SPRING HILL — An audit of the agency that oversees programs for the youngest children in Pasco and Hernando counties turned up several examples of sloppy record-keeping and practices that open the door to abuse — but found no evidence of fraud.
Jim Farrelly, who took over as executive director of the Pasco Hernando Early Learning Coalition in January, months after his predecessor was forced to resign, said he and board members were "very disturbed" but not surprised by the findings, which covered the 2006-07 fiscal year.
That was when the agency was headed by Jo-Ann K. Fuller, a former deputy director who was promoted after her predecessor left amid board turmoil. Fuller quit in April 2007 after staffers complained about unpaid overtime and other management issues.
Arranging the audit, performed by Inverness CPA firm Woodruff, Wardlow, Nelson and Cash, was at the top of Farrelly's to-do list after being hired to head the agency, which oversees subsidized child care and voluntary prekindergarten programs.
"That was then. This is now," he said, adding that he and the staff, which has turned over since the audit, already have been working to correct the deficiencies.
He plans a second audit to cover the first half of the 2007-08 year and then a third to examine the time when he took the reins.
"That one will be crystal clear," he said.
Among the audit's findings:
• Purchases costing more than $5,000 were made without board approval in violation of the agency's policy.
• An American Express credit card that was used by staffers other than the executive director. The card was in the name of the director rather than the coalition. Farrelly called that "absolutely ridiculous" and canceled the card.
• Invoices submitted to the state Office of Early Learning did not match amounts on invoices submitted for payment.
"As a result of the above material weakness, the financial records used to report expenditures incurred for services provided for school readiness and voluntary pre-kindergarten programs cannot be relied upon and actual expenses may vary from those that have been recorded," the audit said.
• Sloppy recordkeeping when it came to keeping track of employees' paid leave time.
• Inadequate methods of recording fixed assets.
• Lack of backup documentation for transactions in accounts payable. Farrelly said only one staffer was assigned to handle bills and pay them.
• No staffers qualified to apply generally accepted accounting practices to record financial transactions and prepare financial statements.
"Things were done in a very basic way, without using current technology," Farrelly said. He added that the auditors were clear that although practices were slipshod, there was no evidence of dishonesty.
At a recent board meeting, Farrelly presented a list of improvements, including:
• Accounts payable is now being coordinated by the fiscal manager, office manager and executive director. No invoices are paid without purchase documentation provided.
All transactions exceeding the $5,000 threshold are now noted with the date of board approval.
• A computer-based system of inventory control has been established using a bar-code system.
• A new computer system keeps weekly track of employees' accrued paid days off.
• Invoices submitted for state reimbursement require paperwork that shows amounts matching the ones on bills.
"This was something that simply had to be done, has to be accepted and then we continue on the road up," Farrelly said of the audit.
Lisa Buie can be reached at [email protected] or (813) 909-4604.