Auditor says district employee misappropriated $587,000 - KWWL - Eastern Iowa Breaking News, Weather, Closings

Auditor says district employee misappropriated $587,000

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CEDAR RAPIDS (AP) -- The Iowa state auditor says in a report that an employee of the Cedar Rapids Community School District misappropriated more than $587,000.

The state auditor's report released Friday found a "significant portion" of the money was used to replace cash that employee Jamie May withdrew from the district's bank account. The district requested the special investigation.

May was fired on Sept. 10, 2009, and she died on Nov. 1, 2009. The auditor didn't specify how she died.

The report identified more than $465,000 in cash deposits to May's personal bank accounts between May 2003 and August 2009. Charges were filed against May, but dropped after she died.

Superintendent Dr. Dave Benson delivered a statement to the media on Friday. Below is a written version of the district's statement. Watch KWWL.com and the KWWL News at 5 and 6 for more reaction from the district.

FULL WRITTEN STATEMENT FROM CRCSD ON STATE AUDITOR REPORT:

The State Auditor's Office released its report April 2, 2010, regarding an embezzlement of funds from the Cedar Rapids Community School District (http://auditor.iowa.gov/specials/index.html).

The report found that former District employee, Jamie May, embezzled $587,784 between 2003 and 2009. The District was alerted to the embezzlement by the Cedar Rapids Police Department in August 2009. Ms. May was later charged and her employment with the District was terminated. Ms. May has since passed away. The Linn County Attorney dropped charges at that time, pursuant to normal procedures. According to the State Auditor, Ms. May was the only employee involved in this theft.

Fiscal integrity is a District priority and we are very concerned that this situation has occurred. We are committed to public accountability and improved District operations. District administration realizes the significance of this theft and its influence on the trust the community places in the school district. We look forward to the opportunity to restore the community's trust and confidence.

To that end, we took immediate steps. Within 30 days of learning of the embezzlement, the District conducted an internal review of Accounting Department functions, worked with bank officials to implement better banking controls between the District and depository bank, developed an Accounting Department restructuring plan that better segregated duties, and added the positions of Internal Auditor and Accounting Supervisor to further safeguard District finances.

The District continues to review internal procedures. Administration will be presenting the information to the Board of Education for their input and further direction.

The District also utilizes a Financial Integrity Hotline, launched in 2007, to provide for anonymous submission of information regarding financial concerns. A District Audit Committee has been in place since the 1997-1998 school year and meets quarterly to review District financial matters.

The financial loss to the District is fully insured, less a $10,000 deductible that the District will attempt to recover from Ms. May's estate. Funds received from the insurance will be restored to the appropriate budget accounts. Additionally, District administration will recommend to the Board of Education that the insurance amount credited to the District's General Fund be used for property tax relief for the fiscal year 2011 property tax rate.

We appreciate the State Auditor's acknowledgement of District staff in cooperating and assisting with the investigation. Recommendations from the State Auditor's Office will continue to guide District efforts to further improve internal controls. The community can be assured that we will become even more vigilant in protecting District financial assets.

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