Seeking an explanation for Beaumont Independent School District trustees seeing a different Comprehensive Annual Financial Report/audit (CAFR) than what was presented to the Texas Education Agency, trustee Mike Neil says he caught superintendent Carrol Thomas and assistant superintendent for business and finance Robert Zingelmann in a lie, and it was all recorded on the district’s video system.
The audit in question was marked as a “DRAFT” but submitted for approval by Zingelmann during the January board meeting. At that time, he implored trustees to move forward with approving the “DRAFT” version saying they were only accepting the document and not verifying its contents or accuracy. He was concerned the district would miss the deadline to file the audit with the state. But then changes were made – changes board members didn’t see – and the audit was submitted to the TEA, complete with the signatures of board president Woodrow Reece and secretary Terry Williams, even though the other board members never signed off on the new document.
The discrepancy, which included a $2.2 million difference in the amount of cash the district had in its accounts on Aug. 31, 2011, wasn’t made public until information about both audits was published in The Examiner two weeks ago. However, that was not the story Thomas and Zingelmann told the board. And now, to hear Zingelmann and Thomas tell their version of events, there were at least three audits floating around.
“There were several different versions, and it was a many-day process to update the CAFR,” Zingelmann told the board. “What happened that day was what the board received was not the most current version. The board received a version that had errors that had not been corrected on the most current version. During that report, we were not aware that the board had the older version.
“I did not go onto the agenda to verify the CAFR the board was looking at was the most current. So during the presentation we were under the impression that we had given the board the most current CAFR that had a lot of these errors corrected already.”
Although Zingelmann said he wasn’t aware the board didn’t receive the correct audit, he was the person who supplied the electronic PDF file to the computer department so they could e-mail a link for the audit to the board members. Several board members, including Neil, Janice Brassard and Tom Neild, all confirmed they received the audit Jan. 15 – the day before the meeting where the faulty audit was approved.
Additionally, at the January meeting, those same board members requested more time to review the audit and go over the numbers that were being presented by independent auditor Gayle Botley. Again, that is when Zingelmann expressed the urgency of moving forward with the audit even though he has now admitted he didn’t know what the board was looking at.
“We are going past the deadline if it is not voted on tonight,” Zingelmann said in Janaury.
During the January meeting, Zingelmann also openly lied to trustees when he said the board was only “accepting the opinion of the auditor” and not voting on the final document, which was pointed out by trustee Neild.
“As it is presented to the board and that you are accepting the opinion of the auditor,” Zingelmann said in response to a question from Brassard about doubts she had with the contents of the audit.
At the time, Neild also pointed out the wording being used was not consistent with the explanation Zingelmann was providing the board. Neild said the item on the agenda stated to approve the audit, “not to consider, not to think about, but to approve. The way this is stated is that we, as board members, are approving that document when we have not had time to review it.”
Zingelmann tried to correct his previous statements in the March meeting but Mike Neil again pointed out that he wasn’t being truthful with the board.
“In January, we brought a report to the board for approval,” Zingelmann said at the March meeting. “In that report were several errors. What happens is the external auditor audits our books; that’s our general ledger. Once that is complete we take those numbers, the district takes those numbers and transfers them over to the CAFR. We do this through several different ways. We do this through electronic transfers, and we do it through manual transfer.
“What we had, we had several issues with that report and I am going to go over both of them. One of the issues we had is we converted our financial software from an old system to a new system. However, we ran the fiscal year on both systems so when we closed the year and had to convert that to the CAFR, there’s conversion that didn’t take place correctly. So those numbers were put into the CAFR, many of those mistakes were noticed and were starting to be corrected and were saved.”
“They thought you had the most current copy. You did not have the most current copy,” Thomas said, seeming to indicate that in January, he knew there were multiple drafts. “Then they went and sent it to the TEA; there were minimal corrections from that particular copy.”
Botley told the board he was made aware of the changes before the documents were sent to TEA in January, but some board members wanted clarification because they understood that Thomas had not been made aware of the changes until March.
Brassard called out Zingelmann saying she went to Thomas after The Examiner first broke the story this month about the two audits, and that was when the district began looking into the issue.
“I got a copy of the documents, both the document that was sent to TEA and the document that was given to us,” she said. “I went over it and it took me six hours. I then came down to Dr. Thomas’ office to show him what was being talked about and asked him if we could get an explanation, at which point, as far as I know, the investigation was launched.
“The problem had already hit the press before anybody had bothered to talk to Dr. Thomas to figure out what happened.”
Brassard was even more concerned that Reece and Williams signed a document that was “attached theoretically to the document that you (Zingelmann) presented to us at the board meeting saying that we had approved that document. Now we are given another document. It sure makes a bunch of people look like idiots.”
When it was his turn to speak, Neil called Botley back to the podium and asked when he became aware changes were made to the audit.
“Before we sent it to TEA,” Botley said.
Thomas’ first reaction was to tell Neil he was wrong, saying, “There is something you said that is totally incorrect – that we knowingly sent that. That is totally, totally, totally wrong. We did not knowingly send that.”
In the very next breath, Thomas said, “My first to know anything was when she (Brassard) brought it to my attention.”
Brassard had just said she was the first to tell Thomas about the problems with the audit, and one of Thomas’ two statements confirmed that.
Neil pounced on Thomas’ comments saying, “You just told me that you weren’t aware of it until Ms. Brassard brought it to your attention, and I don’t care if it is significant or not significant, if we approve an audit and it changes, it should come back to us to be approved, and I bet you the state agrees with that.”
Thomas then said it was the practice of the district in the past to change the audits after the board had approved them, but a previous article in The Examiner revealed that has only been the case for the past two years – since Zingelmann has been involved in preparing BISD’s financial information.
That fact was also pointed out by Williams, whose name is on the fraudulent document sent to the state. And because of the discrepancies found by Neild and the newspaper, the state demanded answers from the board as to why it received a document that was altered after board approval.
Williams, who said prior to the meeting that he was angry about changes being made without his knowledge, made it clear he wanted someone to be held accountable.
“If this had happened anywhere other than BISD, whoever did it would have been fired,” Williams said. “We don’t need to go through this again. I have been doing this secretary deal for probably the last 15 years now, and we never had this problem. I don’t like it.”
Following the meeting, Neil said it was apparent to him that either Thomas or Zingelmann was lying about the audit, when it was changed, and how the audit was sent to the state without board review.
“I think it was very obvious someone was lying when you compare Botley’s statement with those of Thomas and Zigelmann during the meeting,” Neil said.
Neither Thomas nor Zingelmann attempted to clarify why there was $2.2 million less in the cash account for the audit sent to the state than the one approved by the board. The cash account should have been the amount of money the district had at the end of the 2010-11 fiscal year, according to a local auditor who reviewed both documents for the newspaper’s original investigation.
Jerry Jordan can be reached at (409) 498-1074, or at jerry [at] theexaminer [dot] com.