Audit turns up financial problems

Monday, April 14, 2003 | 11:12 a.m.

An audit of the Nevada Public Education Foundation turned up bounced checks, improper reimbursements and other fiscal irregularities, according to a report submitted Saturday to the state Board of Education.

Gary Waters, president of the board, which oversees the nonprofit that distributes money donated to the state, said he was "deeply disturbed" by the audit's findings, which included a $10,000 check that was supposed to go to a Sparks charter school, but instead was altered and deposited into a different account.

Waters said one of the more troubling instances involves the embattled Nevada Leadership Academy, a charter school backed by state Sen. Maurice Washington, R-Sparks.

A $10,000 check from the foundation to the charter school was altered by hand and deposited into an account belonging to Nevada Leadership Inc., the audit found. The only signer on the account at the time was the pastor of the Center of Hope Church, which houses the charter school, the audit said. Washington is pastor of the church.

State statute prohibits charter schools from being "supported by or otherwise affiliated with any religion or religious organization or institution."

Washington said this morning he remembers a $10,000 check coming from the foundation to Nevada Leadership Inc., a nonprofit maintained by the charter school. Washington said he was the signer on the account because he served on the school's board of directors.

The charter school maintained the second account for grant monies, Washington said. The $10,000 was spent on school technology improvements, he said.

The audit recommends the foundation investigate whether the $10,000 was received by the charter school and verify that the money was used according to grant requirements. A grant expenditure report, due to the foundation from the charter school Sept. 30, 2002, was never received, according to the audit.

The Washoe County School District revoked the academy's charter Dec. 3, citing various financial irregularities, including failure to make payroll and bounced checks. A Washoe County judge ruled in February the school board hadn't followed proper procedure in revoking the charter and allowed the academy to continue operating.

The audit found several instances in which the state foundation did not follow generally accepted accounting practices in handling about $23,000 last year, including:

The board planned to wait for a response from the foundation before taking action.