By Alberto Gilman
The Newburgh Board of Education reviewed the results of a forensic audit during a special meeting Thursday, July 17, where consultants confirmed no fraud was found but highlighted areas for improvement across district operations.
The audit, conducted by the firm PKF O’Connor Davies, examined the district’s finances from 2023 to 2024. The firm’s partners, Keith Balla and Melissa Szot, presented their findings and recommendations during the public session. Their full report is available on the district’s website.
“For the past several years, while I’ve been on the board, the idea of a forensic audit on the district has been circulated,” said Board President John Doerre. “On Feb. 5 of this year, we issued an RFP [request for proposals] to do a forensic audit, and the results of that we’re going to discuss in public tonight.”
Doerre said he wanted the information shared before the board’s next regular meeting on Aug. 12 to dispel rumors and provide transparency about district operations.
According to Investopedia, a forensic audit involves a detailed examination of financial records to uncover evidence that may be used in legal proceedings. While the Newburgh audit found no fraud, Balla noted it did identify “weaknesses in reporting, controls and budgeting,” and an underutilization of grant funding intended to support students.
The audit process began with the February 5 RFP and concluded with a report issued June 30. Fieldwork was conducted between March 28 and May 31. Over 400 hours were logged by six firm professionals, who conducted 35 interviews and reviewed more than 500 documents, including bids, contracts, financial reports and grant records.
PKF’s analysis included data testing, payroll access review, budget variance analysis and expenditure tracking. While the initial budget for the audit was $316,000, the project was completed for $175,000.
Szot presented six key areas of concern:
1 Budget Process Gaps – More than 210 budget transfers totaling $56.1 million were made in 2023–2024, but many lacked clear documentation. Staff training and follow-up on budget requests were also inconsistent.
2 Fund Balance Mismanagement – The district’s general fund balance exceeded the state-mandated 4% cap, and no financial projections were provided to the board. Emergency reserves lacked transparency.
3 Delayed or Missing Reports – Treasurer’s reports were delayed 11 out of 12 months. Claims auditor reports lacked required detail, and grant status updates were not provided to the board.
4 Capital Project Oversight Lapses – No facilities committee meetings were held during 2023–2024. Other issues included poor communication with construction managers, missing invoice documentation, lack of climate control for data closets, and incomplete reporting of ongoing projects.
5 Procurement and System Access Control Failures – Some purchases exceeded bidding thresholds without proper documentation. Internal procurement controls were inconsistently followed. Contractors and non-payroll staff had unrestricted access to pay rate information. PKF recommended regular reviews of user access permissions and tighter control of pay rate changes.
6 Lack of Financial Transparency – PKF emphasized the need for better communication across departments and with the public. Recommendations included improved grant oversight and regular policy reviews to minimize financial risk.
Board members posed questions following the presentation and discussed steps being taken to address the concerns raised. While acknowledging the report’s critical findings, trustees reiterated that the audit revealed no evidence of fraud.
“We didn’t find any fraud within any of the areas that we looked at,” Balla said. “None of the individuals we interviewed identified themselves as whistle blowers or pointed to specific wrongdoing.”
The board is expected to continue addressing the audit’s recommendations at future meetings.