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Missing items in Shelby County stem from outdated, unchecked procedures, superintendent says

Shelby County school officials said Tuesday that outdated and unchecked procedures led to thousands of items going missing, including cars, laptops and air conditioners. Those items were flagged in the district’s first external audit of assets in 30 years, released yesterday.

Superintendent Dorsey Hopson II and board members Kevin Woods, Chris Caldwell and Billy Orgel met with members of the press Tuesday to discuss the audit’s findings. The full audit with the list of missing items hasn’t been released to the public.

Hopson said that the missing items were likely the result of a combination of factors.

“This is an audit of 30 years in two school systems,” he said. “Some is human error, some is theft, some of it is poor record keeping.”

Board member Orgel said that blaming missing items on the merger was “an excuse.” The missing items are due to “taking 1975 procedures and using them in 2013,” he said.

Woods said the audit was a “necessary first step” in moving the district toward more reliable asset management. He said the district did not intend to defend its practices, but to improve them. “This puts us on notice, and confirms some things we may have been concerned about. It gives us an opportunity to hold ourselves to higher standards.”

“We have to do better,” said superintendent Hopson.

The audit, conducted by ProBar Associates based on a list of assets provided by the district, found some 10,200 items were missing from legacy Shelby County schools’ 56,290 items and around 44,011 items missing from legacy Memphis City Schools’ 189,000 items. That’s 18 percent of the former suburban school districts’ items, and 23 percent of the city schools’.

The items missing from the legacy Memphis schools were worth approximately $33 million. Those missing from the legacy Shelby County schools were worth close to $15 million. The valuation of the items by the auditing agency did not account for depreciation over time.

Internal audits in legacy Memphis City Schools had turned up occasional irregularities, which were dealt with on a case-by-case basis.

While the results released today alarmed school officials and board members, the initial findings looked worse, Hopson said. It initially appeared that close to 40 percent of items from the legacy city schools and close to half of the suburban district’s items were missing, he said. School officials re-counted objects and found some of those items.

The audit was conducted between June and October 2013 so that the new municipal districts and the merged Shelby County district had an accurate representation of their assets. This audit did not account for items within charter schools or schools run by the state’s Achievement School District.

The audit’s executive summary says some items may have been improperly disposed of, and others may have been lost over the course of school closings and the merger. Other items, including some cars used for drivers’ education programs, had been improperly tagged or otherwise misidentified.

The district plans to do what superintendent Hopson described as a “deep dive” into the 17,000-page audit to identify any “hot spots” or patterns where objects went missing. School officials will be asked to look again for missing items. The district’s auditor Melvin Burgess will also analyze its procedures and provide its plan for dealing with the inventory within 30 days.

Hopson said terminations are possible if someone had willfully taken items.

Hopson said he plans to reach out to AutoZone, FedEx, and other corporations in the area to see if they can help the district modernize its systems for tracking items.

The superintendent also said that the central office would plan to take on responsibility for improving its systems, so inventorying did not fall solely on the shoulders of principals. The district plans to investigate other school systems’ best practices for conducting audits, but external audits do not come cheap.

The audit cost the district close to $1 million. “The last media coverage of this focused on why we spent $1 million on counting things we possessed,” said board member Kevin Woods. “Now you see exactly why we spent a million to count assets.”

Memphis-area schools are not the only place where audits have turned up irregularities. An audit of Philadelphia schools last spring found boxes of equipment sitting unused in shuttered school buildings.

SCS Executive Summary of audit

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