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Audit: Weak accounting let Mississippi misspend federal cash

Auditors say accounting weaknesses at the Mississippi Department of Education allowed an employee to improperly divert millions of federal dollars, causing the state to slash after-school grants to repay the misspent money.

Bill Early, a partner with accounting firm Clifton Larsen Allen, presented the results to the Board of Education Thursday, but copies of the twoaudits weren’t released until Friday. They flagged nine problems, including five classified as material weaknesses, the most severe kind of finding.

State Superintendent Carey Wright said the department is reorganizing its accounting department and fixing the problems. The department fired three employees after problems with the after-school money were discovered.

“We have taken swift action to remedy all deficiencies, including making key personnel changes to ensure strong oversight and to raise the level of accountability,” Wright said in a statement .

She said new Chief Operations Officer Felicia Gavin , who was executive director of the Department of Finance and Administration under Gov. Ronnie Musgrove, as well as a casino executive, has a strong accounting background.

The audit found that a department official improperly diverted $11.5 million from federal anti-poverty grants into the separate federal after-school grant program after the state awarded more grants than it had money for. Two other employees didn’t stop the diversion. Clifton Larsen Allen said higher-level approval should be required for overriding accounting rules, and also said the diversion wouldn’t have lasted four months if the department balanced its books each month.

The snafu had severe consequences for Mississippi students served by the program. The department had originally planned to fund after-school programs for 29,000 students in 67 school districts this year, but had to cut that amount to 7,000 students in 28 districts.

The audits also found that the department wasn’t routinely making sure its books agreed with the state’s computerized accounting system, meaning the department misstated account balances by tens of millions of dollars. Early told board members that corrections had to be made as part of the audit process, including one where $35 million in federal money was deposited into the wrong account.

Wright wrote in a letter to state Auditor Stacey Pickering that her department has worked with state finance officials to improve how it records grants and handles invoices.

Despite the problems, Early told board members auditors found no indication that employees stole money.

“We did not note any cash misappropriated by an employee of the Mississippi Department of Education,” he said.

The financial reviews also criticize the department for running months behind in issuing financial documents, and for not storing electronic copies of documents, meaning some were lost following a July 2015 fire that caused smoke and water damage at its Jackson headquarters.

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