Fountain Hills Unified School District (FHUSD) had over 50 deficiencies on its most recent audit, with Governing Board president Jill Reed saying it is the “worst audit I’ve ever seen.” The district was dropped by its auditing firm and, according to Reed, FHUSD’s previous finance director, Catherine King, resigned after the Board discussed last year’s audit for the first time.

On Wednesday, Aug. 16, the FHUSD Governing Board discussed audit findings and corrective action plans for the year ended June 30, 2022. The Board reviewed each line item on the audit with financial staff, and district employees implemented the final corrective processes by Tuesday, Aug. 22.

Representatives from the Arizona Auditor General will perform an on-site review of FHUSD’s internal controls within two to three months.

“All of you are aware and have read the May 24 letter from the Arizona Auditor General informing you that the district is not in compliance with the uniform system of financial records for Arizona school districts,” resident Matthew Corrigan said in a public comment on Aug. 16. “How would I grade the Board? Sadly, it would not be a high score. If it was a school report, or report card, it would be well under a C.”

A number of the deficiencies from last fiscal year have already been resolved. Several fixes were made by turning files and forms digital, enabling staff to be able to search for documents quickly with key words. Going digital helped in many ways, and FHUSD Director of Finance Alicia Mena also changed online calendars to send the financial department email reminders ahead of important deadlines that were missed in the past.

Mena has been with the district since December 2022, and has worked on correcting past mistakes while also preparing the budget for the 2023-24 school year. She told Board members that she wasn’t sure why some past practices occurred as they did, but Mena has closed excess accounts and reviews bank account reconciliation monthly since taking over.

The finance director is supposed to review monthly cash reconciliations from the county, but that was a deficiency last year. FHUSD had an imbalance in year-end records because of the lack of consistent reconciliation, but Mena plans to perform self-audits throughout the year on top of her other duties.

Mena has been assisted by Tyler Moore, a financial consultant from True Professionals, LLC. Moore is also the Chief Financial Officer for the Higley Unified School District, and he was brought on to consult by Superintendent Dr. Cain Jagodzinski in August 2022. Jagodzinski’s start date was the day after the auditing period, July 1, 2022, so everything from the audit was inherited from previous administrations.

Moore told Board member Libby Settle in response to a question that Fountain Hills had not corrected every deficiency from the 2021 audit and some issues carried over to 2022. Settle followed up by asking the Board to revisit the audit at some point to ensure compliance, and Mena said she’ll look into starting that process. Moore also said the finance team can come up with ways to provide indicators on the corrective action progress as well as revisit this audit during the next audit review.

Mena has set up training sessions for staff to avoid making similar mistakes in the future. Moore and Mena have played catch-up for months to get FHUSD back on track, and Moore said the 2021-22 audit does not reflect the current state of the district.

FHUSD saw a high rate of retention this past spring, but the district had lots of staff turnover from 2020 to 2022. Jagodzinski hopes to maintain continuity within his financial team and throughout the district and said the moral of the story is to get the right people in the right spots and keep them there.