Shoddy recordkeeping prevents auditor from determining validity of claims against former Nevada schools food service chief
The Iowa State Auditor’s Office has been unable to determine whether food and money were improperly taken by the Nevada school district’s former food service manager over a five-year period ending in March 2019, according to an investigative report released Tuesday.
The auditor’s office received a complaint alleging the district’s former food service manager, David Schmitz, “had used school equipment for personal use and took food and collections from the lunch program for personal use,” according to the report.
A request by the Tribune for comment from Schmitz was referred to the Skinner and Paschke law firm. Attempts to reach the firm Monday were unsuccessful.
Schmitz and district officials agreed March 4, 2019, to end his employment due to the concerns, the report said, and he was paid through his contract’s June 30, 2019, end date.
“Back in the fall of 2018 we received an anonymous tip alleging potential wrongdoing by our then food service director,” Nevada Superintendent Steve Gray said in an email to the Tribune.
“Nevada Schools turned the matter over to the Nevada Police Department to investigate. Because of the potential loss of public goods, the State Auditor’s Office is also required to investigate.
“While we were ultimately unable to determine if we experienced any loss, the process allowed us to enhance several of our food service processes,” Gray wrote.
The Nevada school district allows staff, parents and affiliated organizations to purchase food items from the department, though receipts must be sent to to the district’s business office to be recorded in the accounting system, and later deposited in the district’s bank account.
The investigative report said the auditor’s office was unable to determine if any items were improperly removed from the district’s food inventory or if collections for the sale of food were not properly deposited “because adequate records were not maintained.”
The auditor’s office requested copies of the inventory reports but discovered the former director “did not maintain supporting documentation for the use of inventory,” according to the report. The only documents available were copies of vendor invoices submitted by the manager of the business office for payment, according to the report, and “district officials stated they did not keep a perpetual inventory.”
An inventory is completed at the end of each fiscal year for financial reporting purposes, the report noted.
“The former Director did not maintain copies of receipts issued for the sale of inventory and they were unable to locate any other supporting documents for the sale of food items,” the report said in its findings. “As a result, we were unable to determine how often items were sold to staff, parents, affiliated organizations, and others; the types of items sold, and the costs associated with them.”
The auditor’s office recommended in the report the district update its control procedures to provide accountability. Among other recommendations:
n Separating duties to limit employees’ ability to take inventory for personal use.
n Sufficient maintenance of food inventory records. The district should ensure processes are segregated to prevent one employee from having total control over the inventory, and access to inventory should be restricted to those who need it to perform their jobs, the report said.
n Prohibiting parents, affiliated organizations and others from purchasing items from the district.
n Ensuring compliance with guidance provided by the Iowa Department of Education.
n Notifying the auditor of any suspected embezzlement, theft or significant financial irregularities, per Iowa Code.
n Ensuring financial oversight is an ongoing effort.
The full report can be found online at https://www.auditor.iowa.gov/reports/audit-reports/special-investigation-of-the-nevada-csd.