District works to improve accounting procedures

Kalispell Public Schools has implemented improved accounting procedures to prevent would-be thieves from stealing from student activities funds.

The district re-evaluated its money-handling policies after a former employee, Cindy Upwall, confessed to embezzling $17,500 over a period of several years. Most of that came from cash funds, district officials said.

"In hindsight, I think we created some opportunities that someone took advantage of, unfortunately," District Clerk Todd Watkins told the school board at a work session Tuesday night. "And I think we've got some pretty good solutions to hinder that potential."

Upwall was the Flathead High School activities bookkeeper for six years and held the same position at Glacier High School when it opened last fall.

She admitted to embezzling the money after an internal central audit and independent audit revealed several thousand dollars was missing from student activities funds. Upwall, who resigned when she was told she'd be placed on paid leave during the audits, confessed to taking $17,500.

The district's attorney advised officials not to pursue charges against Upwall and to focus instead on getting the money back.

She agreed to make full restitution by July 1. To date, she has repaid $14,071.

In December, the Kalispell Police Department launched a criminal investigation into the embezzlement case. The investigation's purpose is to establish whether Upwall did, in fact, steal student activities funds and to independently verify the amount she confessed to taking.

Investigators are still collecting bank records and hope to forward information to the Flathead County Attorney's Office at the beginning of next week, according to the police department.

As part of its accounting re-evaluation process, Kalispell Public Schools revised some policies and compiled those along with state-mandated procedures into a single, updated manual.

"We've actually followed this for many years," Watkins said, "but I think putting it in the … book is probably long overdue."

The post-embezzlement investigation revealed that the district's biggest weaknesses were in gate receipts and concessions, he said, both of which deal almost exclusively with cash.

To address these issues, the district has made "more user-friendly" collection reports for ticket-takers and concessions workers to fill out.

There are always two people at each gate and at least two at concession stands, both of whom must sign the reports at the end of the event. The volunteers record the money in the cash box at the beginning of the event and the amount at the end. They also keep track of the number of tickets sold to adults and students, which allows them to go back and check their math.

Once both volunteers have signed the sheet, they place it in a bank bag with the cash and checks. The bag immediately is locked in a safe at the school.

On the first school day after the event, the activities bookkeeper at the school verifies that the money in the bag matches the number on the collection report. Grizzly Security will take the money to the bank later that day, Watkins said.

In the past, he said, one person would fill out the reports and count the money.

"The segregation of duties … was not there," he said.

Since the new procedures have been implemented, concessions profits have increased, he added.

"We can't put our hands on anything specific," he said. "But what we can see is an improved bottom line in our concessions."

To further address the need for segregated duties, Watkins recommended creating an activities accountant position in the central office. The accounting clerk, who would report to Watkins, would make sure each school's activities bookkeeper was following protocol and would periodically audit the schools' cash-management procedures.

Activities bookkeepers now have a sort of daily audit, Glacier High School Activities Director Mark Dennehy said.

Previously, activities funds accounts were filed away. Now an activities notebook is available for daily perusal in the activities office, he said.

"We've worked very hard from our standpoint to track and compile and observe very carefully," he said.

It's a lot of money to keep track of, Dennehy said. On any given day, $3,000 to $4,000 might go through the activities office. If an athletic event or other activity is going on, those figures might easily range from to $10,000 to $12,000.

"We handle a tremendous amount of cash in a normal school day," Watkins said. "Frankly, we don't have enough people to make sure those internal controls were adequately separated and one person didn't have control."

That is a statewide problem, he added. It isn't new, either; as an auditor in the 1980s, Watkins helped three districts recover from embezzlements, all of which involved cash.

School districts across the state have contacted Watkins about the embezzlement, wanting to know how to better protect themselves.

"At the AA level, the overwhelming response from those in the same position is, wow, we better take a look at our system," he said.

He recently e-mailed all the Class AA schools and stressed the importance of internal controls and having a solid system of accountability. That, he said, is what Kalispell Public Schools has tried to reinforce in the wake of the embezzlement.

Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com