Embezzlement and Criminal Investigation at KIPP New Orleans

Story below from Times Picayune:

Danielle Dreilinger, NOLA.com | The Times-Picayune By Danielle Dreilinger, NOLA.com | The Times-Picayune

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on February 10, 2014 at 5:00 PM

An employee of New Orleans' second-largest charter school network embezzled $69,840 in the 2012-13 academic year, according to an audit released Monday. The money has been recovered, the employee was fired and a criminal investigation is underway, KIPP spokesman Jonathan Bertsch said.

Short for "Knowledge Is Power Program," KIPP New Orleans educates 3,755 students, or 8 percent of New Orleans' public school enrollment. It will open its sixth school this summer. The network received $37.4 million in public money in 2012-13, according to the audit report.

The fired employee worked in the organization's central administration office and took two checks in April 2013 from batches waiting to be sent to vendors. The second time, the employee signed on to a co-worker's computer and created the check herself.

The theft was discovered when the vendors asked why they hadn't been paid. KIPP administration reported the matter to the police, bank and insurance company. The employee admitted to the theft and was immediately fired.

Auditors said the theft could happen because the accounts payable department both created and mailed checks. Management has since changed procedures so signed checks are sent out by people who are not in the accounts payable department.

Bertsch would not name the employee, a woman, citing the criminal investigation. There was no interruption to any programs, he said. The network conducts background checks on all its hires.

"We want to spend every dollar that we can on educating our students," Bertsch said. "We're very grateful to the support and the work done by the NOPD on the theft."

Also in the audit, examiners found clerical errors involving $3,155 billed to a federal school improvement grant. In several cases, payroll expenses did not line up with an employee's salary, or the wrong percentage of employees' time was charged to the grant. A total of $414 in costs did not have the right supporting documentation.

In a written response to the state, KIPP Finance Director Renae' Montegut said there was a complete turnover in accounting staff. A new staff member submitted grant reimbursement requests without knowing an employee's salary had changed. Some of the accounting was handled by a temporary employee who has since been replaced by "an experienced grant accountant" who is being trained by the Louisiana Association of School Business Officials.

Overall, the auditors recommended that KIPP assess its staffing needs and consider hiring more employees. Bertsch said KIPP brought in consultants to conduct a policy and procedure review. Now "we're fully staffed in our finance and accounting team," he said, and "we have a lot of confidence in their ability to do this work."