NJ Fiscal Folly

Thursday, April 13, 2006

Long Overdue

Reported in today's Record:

"Governor Corzine will hire outside auditors to investigate waste and fraud in four city school districts, including Paterson, state officials confirmed Wednesday. These cities are already under state supervision, but administration sources say the current auditors -- hired by the local school districts -- have not done a sufficient job in maintaining control and scrutiny of finances. These so-called Abbott districts receive extra state funding through a state Supreme Court order.

Teams of private sector "forensic" accountants will descend on three cities that are under direct state control: Paterson, Newark, and Jersey City. They will also examine the books of Camden."

These four cities are budgeted to receive $1.75 billion in school aid in FY 2007. Apparently it never occurred to anyone previously that professional management, financial integrity, and independent audits might be relevant prerequisites.


At 4:09 PM, Blogger Ken Adams said...

Uhhhh....wouldn't it have been more effective to conduct these audits unannounced? Putting out a press release just gives the perps time to bury evidence.

At 5:12 PM, Blogger PN said...

I don't think "the perps" would go that route.

If I'm running the audit, the first thing I go after is disbursements records and authorizing documentation for each transaction. If the records or documentation are missing, the local managers are presumed culpable right away, so it actually makes the auditors' job somewhat easier.

It's more likely that the auditors will find records and documentation, but they will be very poor quality. Financial controls will exist on paper, but enforcement will be weak. The quantity and quality of financial personnel will be insufficient for the sums involved.

At 8:31 PM, Blogger Enlighten said...

This is good news. The waste, fraud and theft must be tremendous in these schools. Although Ken has a point - two sets of books?

At 10:27 PM, Blogger Ken Adams said...

I'll bet it ends up just like the Willingboro school district, but an order of magnitude bigger.

What's that, you don't know about Willingboro? Oh, well, then I'll just have to post about it -- fascinating story.


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