to do annual audits, as state law requires? And will anyone in the district be held accountable?

To the district's credit, the state auditor's recommendations for changes in the auditing department's structure were launched within 30 days of the arrest.

Also, two new positions, an internal auditor and accounting supervisor, were added. Which leads us to wonder: If existing staff uses better practices, is adding more personnel justified?

The district's insurance policy is expected to cover the loss and the state auditor's fee of $11,500. District Superintendent David Benson, who took office shortly before May's arrest in August, said he'll recommend at Monday's school board meeting that the insurance money be used for property tax relief next fiscal year.

That's appropriate.

Benson also vowed that the district will be more vigilant in protecting its financial assets.

That's a must.

The case's impact is more than financial. District officials oversee a $250 million budget. Community confidence is at stake.