Audit of South Hunterdon Financials finds accounting flaws

An accounting firm found South Hunterdon Regional School District financials to be sloppy and incomplete, with inadequate processes to support of financial operations and proper accounting.

This week the district posted the agenda for their next public meeting on Monday, January 27, 2025. Among the items posted were approval for a number of audit-related documents (you can see the files here). The audit covers the fiscal school year ending June, 2024.

The bad news is that in some areas, the district was flagged for being out of compliance of Generally Accepted Accounting Principles (GAAP) and/or NJ State accounting laws.

In total, the audit found two deficiencies serious enough to require a Corrective Action Plan (CAP), that the district had failed to address a previously identified issue flagged in 2023, and indicated that in some areas the district did not capture enough data for the audit to provide a comprehensive opinion. The Annual Comprehensive Financial Report stated that "The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and the New Jersey OMB’s Circulars 15-08 and which are described in the accompanying Schedule of Findings and Questioned Costs as items 2024-001 and 2024-002. Our opinion on each major federal and state program is not modified with respect to these matters".

The CAP document (below) indicated that the first violation that "In some instances, the District did not obtain proper approval signatures and receiving signatures certifying goods or services", and recommended "The business office will put procedures in effect to address the issue and ensure all signatures are acquired to certify receipt of goods".

The prior year 2023 violation also involved inadequate processes involving approval signatures and receiving signatures, showing that this is an ongoing accounting issue with the district.

shrsd-CAP-2024.pdf

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The second violation involved accuracy of the books and records of the district. The audit notes, "The District's records were not accurate in some instances" and indicated that "The District must make continuous effort to ensure that the records and processes for all recordkeeping be maintained and performed in a complete and accurate manner", which is far more serious.

This begs the question - how can the public and tax payers trust that our money is being spent wisely by the district, when even the auditing firms can't unravel the mess?

All deficiencies were attributed to the district Business Administrator J. Andrew Harris. According to his LinkedIn profile, while Mr. Harris has a Masters Degree in Educational Leadership and General Administration, he has little relevant work experience involving finance and accounting. Prior to ascending to the role of Business Administrator, Mr. Harris was a Supervisor of STEM and District Projects and Supervisor of Mathematics at South Hunterdon, and before that an Instructional Mathematics Coach for the Ewing Township School District for almost five years.

Such audit results should not be entirely surprising given that the district is juggling a large number of capital projects simultaneously, including the 2021 $33.4 million referendum construction and other projects. But Mr. Harris' dearth of experience may be telling in this sort of demanding time period for South Hunterdon.

Mr. Harris' contract as Business Administrator was renewed in 2024, including a modest raise.