Early indications show a splintered Scottsdale Unified School District Governing Board on whether the district should hire an internal auditor.
The Governing Board discussed the item at its Jan. 21 meeting but the discussion seemed to reveal a split with some board members in favor of one while others supported continuing the practice of hiring external auditors in certain areas. Board President Allyson Beckham was absent so there was no clear majority.
The district uses an external auditor, which is an independent, third-party that conducts testing on financial statements and whether those statements are a proper reflection, board member Jann-Michael Greenburg explained during the meeting.
He contrasted that with an internal auditor, which provides “an independent assurance that an organization’s risk management, governance and internal control processes are operating effectively.”
Mr. Greenburg presented three routes he thinks the district could take:
He conceded building a department might not be cost effective, but still insisted on someone to oversee efforts from external internal auditors and help bring forth issues.
Mr. Greenburg pointed to the 2016 fallout that saw the removal of former Superintendent Dr. Denise Birdwell for unethical behavior and former Chief Financial Officer Laura Smith with subsequent criminal charges.
He said there is no perfect way to combat rule breaking, but he believes an internal auditor will be more efficient than past practices and open up more money for education expenses.
“People make mistakes,” he said. “At best, they’re innocent mistakes. At worst, they’re intentional deviations from the law and others. But by allowing and creating a pathway for people to submit concerns to an independent party that they know will review this and is not somebody who has an interest in ensuring it is blocked or covered up is a really great way to build trust in our district.”
Superintendent Dr. John Kriekard said those 2016 events were an “anomaly” and expressed concern on the costs of hiring an overseer or developing a department.
“We always have to keep an eye on our percentage of money spent in the area of instruction as opposed to the area of administration,” he said. “And, that’s something I honestly believe, as a district, we still have some work to do to bring that into the right margin.”
Dr. Kriekard outlined what the district typically does, which is handle concerns internally through department heads and, if needed, hire a specialist. He also had a concern there wouldn’t be enough work for a department, thus necessitating auditors to work in multiple fields outside of their expertise.
Interim Chief Finance Officer Jeff Gadd expressed similar sentiments, saying he would rather see the money used for an auditing department go toward savings and use only when the district had a need for a third party.
Mr. Greenburg emphasized he had no problem with current staff, complimenting the job they do. He pointed out he knew the district still experiences challenges, citing his open meeting law complaint and the length it took to receive requested material.
The importance of an internal auditor, Mr. Greenburg believes, is to allow for a channel for whistle-blowers to express concern to the district and allow the district to fix it, doing so with someone not vested in either side of the issue.
Trust is another concern for Mr. Greenburg as he said he was at an event where there are still some feelings of mistrust within the community. Having added accountability, he said, would help improve that trust further than it has over the past year.
“I think it would go a long way to look into this,” he said. “At a minimum, someone who specializes in organizing these functions but can also deal with the investigative side of things. I know what I would want to have. I know that isn’t probably possible. I admit that but there has to be something.”
Board member Sandy Kravetz said she is in agreement with wanting a more efficient district, but couldn’t see what would change under Mr. Greenburg’s solutions. She would rather see the district continue hiring experts in particular fields as needed to do audits or tests.
“I agree with you [Mr. Greenburg], we need efficiencies,” she said. “It’s just a matter of how do we tackle this situation.”
Board Vice President Patty Beckman said she supports a solution that enhances work flow and ensures transparency. Specifically, she would want someone who would work closely with the board and superintendent to discover pinpoint problem areas and maximize work output.
If the board decides to go down the route of bringing in outside specialists, she would want to see an outline on how the board and district staff would identify areas of concern.
Mr. Greenburg agreed there were still communication oversights and reemphasized his point of wanting someone independent to handle potential issues. He also wondered what the district had done to prevent past mistakes from happening in the future.
“We haven’t done anything actually, that’s the truth,” he said. “Other than hire great people and get lucky that someone would even come work for us.”
Dr. Kriekard disagreed with Mr. Greenburg, saying when you hire diligently, those hired will bring good people with them to help establish a good culture.