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Audit report shows reckless financial practices at Bryant School District

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(KATV)-An audit report on the Bryant School District released this week shows reckless financial practices and "significant deficiencies" in financial reporting by the former budget manager. It also shows the district failed to take bids on more than $400,000 of construction work. Earlier this month, Bryant School District Superintendent Randy Rutherford was placed on administrative leave with no explanation from the district.

The Bryant School District told Channel 7 News the business manager is no longer with the district as of November and would not comment when asked if the financial audit had anything to do with Rutherford's leave.

"The Bryant School District has received the audit and are in the process of making decisions on how the issues from the report will be handled," said Devin Sherill, spokesperson for the district.

The audit report showed salaries for two employees were improperly increased by giving them credit for years of service in excess of their actual education related years of service. As a result, two employees were paid $10,218 and $4,397, more than they should have been paid, based on the District's approved salary schedules.

The report showed there is currently no policy for how years for previous employment will be credited for classified employees.

"We will be developing a procedure for employment credits for classified employees which will ensure consistency in the salary schedule," Sherill said.

The report also showed the district purchased four iPads and various office and electronic equipment and did not place these items on the District's inventory, a violation of District policy.

"The office and electronic equipment and three of the iPads were recovered from the Business Manager, who subsequently reimbursed the District for the cost of the remaining iPad," the report said.

The report also showed district management discovered in May 2013 that the business manager had opened an American Express rewards credit card in Feb. 2010 without obtaining authorization from the Superintendent or the School Board. This card was used to make approximately $1.5 million in purchases during fiscal year 2013. The District's internal investigation of purchases with this rewards card and other District credit cards revealed the iPad purchases along with odd repayments.

"The Business Manager without supervisory approval or knowledge, made an electronic transfer of $51,889 to American Express to satisfy an outstanding bill because checks for the actual payment were not received by American Express in time to satisfy the outstanding balance," the report said.

The report also detailed that in numerous instances, the District issued checks to merchants itemized on the credit statements, rather than to American Express; endorsed the checks "I/C/O (in care of) American Express and then submitted the checks as credit card payments. The District recorded these checks as payments to the merchants instead of American Express.

"The American Express credit card has been discontinued. Our previous business manager acted outside normal established procedures. He is no longer employed by the district," Sherill said.

Aside from the dealings within the budget manager's office, the report also showed the district failed to take bids on certain construction projects. State law requires a district to take bids if a purchase is over $10,000.

"We discovered one project for $388,238 for which the district did not appear to comply with the bid requirements, architect requirements and construction bond requirements."

The District did not seek bid two projects for electrical work. The total cost for the projects were $19,525 and $16,900.

Channel 7's Elicia Dover will have more tonight at 5 and 6.