September 24, 2020

Auditors Not Being Credited with “Better Letter Than Never” in Discovery of Pennsylvania School District’s $15 Million Error

In yesterday's Footnotes, we mentioned that the Reading, Pennsylvania School District sorta overstated the amount of a subsidy that it received from the Keystone State. An unfortunate error that will likely result in cutbacks for another struggling school district. 

Because the children are being wronged here, there is plenty of outrage and blamestorming going around. And since we're dealing with financial reporting, the first line of attack in the firestorm of blame is the external auditors. Take it away Reading school district CFO:
Chief Financial Officer Robert Peters explained that the mistake occurred at the end of the 2010-11 school year when a district employee erroneously recorded an extra payment from the state. The mistake made it appear that the district received nearly $16 million more than it actually did, he said.
 
That fall, the error slipped past auditors from Barbacane, Thornton and Co., who were doing the district's annual audit.
 
"It should have been caught by the auditors," Peters said.
Okay, sure. This resulted in the district submitting misstated financial statements to the Department of Education, who missed the error, and a special task force assigned to review the district's finances didn't find it either. But the auditors! Come on, BT & Co.! Where were you?
[The mistake] finally came to light last fall after Barbacane, Thornton and Co. performed an audit on the 2011-12 school year.
Not event the slightest bit of credit or appreciation. Rough.
 

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