Independent assessment finds gaps in Petersburg schools’ financial controls; leadership outlines multi‑year fix plan

An independent financial controls assessment released at the Petersburg City Public Schools board meeting found gaps across the division’s budgeting, procurement, payroll and human-resources controls and recommended a sequence of formal policies, staffing changes and electronic systems to reduce risk.

The assessment, conducted by Alvarez & Marsal and summarized by consultant Michael Potter, was commissioned in July 2024 at the request of the district’s interim leadership and the Virginia Department of Education. Potter told the board the engagement focused on “document[ing] and understand[ing] the control environment and to test adherence to the internal controls,” not on auditing the district’s financial statements or investigating personnel.

The report — posted to the district’s BoardDocs and described by Potter as an executive summary plus a 55-page detailed assessment — identified recurring problems: limited formal policies or manuals for key processes; uneven adherence where policies existed; a lack of long-term financial planning and forecasting tools; insufficient documentation and training for process owners; and turnover and gaps in finance leadership that reduced oversight.

“Planning, compliance and accountability are not really possible if you don’t have exact targets that you’re tracking,” Potter said, summarizing why the team recommended both procedural fixes and technical improvements. He called for updated procurement and accounts-payable manuals, an improved expense policy with approval thresholds, electronic expense tracking, a payroll validation process, and stronger position-control and federal‑funds compliance functions.

Superintendent Yolanda Brown framed the assessment as part of a broader effort she began when she became acting superintendent on July 9. “Building on Our Progress and Setting Up for Success,” Brown said, listing hiring and curriculum work the district has completed while leaders address finance. Brown and interim finance staff said some immediate steps are already underway, including a cash‑flow forecast for the 2024–25 year, enhanced manual review of Title reimbursements, and a temporary accounting leader in place while the district recruits permanent staff.

Interim finance chief John Wallingford told the board the district will form a steering committee and several subcommittees to translate the consultants’ recommendations into workstreams. Wallingford said the work could take “anywhere between a year [to] three years to accomplish” but emphasized that the leadership team has already begun priority tasks such as developing a cash‑flow forecast and instituting a manual position-control sign‑off process.

Potter and district staff said the highest‑priority next steps are: (1) produce a rolling cash‑flow forecast that incorporates vacancies and burn rates, (2) formalize and centralize federal-funds controls and reimbursement review, (3) hire a permanent chief financial officer and accounting leader, and (4) implement a position-control process that requires HR and finance sign‑off before hiring. Potter advised pursuing system modernization and policies in parallel: enterprise financial systems can help, but they must be driven by agreed procedures and clear role assignments.

Board members pressed for timelines and training plans. Potter said much of the specific staff training can be delivered in weeks or months and must be reinforced by written procedures and practice; Wallingford and Brown said some training already has been scheduled and that recruitment of permanent finance staff is a top priority.

District leaders emphasized that the assessment was intended to be forward‑looking and to produce a roadmap for controls and operations, not a retrospective audit. Alvarez & Marsal’s materials remain on the district website, and Potter said his firm will continue to support implementation work on specific tasks such as the cash‑flow template and position-control procedures.

The board did not vote on the assessment itself during the presentation; members thanked the consultants and staff and asked for status updates as implementation milestones are reached.