A risk assessment test done as part of a financial audit of the Athens City Schools system found no current issues with the way students are enrolled in virtual school or reported to the state.
Certified Public Accountants Jeremy Blackburn and Jacob Gatlin with CDPA, PC gave an overview of their audit during the Athens City Board of Education meeting April 15.
“The way virtual students are being entered into the system and reported to the state, based on our test, is being handled appropriately,” Gatlin said.
The interest in the status of the virtual school stems from the federal indictment of former Superintendent Trey Holladay. He and several others have been charged with colluding to inflate the number of virtual students enrolled in Athens Renaissance School so they could obtain additional funding from the Alabama State Department of Education.
The indictment left many pondering how such an alleged scheme was carried out without being discovered.
Board member Scott Henry asked Blackburn and Gatlin a series of questions centered around why the alleged fraud was not discovered by previous audits and whether or not enrollment at ARS was still an area of concern.
Blackburn said “fraudsters are typically very smart,” which includes searching for ways to hide their crimes from those who might report them.
“In the scenarios you are referring to, you have multiple parties that colluded,” he said. “If I'm in the compliance role for the city school system, and I have a third party giving me documents that support something, you are going to have a hard time catching those controls.”
Gatlin said these controls require a certain amount of documentation in place.
“When that student gets entered into the system, it goes to the state, and the state reimburses the money for the virtual student,” he said. “If that control is bypassed by someone not having the documentation and (who) has the ability to just enter a student straight into the system or providing false documentation, they have the ability to circumvent those controls.”
Blackburn said his firm did a sample test of students currently enrolled at ARS and found each of them had proper documentation.
“We took a sample of a number of students, and we verified what the procedures were previously and what they are now for those students to be enrolled in virtual schools,” Gatlin said. “We took a sample of students enrolled in virtual school, pulled their files and verified that documentation was in fact there. We didn't identify any control deficiencies in the process.”
Blackburn told the board that while this test was a compliance test, it was done for risk assessment and is not the same type of test the state would administer.
“We did not find any issues with the sample that we took, but you have to make sure you continue to have (proper) procedures in place,” he said.
Since the indictment, the school board has maintained none of its current members were aware of the alleged crimes that Holladay and those colluding with him were carrying out. Superintendent Beth Patton and Board President Russell Johnson said these findings alleviate concerns of further issues surrounding ARS.
Finances in order
Blackburn and Gatlin said they found no issues with the ACS budget covering the current fiscal year presented by Chief School Financial Officer Serena Owsley in September.
“If there were any significant or unusual transactions, we would have to disclose them to you,” Blackburn said. “There were none outside of COVID-related monies that come through the federal government.”
Owsley has said the ACS budget looked great and was one of the best the system has had over the past few years. ACS currently has 2.77 months of operating budget held in reserve, with only one month required by the state.