Special investigation Page unified school district #8 theft and misuse of public monies

              Special Investigation
Page Unified School
District No. 8
Theft and Misuse of Public Monies
Special Investigative Unit
Debra K. Davenport
Auditor General
DECEMBER • 2008
A REPORT
TO THE
ARIZONA LEGISLATURE
The is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators
and five representatives. Her mission is to provide independent and impartial information and specific recommendations to
improve the operations of state and local government entities. To this end, she provides financial audits and accounting services
to the State and political subdivisions, investigates possible misuse of public monies, and conducts performance audits of
school districts, state agencies, and the programs they administer.
The Joint Legislative Audit Committee
Representative John Nelson, Chair Senator Robert Blendu, Vice Chair
Representative Tom Boone Senator Carolyn Allen
Representative Jack Brown Senator Pamela Gorman
Representative Pete Rios Senator Richard Miranda
Representative Steve Yarbrough Senator Rebecca Rios
Representative Jim Weiers (ex-officio) Senator Tim Bee (ex-officio)
Audit Staff
George Graham, Manager
Lindsey Perry, Senior
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
December 17, 2008
Members of the Arizona Legislature
Governing Board
Page Unified School District No. 8
The Honorable Terry Goddard
Attorney General
The Honorable Tom Horne
State Superintendent of Public Instruction
The Office of the Auditor General has conducted a special investigation of the Page
Unified School District No. 8 for the period October 2002 through June 2005. The
investigation determined the amount of public monies misused, if any, and whether
there were any conflict-of-interest violations during that period.
The investigation consisted primarily of inquiries and examination of selected financial
records and other documentation. Therefore, the investigation was substantially less in
scope than an audit conducted in accordance with generally accepted auditing
standards. Accordingly, the Office does not express an opinion on the adequacy of the
financial records or the internal controls of Page Unified School District No. 8. The
Office also does not ensure that all matters involving the District’s internal controls,
which might be material weaknesses under standards established by the American
Institute of Certified Public Accountants or other conditions that may require correction
or improvement, have been disclosed.
The accompanying Investigative Report describes the Office’s findings and
recommendations as a result of this special investigation.
After this report is distributed to the members of the Arizona State Legislature, the
Attorney General, and the State Superintendent of Public Instruction, it becomes public
record.
Debbie Davenport
Auditor General
Enclosure
page i
Office of the Auditor General
SUMMARY
In September 2005, the Office of the Auditor General reviewed a fiscal year 2004
Page Unified School District (District) audit report from a public accounting firm
alleging financial misconduct by the former District Superintendent, Greg Conway.
After requesting and receiving relevant documentation from the District in January
2006, our Office commenced an investigation into those alleged financial
improprieties. During our investigation, we determined that Mr. Conway embezzled
and misused public money, failed to abide by conflict-of-interest
laws, and manipulated public documents in order to conceal
his crimes. As a result, we submitted our report to the Attorney
General’s Office, and they have taken criminal action against
Mr. Conway (see the Conclusion on page 17 of this report).
Our investigation revealed that from October 2002 through
June 2005, the former Superintendent misappropriated a total
of $172,501. Specifically, Mr. Conway embezzled $17,216 for
his personal use, violated conflict-of-interest laws regarding
payments totaling $87,520 for his wife’s employment, and
directed unauthorized payments to district staff members
totaling $67,765. Finally, Mr. Conway attempted to conceal his
misconduct and embezzlement schemes by manipulating
records within the Governing Board (Board) meeting files.
Mr. Conway embezzled and misused public money by abusing
his authority as Superintendent and circumventing internal controls governing the
disbursement of district money. Specifically, he directed subordinates to make
improper payments, provided false documentation, and withheld relevant
information from Governing Board members. While no control system can be
expected to totally prevent dishonest actions such as Mr. Conway’s, there are actions
the Board could have taken and can take now to help deter future instances of
misconduct such as those that Mr. Conway perpetrated.
Investigation Highlights
Former Page Unified School District
Superintendent Greg Conway:
 Embezzled $17,216 for his
personal use.
 Violated conflict-of-interest laws
regarding $87,520 of his wife’s
compensation.
 Directed unauthorized payments
to staff members totaling
$67,765.
State of Arizona
page ii
Office of the Auditor General
TABLE OF CONTENTS
1
3
3
5
7
7
9
11
13
15
17
3
4
5
7
Introduction & Background
Finding 1: Former Superintendent embezzled and
misused public monies
Unauthorized performance pay
Unauthorized administrative pay
Finding 2: Former Superintendent engaged in conflicts
of interest
Unauthorized payments for Ms. Conway’s employment
Unauthorized payments for Mr. Conway
Finding 3: Former Superintendent altered public
documents
Finding 4: District officials should take action to help
prevent similar occurrences
Recommendations
Conclusion
Exhibits:
1 Embezzlement and Misuse Schemes
June 2003 to June 2004
2 Unauthorized Performance Payments
June 30, 2003
3 Unauthorized Administrative Payments
June 30, 2004
4 Conflict-of-Interest Payments
June 2003 to June 2005
page iii
State of Arizona
page iv
Page Unified School District No. 8 is located in Page, Arizona, within the Coconino
County boundaries. The District is composed of two elementary schools, one middle
school, and one high school. The District is financially accountable to taxpayers for
the nearly $36 million it received in fiscal year 2007 to educate more than 3,000
enrolled students. The District has five publicly elected Governing Board members
who are responsible for establishing all district policies and are the final authority over
all school district business.
Mr. Conway’s history with the District
On January 6, 2000, Mr. Conway applied for the open Page Unified School District
Superintendent position. In his application, Mr. Conway falsely certified that he had
“. . . never been involuntarily released from any position, nor have I been asked to
resign for any reason.” In fact, Mr. Conway had signed a separation agreement with
a Colorado school district just 2 weeks prior in which he agreed to resign as
Superintendent and return money to the district. He reimbursed that Colorado school
district $9,300 for using district monies to purchase personal construction items and
paid an additional $36,000 for the District’s cost to investigate this matter. Unaware
of these events, the Page Unified School District Governing Board hired Mr. Conway
for the Superintendent position on March 9, 2000.
As the Superintendent, Mr. Conway acted as the chief executive officer of the school
district and reported directly to the District’s Governing Board. Mr. Conway was
responsible for areas relating to students, personnel, governing board operations,
instructional programs, and noninstructional operations. Additionally, as a public
official, Mr. Conway had a responsibility to prudently manage district assets on behalf
of the community he served.
After receiving allegations relating to potential financial misconduct by Mr. Conway,
the District’s Governing Board hired an independent investigator at a total cost of
$15,369. Although the investigator’s report has not been made public, shortly after its
submission, on December 29, 2004, Mr. Conway agreed to the District’s separation
agreement and mutual release, thereby tendering his immediate resignation.
Pursuant to this agreement, the District paid Mr. Conway $54,977 for earned wages,
accrued vacation, sick leave, and personal business leave, and 3 months of
severance pay.
Office of the Auditor General
INTRODUCTION
& BACKGROUND
page 1
State of Arizona
page 2
Former Superintendent embezzled and misused
public monies
From June 2003 to June 2004, Mr. Conway, while employed as the Page Unified
School District Superintendent, embezzled at least $17,216 and misused $67,765
from the District by improperly
giving himself and other
district employees additional
compensation (see Exhibit 1).
Over this 1-year period, Mr.
Conway violated state laws
related to theft, fraudulent
schemes, and misuse of
public monies by abusing his
authority as Superintendent
and demanding that business
office staff make payments to
himself and to other staff
members. Mr. Conway also falsely represented to business office staff that the
Governing Board had authorized additional compensation for certain employees
related to their performance or administrative activities.
Unauthorized performance pay
According to the Uniform System of Financial Records and state law, school district
governing boards assume financial responsibility for the district, which includes
authorizing expenditures, employing personnel, establishing staff salaries, and
maintaining and verifying staff payroll records. In May 2001, the Board approved a
plan to award its teachers bonus pay for excellent performance, and a month later,
the Board implemented a similar plan for its administrators. Although the Board
stipulated that administrative personnel who received a positive job evaluation and
obtained particular school-level goals were eligible for up to $4,000 in bonuses that
first year, they failed to provide specific direction on how and when staff should be
page3
Office of the Auditor General
FINDING 1
Date Extra compensation improperly
given by Greg Conway
Greg
Conway
Other
District Staff
Total
June 2003 Unauthorized performance pay $ 8,845 $60,964 $69,809
June 2004 Unauthorized administrative pay 8,371 6,801 15,172
Total $17,216 $67,765 $84,981
Embezzlement and Misuse Schemes
June 2003 to June 2004
Exhibit 1:
Source: Auditor General staff analysis of district records.
evaluated, how these awards should be documented, and whether the employee’s
individual awarded amounts should be brought before the Board for final approval.
The Board did stipulate that it expected to participate in the general renewal and
approval process for all future years’ performance plans by reviewing the
administrative committee’s annual recommendations; however, Mr. Conway
bypassed the Board’s authority and unilaterally created his own plan for the 2002-
2003 school year. This arbitrary schedule of amounts and individuals far exceeded
the parameters of the previous year’s performance pay bonuses and did not include
any evaluative criteria for determining eligibility. In fact, Mr. Conway’s new schedule
added six positions that had not been included on the original 2001-2002 school year
schedule and allowed more than half of the awards to exceed the $4,000 limit
approved in 2001 (see Exhibit 2).
Falsely purporting his schedule to be board approved, Mr.
Conway inappropriately directed staff to issue 14 payments
to employees totaling $60,964, and one payment to himself
in the amount of $8,845 (see Exhibit 2). Although Governing
Board members were unaware of this payment plan, Mr.
Conway specifically told business office staff that the plan
had received board approval as he misleadingly presented
a false handwritten schedule stating, “Approved, Greg
Conway 6-23-03.” Business office staff relied on Mr.
Conway’s false representations and processed the
payments without first verifying through Governing Board
minutes that Mr. Conway’s plan had in fact received board
approval. Further, Mr. Conway failed to provide
documentation that supported the purpose of the bonuses
or supported that the people receiving the bonuses,
including himself, met any performance goals. In fact, his
bonus amount was the largest individual payment and
more than double the amount of his authorized bonus from
the prior year.
Mr. Conway had no authority to unilaterally create his own bonuses or make changes
to his or any other employees’ employment contracts. Any changes to employment
contracts must be discussed, voted on, and approved by the Governing Board;
however, they were not. Because of Mr. Conway’s fraudulent actions, the District paid
$69,809 in employee performance pay bonuses that had not been approved or
budgeted for. Mr. Conway admitted to Auditor General staff that he was acquainted
with open meeting laws, but that his failure to obtain board approval for the
administrative pay was an error.
State of Arizona
page 4
Employee Amount
Greg Conway, Superintendent $ 8,845
Assistant Superintendent 6,800
High School Principal 5,625
Middle School Principal 4,950
Elementary School Principal #1 4,900
Elementary School Principal #2 4,900
Special Program Director 4,900
Business Manager 4,275
High School Assistant Principal #1 3,900
High School Assistant Principal #2 3,900
Middle School Assistant Principal 3,900
Assistant Business Manager 3,900
Research Director 3,250
Professional Development Director 2,882
Vocational Education Director 2,882
Total Unauthorized Performance Payments $69,809
Unauthorized Performance Payments
June 30, 2003
Exhibit 2:
Source: Auditor General staff analysis of district records.
Unauthorized administrative pay
In June 2004, Mr. Conway directed staff to issue payments to him and
to four district employees totaling $15,172, falsely representing to
business office staff that the individual payments were authorized
through an Intergovernmental Agreement (IGA) with the Coconino
County School Superintendent’s Office. However, the existing IGA
called for payment only to the District, not individual employees, for
administrative work associated with a county-funded accommodation
school located in the City of Page.
From 1999 to 2003, the District maintained an alternative school to accommodate
students with behavioral problems. During 2003, the Coconino County School
Superintendent’s Office took over operation of this alternative school, changing the
name to the Coconino County Regional Accommodation School District (CCRASD)
and expanding enrollment to include county students in and outside of the District.
In January 2004, the District’s Board approved the arrangement and entered into an
IGA with Coconino County. As part of the IGA, the District agreed to provide
administrative services to CCRASD for on-site monitoring, registration and
scheduling, and managing student behavioral problems. In exchange, CCRASD
agreed “to appropriate and pay to PUSD [Page Unified School District] the sum of
$20,000 [per year] for administrative services rendered by PUSD under this
agreement.”
Four months after the IGA was approved, Mr. Conway inappropriately created a
handwritten invoice on district letterhead, requesting
payment from the County for five employees,
including himself. Mr. Conway submitted this
invoice to the County, but they refused to pay any
individual citing that their agreement required
payment to the District. In June 2004, after the
District’s business manager received the County’s
payment, Mr. Conway abused his authority and
directed staff to pay the IGA monies to him and to
four employees, as illustrated in Exhibit 3 below. In
order to facilitate the processing of these
unauthorized payments, Mr. Conway provided the
business office staff with a written statement falsely
asserting that the individual payments were
authorized by the IGA and the Governing Board.
Business office staff relied on Mr. Conway’s false representations and processed the
payments as directed.
Office of the Auditor General
page 5
In June 2004, Mr. Conway improperly
issued extra compensation to:
•himself totaling $8,371, and to
•four district employees totaling $6,801.
Employee Amount
Greg Conway, Superintendent $8,371
Assistant Superintendent 6,103
Food Services Director 436
Technology Director 175
High School Principal 87
Total Unauthorized Administrative Payments $15,172
Unauthorized Administrative Payments
June 30, 2004
Exhibit 3:
Source: Auditor General staff analysis of district records.
Mr. Conway and the four district staff members were not entitled to receive extra
payment for this work as it was already within the scope of their duties and
responsibilities as district employees. In fact, prior to the CCRASD’s creation, Mr.
Conway and the others had helped provide the same administrative services without
any extra compensation.
Mr. Conway knew that he had not presented either the performance or the
administrative pay to, or received approval by, the Board at a public meeting.
However, he still directed that the unauthorized administrative and performance
payments be made to himself and to select employees. Mr. Conway admitted to
Auditor General staff that instigating the issuance of performance pay was
inappropriate and a misuse of public money. Therefore, Mr. Conway failed in his
responsibility to the public he served by abusing his official position for his own
personal gain.
State of Arizona
page 6
Former Superintendent engaged in conflicts of
interest
From October 2002 to June 2005, Mr. Conway repeatedly violated conflict-of-interest
laws by improperly participating in and authorizing
payments to himself and to his wife totaling more
than $104,000 (see Exhibit 4). Pursuant to a
scheme to deceive the District’s Governing
Board and secretly employ his wife, Mr. Conway
failed to disclose his interest to the District’s
Governing Board and improperly arranged three
payments totaling $87,520 for his wife’s salary
and related expenses. He also wrongly
participated in approving two payments to
himself totaling $17,216 that were described in
Finding I. In each instance, Mr. Conway had a
substantial interest in the decision to issue these
payments, as he stood to financially benefit.
To help ensure that public officials do not
improperly use their position for their own benefit,
Arizona law requires that public officials make
known their substantial interest in any decision as
well as refrain from participating in that decision,
both of which Mr. Conway failed to do.
Unauthorized payments for Ms. Conway’s employment
From October 2002 to June 2005, Mr. Conway violated conflict-of-interest laws by
participating in all aspects of his wife’s employment, including covertly working to
create a position for his wife at a neighboring school district, funding that position
solely with Page Unified School District monies totaling $87,520, obtaining Governing
Board approvals without full disclosure, and personally benefitting from monies that
were deposited into his and his wife’s joint bank accounts.
page7
Office of the Auditor General
FINDING 2
Date Amount
Payment for Ms. Conway’s employment
June 2003 $ 29,764
June 2004 48,340
June 2005 9,416
Total, Ms. Conway $ 87,520
Finding I, Mr. Conway’s performance pay
June 2003 $ 8,845
June 2004 8,371
Total, Mr. Conway $ 17,216
Total Conflict of Interest $104,736
Conflict-of-Interest Payments
June 2003 to June 2005
Exhibit 4:
Source: Auditor General staff analysis of district and CAVIAT records.
Mr. Conway first attempted to obtain employment for his wife as the Page Unified
School District Personnel Director when the District was seeking to fill the position in
July 2002. Specifically, he used his position to influence and intimidate two district
employees who were serving on the four-person committee responsible for
conducting the selection process. Mr. Conway admitted to Auditor General
staff that he had inappropriately questioned the two committee members,
contacting them at their respective homes, because he was upset that his
wife was not immediately selected for the position. Both of these individuals
stated that the Superintendent intimidated them into recommending his wife
for the Personnel Director position. Although the committee and Mr. Conway
ultimately recommended that the District hire his wife, the Governing Board declined
to hire Ms. Conway because of conflict-of-interest concerns.
After failing to obtain employment for his wife at the District, Mr. Conway worked to
create a position for her at a nearby school district, the Coconino Association for
Vocation Industry and Technology (CAVIAT). Mr. Conway asked the Superintendent
of CAVIAT to create a position within CAVIAT to manage two Page Unified
School District legislative programs, the No Child Left Behind Act of 2001 and
the state-enacted Arizona Learns Program, and to consider his wife for that
position. Even though the position would be under the umbrella of CAVIAT,
Mr. Conway intended for the position to serve the needs of the District, not
CAVIAT. Moreover, the position was completely unrelated to CAVIAT’s
educational mission, but CAVIAT agreed to the arrangement as Mr. Conway
assured CAVIAT that the position would be entirely funded and reimbursed
with district monies.
At a District Governing Board meeting on October 1, 2002, Mr. Conway asked for
permission to direct district monies to CAVIAT to manage and support district
programs; however, Mr. Conway failed to provide specific details about this
arrangement, including the methods to achieve the purpose, duration, costs, manner
of financing, or a formal agreement outlining both the District’s and CAVIAT’s
obligations. Further, Mr. Conway specifically did not disclose that it would be
necessary to hire an individual and that the money would be used to pay for that
person’s salary and expenses. The Board approved his request without comments
or questions.
CAVIAT advertised the position on October 30, 2002, indicating the deadline for
applications was November 1, 2002, thereby restricting the response time to only 2
days. Ms. Conway was the only applicant and was hired on November 7, 2002.
Mr. Conway admitted to Auditor General staff that he was aware the District’s
Governing Board first declined to hire his wife because of conflict-of-interest
concerns and that he did not inform the Board that his wife would be receiving the
district money sent to CAVIAT. Mr. Conway also acknowledged in an e-mail that he
arranged employment through CAVIAT because it would be “palatable to certain
State of Arizona
page 8
Mr. Conway admitted to participating in
a conflict of interest.
Mr. Conway created a position for his
wife at another school district and
funded her salary solely with district
monies.
individuals.” In fact, Mr. Conway withheld and concealed material facts from the
Board by failing to inform them of his wife’s employment, the services she was to
provide, the time frame for these services, and her proposed salary.
After Ms. Conway was hired, Mr. Conway continued to participate in this fraudulent
arrangement. Unbeknownst to the Board, Mr. Conway directed district staff to
reimburse CAVIAT for his wife’s salary and related expenses in June
2003 for $29,764 and in June 2004 for $48,340. However, citing the
lack of a contract with CAVIAT, the business manager expressed
concerns regarding the expenditures’ propriety and refused to
process the June 2004 payment without further documentation. Mr.
Conway then circumvented district disbursement procedures,
completing the purchase request and order forms himself and
ordering another employee to process and issue the $48,340 payment.
In September 2004, after receiving complaints alleging financial misconduct, the
District’s Board launched an investigation into Mr. Conway’s misconduct. Two
months later, Ms. Conway submitted her resignation to CAVIAT. As of August 2008,
the CAVIAT position had been terminated, and the duties it previously performed are
being performed by district employees.
District officials initially refused to reimburse CAVIAT for Ms. Conway’s fiscal year
2005 salary and related expenses, citing the lack of a contract. However, in June
2005, the District settled with CAVIAT and agreed to pay $9,416, half the sum of Ms.
Conway’s reported salary and related expenses.
Unauthorized payments for Mr. Conway
As discussed in Finding 1, Mr. Conway unlawfully used his position with the District
to personally issue two payments to himself, thereby obtaining more than $17,000 in
illegal performance pay and bonuses. By participating in transactions in which he
had a substantial interest and failing to disclose that interest to the District’s
Governing Board, Mr. Conway violated conflict-of-interest laws.
Office of the Auditor General
page 9
After the business manager refused to
process the June 2004 payment, Mr.
Conway circumvented procedures and
issued the payment to his wife.
State of Arizona
page 10
Former Superintendent altered public documents
In September 2004, after the District hired an independent investigator, Mr. Conway
attempted to conceal his misconduct and embezzlement schemes by altering
records within the Governing Board meeting files. For the files associated with ten
separate Governing Board meetings between February 2002 and July 2004, Mr.
Conway added misleading documentation that falsely represented
that the records were reviewed and discussed by board members at
a public meeting. The extraneous documents were noticeable
because the additions were out of order and loose within the board
file, irrelevant to the meeting and agenda, or on specialty paper that
was not used for board documents. By manipulating the contents of
these files, Mr. Conway attempted to make it appear as though he had
made full disclosure to the Governing Board and thereby obtained their
approval for his activities. Mr. Conway admitted to the Governing Board that he had
inappropriately added information and memoranda to the Governing Board meeting
files.
page11
Office of the Auditor General
FINDING 3
Mr. Conway added documents to board
meeting files in order to make it appear
as though he informed the Board about
payments made to himself, his wife,
and to other district employees.
page 12
State of Arizona
District officials should take action to help prevent
similar occurrences
Public officials with oversight authority have a responsibility to manage the
administration of money and property entrusted to them. Likewise, public officials
should ensure that sufficient internal controls are designed and implemented to
protect those assets. Nevertheless, a system of internal controls will not succeed
when those in a position to oversee those operations are in fact perpetrating unlawful
behavior and concealing their misconduct, such as Mr. Conway did in overriding and
circumventing the District’s internal controls. However, there are actions the
Governing Board could have taken and can take now that could help deter future
misconduct such as Mr. Conway’s.
First, the District’s Governing Board can improve its monitoring of directives it gives
to district staff. For example, in December 2002, the Board directed Mr. Conway to
revise the 2001-02 performance plan, to develop a preliminary model of the plan, and
to present this proposal for its review and approval. Although this
revised plan for the 2002-03 school year should have been presented
to the Board, it was not, and the Board failed to independently look
into the matter or to probe Mr. Conway for answers. The Board should
also require district staff to provide more thorough analysis and
greater detail regarding programs brought to the Board for approval.
For example, the administrative performance evaluation procedures
approved by the Board in 2001 were not clear. The procedures did not
state how and when staff should be evaluated, how these awards should be
documented, and whether the employee’s individual awarded amounts should be
brought before the Board for final approval. In fact, for the ten administrators who
received performance pay in the first year, each and every administrator received the
maximum allotted amount of $4,000, with no supporting documentation to justify the
award.
Second, the District’s Governing Board should take greater care when approving
contracts and intergovernmental agreements to ensure that each agreement
page13
Office of the Auditor General
FINDING 4
The Board failed to independently look
into the performance pay issues or to
probe Mr. Conway for answers.
specifically details the purpose, methods to achieve the purpose, duration, manner
of financing, justification for expenditures or receipts, and any other necessary
matters as outlined in the Uniform System of Financial Records. Because the Board
approved Mr. Conway’s vague request to direct monies to CAVIAT, to a certain extent
it facilitated Mr. Conway’s deception. Additionally, the District should ensure that
copies of all agreements are provided in a timely manner to the appropriate district
office staff.
Finally, the Board needs to create an environment in which employees feel confident
in reporting misconduct without the fear of retribution. This may include
creating a strong whistle-blower system, as well as reinforcing the Board’s
support for, and insistence on adherence to, strong control procedures.
Because of Mr. Conway’s position, he successfully instructed business office
staff to process unauthorized payments to himself, his wife, and other district
employees. Even though some of these employees viewed Mr. Conway’s
actions as improper, they feared retribution for reporting his misconduct.
page14
State of Arizona
The Board needs to create an
environment in which employees feel
confident in reporting misconduct.
To help ensure the proper use of public monies, the District should ensure that the
following actions are taken:
1. The District’s Governing Board should institute policies and procedures that
effectively oversee management and address the risk of management override.
For example, the Board should strengthen its understanding of the business
and control climates, brainstorm potential fraud risks within the District, cultivate
a strong whistle-blower system, and consistently maintain an appropriate level
of independence and skepticism. In doing so, the Board increases the likelihood
of preventing, deterring, and detecting fraudulent activity.
2. The District must ensure expenditures are processed based on proper
documentation. Such documentation includes, but is not limited to, properly
approved purchase requisitions, purchase orders, vendor invoices,
intergovernmental agreements, and board-approved contracts and meeting
minutes.
3. The District’s Governing Board should require the District Superintendent to
develop for board approval written administrative performance evaluation
procedures and make them available to all administrative employees. These
procedures should be updated annually and clearly indicate the requirements
and payment levels for earning performance pay.
4. The District’s Governing Board should take greater care when approving
contracts and intergovernmental agreements to ensure that each agreement
specifically details the purpose, methods to achieve the purpose, duration,
manner of financing, justification for expenditures or receipts, and any other
necessary matters as outlined in the Uniform System of Financial Records.
Additionally, the District should ensure that copies of agreements are provided
in a timely manner to the appropriate district office staff.
5. The District’s Governing Board should establish periodic monitoring procedures
to ensure that all policies and procedures prescribed by the Uniform System of
Financial Records are being followed.
page15
Office of the Auditor General
Recommendations
State of Arizona
page 16
On December 17, 2008, Mr. Conway pled guilty to a total of two felony counts related
to theft and attempted misuse of public monies. As part of the accepted plea
agreement with the Attorney General’s Office, Mr. Conway agreed to pay $84,981 in
restitution to the Page Unified School District.
page17
Office of the Auditor General
Conclusion