Stenmark Financial Services

I was recently catching up on some reading and stumbled across a Star Tribune article from Sept. 10th on the now-defunct Chiron charter school.  The piece was primarily focused on the fraudulent financial activity that was going on at the school; ultimately costing the state $340,000 in aid payments.  The basic fact that a person or group of people would be willing and able to embezzle this kind of money from a public entity designed to serve our commnunities and young people is deplorable.  The relative ease as to how this was done is even worse.

 The administrator of the school is alleged to have taken advantage of loose internal control regulations to cut duplicate paychecks to herself, expense payments for unauthorized items, and repay a purported loan that was never documented.  My first question was, “How did all of that get through the audit?”  It turns out that it didn’t.  Two audits of Chiron by independent auditors expressed concern that one person was allowed to handle a financial transaction from start to finish.  Point taken, there is a problem…now what?  It turns out that the state does not currently have an effective system of tracking these issues and following them through the correction of the process because it was after these two audits that the administrator in question began the purging of the school’s assets.  There was not an appropriate level of action from the state following the audit findings nor was there a state-approved accounting company on the payroll to ensure prudent financial internal controls to prevent this from happening.

What I have taken away from the article (besides obvious disdain for the operators of Chiron)  is a feeling of disappointment in the lack of internal controls being allowed by the state.  The correct mechanisms are in place to identify situations that are fiscally irrisponsible as evidenced by the audit findings.  Unfortunately, there was little recourse in this case and it ultimately allowed the administrators to walk away with large amounts of money that should have been going to our children and community.  I am biased, but truly believe that independent accounting firms add as much to charter school accounting as they do for corporate accounting.  The stakeholders may be different, but their interest in the longevity of their institutions are the same.  I fear that these financial scandals will continue throughout all facets of our economy until we recognize the appropriate level of internal controls needed to curtail these unfortunate situations and force the issue in our government offices. 

We are finally up and running!  Our goal for this blog is to bring forth different articles, discussions, and points of view relating to the learning community and more specifically Charter Schools.  Please feel free to react to this blog through posting comments in this space.

 If you have additional topics to discuss, feel free to register and post topics in the Charter School discussion forum at the following link: http://stenmarkinc.com/forum