Forensic audit finds control gaps but validates most payments to Merit Academy

Brandon Walbrand, the engagement leader for the district's forensic accounting team, told the Woodland Park School District RE-2 board that follow-up interviews and documentation largely explained roughly $1.4 million in invoice payments to Merit Academy but also exposed systemic internal-control problems.

Walbrand said auditors reviewed nearly all invoices paid to Merit Academy for the engagement period (July 1, 2023'June 30, 2024), inspected supporting ledgers and emails, and interviewed Merit personnel. "We reviewed 98.9% of the invoices paid from Woodland Park to Merit Academy," he said. The firm confirmed proportionate-share calculations for federal programs and ESSER-related transfers after seeing supporting evidence, though he noted the district and Merit should clarify whether federal funds will be handled by reimbursement or apportionment going forward.

The presentation also detailed control weaknesses discovered during targeted testing. Of 60 bank-account transactions tested, 28 lacked required check-request forms and three additional items lacked approval signatures; two transactions were missing support entirely. In credit-card testing, Walbrand said five transactions showed the requester also approved the purchase, contrary to district policy, and several event charges lacked participation lists to confirm business purpose. Personnel-file and payroll testing identified missing dates and signatures in some files. "We summarized 20 internal-control recommendations," he said, and noted several already had been implemented by management.

Walbrand recommended revising the agreement between the district and Merit Academy to clarify which funding streams Merit is eligible to receive (bond, federal, state, local) and whether federal funds will be paid on a reimbursement basis or via proportionate-share apportionment. He also offered operational recommendations to strengthen documentation, purchase approvals, personnel-file practices, and credit-card controls.

Board members asked for the forensic team's source materials to be included in the final report package; Walbrand said he could add the supporting emails to the final report and that the district would handle any required redactions for privacy. The board did not take a formal vote to accept the forensic report during the meeting; Walbrand said the report would be finalized once the minor wording edits and clarifications were made.

The presentation concluded with an invitation for further questions and a suggestion to add an addendum or amended contract with Merit Academy to resolve the lingering procedural issues.

The forensic presentation is the most recent step in multiple finance reviews the district has undertaken; the board directed staff to consider the auditors'recommendations and to follow up on contract language and documentation procedures.