As reported in the March 20 edition of the Seminole Producer, State Auditor and Inspector Cindy Byrd on Thursday released an audit of Varnum Public Schools that revealed multiple issues, including check tampering.

Thursday afternoon, after our press deadline, Varnum Superintendent Jon Hadley emailed a statement to the Producer, which appears below.

“This week, Oklahoma State Auditor and Inspector Cindy Byrd released the results of a financial audit of Varnum Public Schools, related to concerns that were first reported in 2021. The audit identifies issues involving the actions of two former employees and describes conduct that does not meet the standards expected of stewards of public funds. In 2022, the Board of Education addressed these concerns to the Seminole County Sheriff’s Office and the District Attorney’s Office, followed up by hiring a private auditing firm to perform a forensic audit, and subsequently began the steps of involving the State Auditor’s Office, both at the expense of the district. Current school officials cooperated fully with the auditors’ investigations.

This report has been submitted to the District Attorney. The actions described in the audit occurred approximately five years ago. Since that time, the district’s administration, leadership team, as well as the composition and structure of the board, have changed significantly. Furthermore, the district has incorporated improved and strengthened financial procedures, internal controls, oversight, and transparency to ensure strong safeguards are in place, so that public funds and resources are managed responsibly and carefully in the best interest of our district, students, and taxpayers. Our patrons and community entrust the district’s leadership with public resources to educate our students, support our programs, and to effectively operate our schools, and we take that responsibility seriously.

Careful financial stewardship, transparency and accountability are essential to maintaining the trust our community places in its public schools. Today, our focus remains on the future — with our improved management, controls, and oversight, our district’s recent and current audits reflect sound management and practice, and our district’s financial situation is strong. We are dedicated to supporting our students and ensuring that the resources entrusted to our schools make a meaningful difference for the children and families we serve.”

Following are highlights from Byrd’s report.

Check Tampering According to the audit, Stacey Benard, the District’s former encumbrance clerk and the superintendent secretary, issued fraudulent payments to herself totaling $9,621.80. Benard changed vendor payee information in the accounting software to print checks payable to herself. She then endorsed and deposited these checks into her personal bank account. Benard stated during an interview that she routinely signed former Superintendent David Brewer’s name on checks.

Undocumented Purchases Between June 2018 and June 2020, the District spent $92,593.48 on Amazon purchases. Supporting documentation could not be provided for 27 of 61 Amazon purchases reviewed. The District made 77 purchases with the Activity Fund debit card in FY 2021. All 77 transactions, totaling $8,300.94, lacked supporting documentation. The District wrote a total of 206 checks from both the Activity Fund and the General Fund. 150 of those payments (73%) did not have adequate supporting documentation or contained conflicting records.

Missing Cash Deposits Collections from school fundraisers, entrance fees, and concession sales, were required to be deposited into the Activity Fund. In FY 2021, bank deposits were $9,581.55 less than the cash collected. The actual loss may be greater. The review was limited to deposits for which supporting documentation was available. Numerous records were missing.

Restitution Unpaid Benard signed a resignation agreement dated August 24, 2021. The agreement stated that the District believed Benard had embezzled money from its accounts. Benard acknowledged misconduct and agreed to repay $50,000. No one could explain how the $50,000 figure was determined. Benard made two $500 payments before discontinuing further payments on the advice of her legal counsel.

“We had a particularly bad actor in this case, but the ultimate responsibility falls on the members of the school board,” said Byrd. “One of the fundamental duties of a school board is to keep an eye on the money. This includes overseeing the integrity of deposits and withdrawals from the district’s accounts. Blind trust is the opposite of oversight.”

This is the 227th audit released by Byrd this fiscal year. The full audit report is posted on the Oklahoma State Auditor & Inspector’s official website.