A week after The Examiner exposed the Beaumont Independent School District for submitting a fiscal year 2010-11 audit to the Texas Education Agency that was never approved by the board of trustees, the district will now vote to send the corrected audit to the state – and address the $2.2 million found missing from its cash and cash equivalents account.
BISD Superintendent Carrol Thomas refused to discuss the 2011 audit when asked about it Wednesday. His only reply was “no comment.” And Robert Zingelmann, BISD assistant superintendent for business and finance, is supposed to give an explanation to the board Thursday, March 15.
But The Examiner has now found errors in the 2009-10 audit submitted to the TEA. A copy of the 2010 CAFR (Comprehensive Annual Financial Report) that was attached to the BISD board agenda on the district’s Web site showed an $81 million swing in documents presented to the board versus those that were presented to the state in 2010. The fact that the document was changed after it was signed by trustees was never addressed but was subitted as an amended audit two months later.
Following the newspaper’s article pointing out that board members Woodrow Reece and Terry Williams signed a document in Janaury 2012 that was never approved by the board, Zingelmann told the Beaumont Enterprise that it was common for boards to receive draft audits.
He told The Examiner the same thing but this newspaper went over past audits to check out his story.
“Typically boards are presented the audit in draft form,” Zingelmann said. “However, what needed to be corrected was the CAFR, which the district puts together, we transferred that from the audit, from our general ledger, to the CAFR. The general ledger is as presented. So what (the auditor) audited, that is what he audited – the general ledger. And we take that data and move that over to the CAFR. So it’s not as if there are two sets of audits out there. It’s that when we transposed the data from the general audit to the CAFR, there were certainly some numbers that needed to be corrected.”
That was in regards to the 2011 audit approved on Jan. 19, 2012.
And the explanation by Zingelmann does not seem plausible since audits prior to his employment didn’t have the same issues. Zingelmann was put in his current position with BISD in 2009 and according to district records, there have been issues with its financial audits since that time – a fact pointed out by BISD trustee Tom Neild.
A comparison of the audits from 2007 and 2008 did not indicate a draft had been presented to the board. And although there were multiple audits for 2009, the final CAFR sent to the board appeared to be the same one submitted to the TEA. And that was the last year that former business head Jane Kingsley was involved in the auditing process.
Things changed in 2010 when the audit approved by the board in January 2011 was found this past week to be different than the one sent to the state. Last year, board members were presented an audit at their January meeting – although it was not marked DRAFT – that showed $81 million more in district net assets than what was ultimately presented to the state. Still, Reece and Williams signed off on the documents although the changes were made after the report was reviewed by the board of trustees.
The difference was found after The Examiner reviewed several audits from BISD and found that on page 17 of the 2010 CAFR, the total net assets were listed as $220 million in the document presented to the board, but the document presented to the state showed the district’s net assets as $139 million.
“What I found is that I looked back to when Kingsley was here all of the audits were submitted to the board were the same as what was submitted to the state,” Neild said. “These issues didn’t happen until Zingelmann got here. That is inexcusable, but that is not the main issue. The fact is that this is the second year in a row that we sent something to the state that was fraudulent and that the board did not approve. Why do we have to find this stuff out for ourselves or after The Examiner reviewed the audit? If they knew about these changes, why didn’t they let the board know?”
Zingelmann said he will make a presentation at the Thursday, March 15, board meeting and address the issue but that likely won’t include the issue from the 2010 audit as the errors were not discovered until after he provided comments to the newspaper.
“We are going to present to the board a corrected CAFR. I think a couple of things that happened – the new financial system that we have didn’t convert some of the number correctly into our documents software and corrections had been made, but I don’t know if they didn’t get saved or what happened but what went to the board, obviously had corrections required. So the next day or Monday, we went through and started making the corrections.”
Zingelmann did not address why board president Woodrow Reece and board secretary Terry Williams signed the document as if it had been approved in its final format by the board when it hadn’t.
“That is a question for the board,” Zingelmann said.
But it was Zingelmann who was pressing the board to approve the CAFR at the January meeting. He is the one that can be heard on the videotape of the meeting saying, “We are going past the deadline if it is not voted on tonight.”
Neild and board member Mike Neil aren’t buying the excuses.
“They are going to really stretch hard to try and convince me, and so far his excuses make no sense,” Neild said. “Am I surprised we did this last year? No. Am I disappointed? Yes. I should have caught this, but there really was no way I could unless I had gone to the TEA and pulled the audit that was submitted to them.”
Neil said he isn’t sure what his comments will be at the Thursday meeting, but he promises he won’t be silent. He said he intends to find out what is going on with the district’s finances and wants to see changes. When asked if he was advocating the removal of Zingelmann from his current role or would like to see him fired, Neil said, “I am not sure what I am going to say tomorrow night regarding that. I don’t see where any answers are going to be appropriate. I have no confidence in our business department because of all the problems we have run into, and I think changes need to be made. Between the bidding problems and the different answers that we have received, I don’t know what to think. As a trustee, our job is the oversight of the district and its fiscal responsibility to the community.
“And now we have two audits that were submitted to the TEA under false pretenses because they did the same thing last year. If you look at it, it is pretty clear that the audit submitted to the board and attached to the agenda item online is not the same one that was presented to the TEA. We can’t have this.”
Zingelmann said he would answer any questions the board has and that he shares in the blame for the errors in the audit. He also said that Gayle Botley, who conducted the audit, would be in attendance to address the board’s concerns. When asked to comment on the possibility that changes could be made in his department or that he could lose his job, Zingelmann said, “No comment.”
Neild said he expects that he will be criticized because he went to the TEA rather than bringing the problems to Thomas’ attention. He said he is OK with that, and he has a simple reason for his actions.
“I don’t trust them,” Neild said.