Iowa City school district requests state audit

Following a recent string of financial mistakes, the Iowa City school district has asked for a state audit of its books.

It's undetermined, however, whether the audit will occur and whether it would help the district resolve its issues.

Iowa City school district officials contacted the Iowa Office of Auditor of State last week to ask for a financial audit, Superintendent Stephen Murley said Wednesday.

The district recently revealed that it discovered $2 million in bookkeeping errors and that it was fined $25,000 by the Internal Revenue Service for making a late payment on payroll taxes.

Murley said earlier in August that he wanted the district to hire an outside auditing firm to look at its operational processes.

At a school board meeting last week, Phil Hemingway, who is a constant and vocal presence at board meetings and is seeking a seat on the board in the Sept. 13 election, called for a state audit, noting it would be free to the district, Murley said.

Hemingway also submitted a petition to the state on Monday, which forced the auditor's office to look into the matter, said Andy Nielsen, deputy state auditor.

Murley said administrators did not previously consider a state audit because that would look at the districts books, not what caused the mistakes and how to correct them. He said the district believes the errors were caused in part by the human resource and business software not being in sync, which allowed teacher salaries to be counted twice, although no one was paid twice.

“The likelihood is they (the auditor's office) are going to tell us what we already know,” he said, adding, “Really what we want to do is figure out how to make the process better.”

Nielsen said he has not yet reviewed the request and could not comment on what exactly a re-audit would entail. He also said the term “re-audit” is somewhat of a misnomer because state auditors build upon an organization's previous audit, if there is one, rather than simply redoing that work.

The Iowa City school district is audited annually by McGladrey & Pullen, which is a licensed certified public accounting firm.

Nielson said his office typically starts by reviewing the work papers of the auditing firm. He also said his office does not spend time on something that can't be improved upon and takes on about half the re-audit requests that it receives.

Murley said the district chose to ask for the state audit in hopes that it builds public trust that the district's finances and McGladrey & Pullen's work are accurate.

He said McGladrey does some assessment of functions and processes but mostly reviews the district's financials. He's moving ahead with seeking an audit from another firm looking more at how the district's accounting practices work and how they could be improved.

He has two finalists for the job and hopes to bring a recommendation to the school board at its Sept. 12 meeting, with the work to start by Oct 1. The cost is still undetermined, he said.

Hemingway did not immediately return messages seeking comment.