Mid-Central Educational Cooperative

Transcription

1 Mid-Central Educational Cooperative Presented by: Eric Hansen, CFE Forensics & Valuation

2 Background Qualifications Eide Bailly Top 25 CPA Firm in the Nation Tax, Audit & Assurance, Technology Consulting, Forensic & Valuation Services 28 Offices in 12 States / Headquartered in Fargo, ND Eric Hansen, CFE (Certified Fraud Examiner) Senior Associate Forensic Accounting located in Sioux Falls, SD Over 7 Years Experience Conducting Financial Investigations Previously South Dakota Law Enforcement Officer Specializing in Tax Fraud Cases

3 Forensic Accounting Examination Scope Account for and Examine the Expenditures Submitted by Mid-Central Educational Cooperative (MCEC) for Reimbursement Through GEAR UP Account for GEAR UP Reimbursements Paid Directly to MCEC by the South Dakota Department of Education (SD DOE) Identify Potential Questionable Activity, if any, Related to MCEC and GEAR UP

4 Forensic Accounting Defined Forensic Accounting utilizes accounting, auditing and investigative skills to conduct an examination into a company s financial statements, thus providing an accounting analysis that is suitable for court. The purpose is to attempt to piece together or reconstruct a past event or events using financial information.

5 Forensic Examination vs. Traditional Audit Forensic Examination Nonrecurring Specific Scope Designed to Resolve Specific Allegations Whether an Issue Exists, Who is Responsible, Quantify Loss Forensic Accounting Techniques Used Traditional Audit Recurring General Scope Independent Opinion Whether the Financial Statements are Presented Fairly (Not Materially Misstated) Audit Techniques

6 Overview of Procedures Completed Onsite Visit Interviewed Key Personnel Gathered Records Examined Thousands of Records Primarily Consisting of Bank Records, Credit Card Statements, Monthly Claim Forms, Vouchers and Other Supporting Documentation Over 350 Hours Inputted

7 Procedures Performed

8 GEAR UP Reimbursements Paid to MCEC MCEC Incurred Expenditure, Then Reimbursed Examined Records to Account for Monies Paid to MCEC MCEC Internal Receipts SD BFM E-Stubs SD DOE Payment Records MCEC Bank Records No Discrepancies Noted in Records

9 GEAR UP Reimbursements Workpaper 1

10 GEAR UP Donation(s) MCEC Received Donation, Deposited into DIAL Corporation Bank Account, Check Written from DIAL to Recipient Examined Records Involving GEAR UP Donation(s) Donation Award Letter Bank and Accounting Records $30, Donation

11 GEAR UP Expenditures Process/Timeframe MCEC Incurred Expenditure Directly or Indirectly MCEC Paid Expenditure MCEC Submitted Expenditure for Reimbursement GEAR UP Grant s Project Period September 26, 2013 through September 25, 2014 September 26, 2014 through September 25, 2015 October 2013 through August 2015

12 GEAR UP Expenditures Records Examined Records to Account for Expenditures MCEC Paid and Submitted for Reimbursement Identify Any Potential Questionable Activity Involving Expenditures Records Examined Monthly Claim Forms, Credit Card Statements, Vouchers, Invoices, Payroll Records and Other Supporting Documentation

13 GEAR UP Expenditures Findings 2,278 Expenditures Totaling $6,018, ,276 Expenditures had Supporting Documentation

14 GEAR UP Expenditures Top 20 Vendors

15 GEAR UP Expenditures AIII

16 GEAR UP Expenditures SD School of Mines & Technology

17 GEAR UP Expenditures Rick Melmer

18 GEAR UP Expenditures Findings Identified 175 Expenditures as Potentially Being Problematic due to the Supporting Documentation Separated into 2 Categories Expenditures with Issues Regarding the Supporting Documentation Expenditures Containing Discrepancies Between the Invoice Amount and the Amount MCEC Submitted for Reimbursement Compliance-Related Issues

19 GEAR UP Expenditures Findings Expenditures with Supporting Documentation Issues: 142 Expenditures Totaling $93, Examining for: Incomplete Documentation Questionable Activity

20 GEAR UP Expenditures Findings Workpaper 2.2

21 GEAR UP Expenditures Findings Expenditures MCEC Over Paid Compared to What was Submitted for State Reimbursement: 32 Expenditures Totaling $15, Examining for: Amount MCEC was Billed Amount MCEC Paid Amount MCEC Submitted for Reimbursement

22 GEAR UP Expenditures Findings Workpaper 2.3

23 GEAR UP Expenditures Findings Expenditure MCEC was Over Paid: 1 Check Involving $ in State Reimbursement MCEC Paid a School for Services, Submitted and Received Reimbursement for Expenditure, but Eventually Voided Check to School for Documentation Issues

24 GEAR UP Expenditures Analysis Expenditure Analysis of MCEC s Internal Accounting Records for GEAR UP-Coded Expenditures to GEAR UP Expenditures Submitted to the SD DOE for Reimbursement $186, Difference Per MCEC s Review, Discrepancies Were Found to be from Timing Differences and Account Coding Issues

25 Other Forensic Analysis Conducted Voided Checks / State Reimbursement Analysis Voided Check Verification Analysis Check Register to Bank Statement Analysis State Reimbursed Expenditures / Cancelled Check Analysis Gap Analysis

26 Conclusion Examination Areas Examined areas consisting of: GEAR UP reimbursements paid to MCEC GEAR UP expenditures paid out by MCEC listed for reimbursement GEAR UP expenditures coded to MCEC s internal accounting records GEAR UP expenditures reflected with MCEC s banking records; and Monies donated to MCEC designated for GEAR UP

27 Conclusion Findings GEAR UP Reimbursements Accounted For All GEAR UP Expenditures Accounted For All GEAR UP Expenditures Findings 1.8% Potentially Contained Issues

28 Thank You Presented by: Eric Hansen, CFE Forensics & Valuation