Hannibal Audit Finds District Finances In Good Shape

An independent audit of the way Hannibal Central Schools handles money finds no major problems.

“I’m very, very happy,” said Superintendent of Schools Mike DiFabio of the audit by the certified public accounting firm D’Arcangelo & Co.

(Read the executive summary of the audit here: Hannibal financial audit executive summary)

The district hit bottom with the discovery that a department head was spending district money to buy personal items. Then-bus garage mechanic Jon McCoy bought at least $300,000 in high performance racing auto parts using district money from 2001 to 2004. McCoy was sentenced to prison in 2006 and ordered to repay $300,000 for grand larceny and falsifying business records.

At the time, then-Superintendent Joseph Caruana was also serving as business manager.

A state audit of the district’s financial operations and oversight from 2002 to 2005, released in late 2007, found numerous problems with the district’s accounting and financial forecasting. The audit did not mention the McCoy incident, though it did address adding checks and balances on payments. The district, in its response, did not reference the McCoy incident either, but noted that it was glad that the audit found no “wrongdoing” on the district’s part.

“The last five years, Hannibal Central Schools have been slowly but surely building our financial status,” DiFabio said.

The annual audit found three significant problems a year ago. Employees paid through federal grant funds needed proper certification for the time they worked; the treasurer, accounts payable clerk and payroll clerk needed more separation in the types of tasks they handle; and purchase orders were not being used for orders in the school lunch program.

This year’s audit found that those problems had been resolved.

In addition, the district also fixed three minor problems from last year’s audit, involving timecards, attendance records for salaried employees and a mileage policy.

Only a very minor issue, called a material weakness, remains from the year before. It involves cash receipts for extraclassroom accounts.

DiFabio is also pleased that another weakness found in the state’s 2007 audit is no longer a problem. The district has built up its fund balance. The lack of a fund balance hurt the district in the 2005-2006 school year, when taxes rose about 35%. The fund balance had been drained by two years of operating losses.

Now, with a fund balance of about 18%, DiFabio feels better about handling the two years of very difficult budgets that lie ahead. “If someone was planning years ago for a bad situation, we couldn’t have done a better job,” he said.