BRADENTON -- In the first quarter of the 2014-15 fiscal year, the Manatee County School District used up about half of the indirect auditing services included in its budget.
At an audit committee meeting Wednesday, members reviewed the billing statement from Shinn & Co. as of Sept. 30, and were surprised to see so many hours spent investigating whistleblower complaints.
The district and the company -- on the recommendation of the audit committee -- contracted for a total of 1,795 hours of internal auditing work in the 2014-15 year. The $315,000 contract between the district and Shinn includes 1,110 hours of direct work and 685 hours of indirect work, which includes attending meetings and 390 hours of special projects. The special projects work includes responding to hotline and whistleblower complaints.
So far in 2014-15, not many hours of direct services have been used, but audit committee chairman Joe Blitzko reported that Shinn & Co. has already billed the district for about half of the indirect hours, putting the district on pace to use all the indirect work within the first six months of the fiscal year.
A total of 355 hours of the 685 hours in the indirect services have already been used up, and 70 of the 1,110 direct hours have been used so far, according to the invoice dated Sept. 30. Overall, a total of 1,396 hours are still left for the rest of the year's auditing duties.
"That's something the staff and the board has to be cognizant of," Blitzko said, adding the committee will be getting a monthly report to monitor and track the process.
Part of the problem is responding to complaints through the hotline, which cannot be controlled. The hours spent auditing those issues is included in the indirect billing services.
"We can't control what might come up through an investigation or hotline call, but we will be cognizant of that time," said Neil Unruh, an audit partner at Shinn & Co.
One of those hotline complaints -- about Pell Grants used at Manatee Technical Institute -- was raised during Wednesday's meeting.
The committee received an update on an audit done on the Pell Grant program at MTI. The report is not finalized yet, and audit committee members had further suggestions for Shinn & Co. to do before the report is complete.
Some committee members were also suspicious about the timing of the investigation, noting how long it took for the investigation to get to the audit committee and when the final report would be released.
Audit committee member Mary Foreman asked why it took so long to get the complaint to Shinn & Co. Committee members also discussed how quickly the report could be finalized and completed to be presented to the school board.
"The elephant in the room would be the election," Foreman said.
Mary Cantrell, the District 5 school board candidate challenging incumbent Julie Aranibar, was head of MTI until the end of the 2013-14 academic year, when her contract was not renewed.
The complaint originally surfaced in January and was reported to Troy Pumphrey, the district’s professional standards investigator. Parts of the hotline complaint were turned over to Shinn & Co. to review in May, but Shinn & Co. could not start work on the issue until August, when their contract with the school district was renewed, Byron Shinn said Thursday.
The complaint dealt with the Pell grant program at MTI, and the whistleblower named an individual who received a Pell grant who was ineligible to do so, officials said Wednesday.
Overall, the draft report did not confirm the whistleblower complaints but did reveal eight findings within the Pell grant program at MTI.
"Let me say this, there were documentation issues, but those are common to be seen," said Donna Henson, an audit manager with Shinn & Co.
Some of the issues Henson raised had to do with understaffing and technology issues at MTI. For example, there are some functions only the business manager can perform. If something happens to the business manager, MTI will be in trouble, Henson said.
Doug Wagner, the director of MTI, discussed MTI's plan to respond to the findings. In the case of the business manager, other staff members will be cross-trained to fill in necessary gaps and MTI will look into hiring more staff.
"We want to be 100 percent corrected and compliant," Wagner said. The MTI budget relies on tuition and is pretty tight right now, he told the committee.
Audit committee members directed Shinn & Co. to look more into the issue, including checking on whether the whistleblower claim was true. Shinn & Co. ran a sample of students to see whether MTI was awarding Pell Grants improperly, but it was unclear whether they checked on the student named in the whistleblower report.
The next, and final board meeting before the election, is on Tuesday and the agenda is already published for that meeting. It is unlikely the audit committee will be able to review and approve a final report from the internal auditors before the meeting.
The committee also discussed Superintendent Rick Mills' request to move the purchasing department up on the internal audit priority list.
Mills' request came as a result of a lawsuit filed against the school district after it violated the Sunshine Law in hiring Sarasota Security Patrol to guard the district's elementary schools. An evaluation committee did not advertise a meeting when choosing the company. The lawsuit cost the district $10,000 in a settlement fee.
The internal audit plan was originally set to start with human resources and payroll.
"We did a risk assessment and developed an audit plan. I'm questioning whether we should be deviating from that," Foreman said.
The audit plan did not include purchasing in the 2014-15 year. The plan was to spend 175 hours on human resources, 170 on information systems, 300 on finance and 270 on budget, which totals 915 hours.
The committee came to a consensus to revise the plan to do 300 hours each in purchasing, human resources and information systems.
"We can work these things simultaneously and keep them running fairly quickly," Unruh said.
Meghin Delaney, education reporter, can be reached at 941-745-7081. Follow her on Twitter @MeghinDelaney.