DOVER — State Auditor R. Thomas Wagner Jr. released a report Tuesday on the Academy of Dover highlighting fiscal mismanagement that went undetected for years.
According to the report, which is posted at auditor.delaware.gov, several factors combined to create “a perfect storm” of poor internal controls.
The report said former school principal Noel Rodriguez used school funds to purchase personal items adding up to $127,866 and an extra $129,458 in purchases that couldn’t be validated for either personal or school use over a three-year period beginning in July 2011.
He paid legal fees for lawsuits alleging sexual harassment; reimbursed employees for purchases in violation of state policy, including alcohol; and rewarded teachers with stipends and bonuses without adequate justification, board approval or equitable distribution, the report said.
Mr. Rodriguez created a control environment with an unapproachable, “no questions asked” tone at the top, the report said. He also knew the weaknesses in the state’s oversight efforts and used them to his advantage.
Oversight bodies passed on transactions that were in conflict with state policy simply because local funds were used in payment, the report said.
And until August 2014, when the Office of Auditor Accounts received a tip on its fraud hot line, nothing drew attention to the problems at the school. Subsequently, the Department of Education and the school’s board of directors contacted the office about irregularities at the school.
According to the report, the school board told the Office of Auditor Accounts that Mr. Rodriguez had misused school funds in September 2014. Mr. Rodriguez had left the school that month at the board’s request.
Looking from July 1, 2011, through Oct. 21, 2014, The office inspected credit-card activities incurred on all school accounts, as well as direct reimbursements to employees, payroll activity and various other school expenditures.
In those three years, “neither (Academy of Dover) personnel or the Board had knowledge of its complete failure to evaluate risk and develop an internal controls environment that would help protect the school against fraud, waste, and abuse,” a press release from the Office of Auditor Accounts said.
“This left a culture that put one person in almost complete control of all aspects of the School’s operations and a culture where no one dare report such matters including the firm contracted to do the financial audit.”
According to the report, the board was not adequately trained or involved in day-to-day operations either.
In part, the report blamed “the hands-off approach” taken by oversight parties — including the board of directors, the Department of Education, independent auditors, Innovative Schools, the Charter School Accountability Committee and the Division of Accounting.
The Academy of Dover, which opened in 2003, serves students in kindergarten through fifth grade.
It receives state and local funds each year through the budget bill and from local school districts based on an annual student count.
The report said “significant work” is needed to improve its operations.
“A clear and consistent message is needed from all state agencies about fiscal accountability over all charter school funds including local funds,” it said.