—– By: Ann Costantino —–
At the conclusion of a short presentation on Tuesday night by Columbia-based audit firm, UHY Advisors, on its final draft of Phase One of a widely anticipated procurement audit, board members sparred for over an hour on what even the auditor said was a highly unusual request to release the first draft of a report he had begun work on in June 2018.
“Had I known that a draft of this would potentially get released to the public – which has never occurred in my professional career – I would have to consider why?,” auditor, John Reagan said.
Reagan said that had he released the draft version of the audit when he was asked to do so, it would have “established an expectation as to what the report would eventually say…. I would have considered it something like that, an inappropriate attempt to influence the ultimate issuance of the report and the contents within (it),” Reagan said. “Again, I have never had that happen….ever.”
In September 2017, within days of news that the district’s former Superintendent S. Dallas Dance had been under criminal investigation prior to resigning months before, interim Superintendent Verletta White announced her desire for a review of the system’s procurement practices.
Over one month later, when the New York Times and Baltimore Sun published articles critical of employee travel and vendor relationships, calls for the audit intensified.
The Baltimore Sun reported that Dance had traveled extensively on Baltimore County’s dime. And the New York Times called into question the district’s relationships with vendors, stating “Close ties between school districts and their tech vendors can be seen nationwide. But the scale of Baltimore County schools’ digital conversion makes the district a case study in industry relationships.”
Dance was later convicted on four perjury charges for lying on his financial disclosure forms, which included undisclosed payments he received from two school system vendors..
Disagreement about the scope, time frame and whether or not the school system would control its own audit ensued, with both local and state lawmakers weighing in on how and if an audit should occur.
In May 2018, Baltimore County’s former school board approved an over $400,000 contract with UHY to conduct the first phase of a multi-phase audit of the school system’s procurement practices and 18 contracts. One and a half months after being seated, a brand new partially elected school board was presented with the draft audit that some board members, lawmakers and even media agencies pressured the school board to release.
But UHY auditor, Reagan, said the request was unusual and unprecedented. Reagan said that multiple board members had asked him during the months leading up to the final version of the audit if he had been inappropriately influenced at any stage. He said that he had not, but that had he been asked to release the draft audit, that it “… certainly …. (would have) constituted something like that.” Reagan said, “It has never happened to me in my career… I don’t even know how to react…” he said.
Board members traded motions and references to Roberts Rules of Order – a manual that provides guidance on board procedures, conduct and motions – to make their cases. Some Baltimore County Public Schools’ employees sighed, gasped and rolled their eyes, many visually supportive of the release of the draft audit.
Then the school board voted to appeal Chairwoman Kathleen Causey’s decision not to vote on releasing the draft report during the meeting. Causey wanted instead to bring the idea back to a committee to decide. But the board voted to appeal Causey’s decision. The motion passed. The board then voted to release the draft audit.
“I have never in my career have a draft document enter the public domain. I do not think it is appropriate,” Reagan said.
Interim Superintendent Verletta White – who had been in support of releasing the draft audit in January – thanked Reagan and expressed assurance that there is no scandal.
Earlier in the meeting when asked, Reagan mentioned the destruction of thousands of financial disclosure statements as part of a timeline of events that occurred during the audit.
He also recommended changes needed in the system’s pre-procurement process and that retention schedules for some documents – that are needed to show those processes – should be extended. One employee, he said, also split up charges on a credit card to make it appear as though spending was at an approved level, while another employee had unchecked travel allowances for the past six years.
But White gave the audit a clean bill of health. “There is no scandal here,” White said. “Our procurement practices are sound… based on these recommendations… we have tweaks to make… It’s why I called for the audit,” she said. “…to get us back to who we are… We are team BCPS,” White said.
Reagan said his firm reviewed thousands of documents and purchase orders that supported the execution of contracts. He stated that late filings and amendments to financial disclosure statements were a “finding” in the audit, meaning they were not compatible with school policy or the law.
Reagan explained the process as he went through during the audit, defining “findings” and “observations.” He said his firm found 12 items he classified as observations, or things that need improvement. And he thanked school staff for working with him on getting the information that he needed.
“We worked closely with a small number of BCPS (staff members),” he said. “It is normal for us to identify matters, to add things to the report,” he said. “We asked for BCPS to … provide additional documentation.”
Reagan emphasized several times that it was normal for his clients to go back and forth during the draft audit process. “This give-and-take is a normal part of process,” Reagan said. And he said that the previous board established the precedent to do so in June 2018, at its audit “kick off” meeting
Reagan also said, “Please note that while comments were provided … the ultimate editorial control of this report was retained by me.”
The draft and final audit reports are scheduled to be released on Wednesday. If the board approves the next phase – Phase Two – the audit would be priced separately, and would include an examination of approximately 180 contracts worth $1 million each or more.
This story will be updated.