Forty-three pages: $49,000.

To track down exactly what caused a fund balance shortfall that was, by some estimates, as large as $369,000, this is what the South Whidbey School District spent for audit results that didn’t quite make 50 pages.

Results of the independent audit were released Wednesday, just in advance of two South Whidbey school levy votes on Tuesday. The results of the audit are posted on the district’s Web site.

The 43-page report, penned by the Seattle auditing firm Moss Adams, offers a number of recommendations and findings related to four specific areas of the budget: the fund balance shortfall, the 2003-03 budget, oversight and reporting, and internal controls. Those recommendations didn’t come cheap: The cost of the audit works out to $1,139 per page.

There is a lot of specific detail in the report. Moss Adams reports weaknesses in the district’s accounting and reporting systems in its 2002-03 budget, and a lack of adequate business office supervision by administration and the board of education of the former business manager.

The report also suggests that the board and district administrators micro-manage the budget; at the same time, Moss Adams concluded the district employs the equivalent of 17 more full-time employees than the state funds.

On the report’s opening page, the auditors do make a clear recommendation for how the district should do its financial business in the future.

“This situation should be considered a wake-up call to the board and the superintendent to vigorously move to strengthen its financial management and day-to-day accounting practices.”

The reports further states that since problems with the district’s accounting system were recognized by the beginning of the current school year, the district has since made progress in changing its business practices.

Administration officials and school board president Helen Price-Johnson spoke in general terms about the report this week, preferring to wait until the board’s February workshop to discuss the specifics.

Price-Johnson said some of the findings in the Moss-Adams report are no longer at issue.

“I know the district office is already addressing many of the items in the report so some of the findings are no longer valid,” she said.

Since the discovery by administrative staff of the shortfall in the fund balance last summer, the district’s superintendent and new business manager say they have been working to better manage the budget.

“The administration had implemented a number of tools and systems this fall before the report came out,” said district superintendent Martin Laster. “We are making good headway on all the pieces.”

Laster said this improvements include a new year-end books balancing process and closer monitoring of the current budget.

Moss Adams auditors reported much of the responsibility for the district’s financial problems “rests clearly on the shoulders of the past business manager who freely admitted to the auditors and administration that he was in over his head.” The report found that the oversight of the business manager was lacking by the superintendent, assistant superintendent and board members.

The report found that a year-end general fund balance of $238,000 calculated by the district for 2003 was accurate. Auditors recommended the fund balance be reviewed and reconciled on a monthly basis. Last year, that balance was errantly reported by the superintendent and the school board to be greater than $700,000.

The district is credited in the audit report for taking financial responsibilities seriously. However, the auditors also pointed to this as a weakness.

“At South Whidbey Schools there has been a tendency for the board and executive management to either look at the big picture or micro-manage on a line item level,” said the report.

Accounting problems in 2002-03 occurred when entries were made into incorrect accounts and in wrong time periods, and due to incomplete reconciliations and inconsistent reports, according to Moss Adams.

Speaking to the number of staff that the district employs, the report found staff counts exceed those funded through the basic education allowance from the state. The district has 107.7 certified employees, but is funded for only 101.656. Among current classified staff, 45.606 full-time equivalent positions exist, while only 35 are funded. The district is also heavy on administration, with 8.733 full-time positions funded at a level of 8.413.

The lead auditor for Moss Adams, Tom Krippaehne, reported on the progress of the the audit during board meetings in October, November and December. He is expected to be at the February workshop to answer questions.

Price-Johnson said the purpose of the upcoming workshop is to focus on the results of the Moss Adams report and the districts annual audit by the state.

“We need to get an objective look at where we are and where we need to be,” she said.

INFO BOX

Independent audit report available

Read the Moss Adams audit report on the Web at www.sw.wednet.edu/schools. Click on “School Board Information” and “January Performance Audit 2004.” The document, in PDF format, is 43 pages long. Copies are available at the district office in Langley.