Forensic audit completed
Results are being withheld while police and DA investigate
PHOENIXVILLE » The longawaited forensic audit of the Phoenixville School District’s finances has finally been completed.
However, the results are not being made public because the matter has been referred to the Phoenixville Police Department and the Chester County District Attorney’s office for possible criminal investigation.
The investigation will be led by Phoenixville Detective Sergeant Patrick Mark, according to a release issued Monday by the district.
Mark is working closely with Assistant District Attorney Myles Mattson, according to the district’s release.
The investigation was described as “potential misappropriation of funds by a former PASD employee.”
“At the request of the investigating authorities, the audit will not be released to the public until we receive clearance from the police and the district attorney,” the release stated.
“The forensic audit will be released to the public once the district is advised to do so by the police and the DA,” according to the school district statement.
It was last September that the district first announced the discovery of “discrepancies” in its finances in the wake of the resignation of former business manager Chris Gehris.
The district learned of potential misappropriations last August.
A Philadelphia forensic audit firm named EisnerAmper was retained in late October, and their work has been ongoing.
According to their agreement with the district, posted on the district web site, the firm’s hourly rate ranges from $175 to $415 per hour. That agreement, dated Oct. 29, 2019, estimates the cost of the forensic audit to not exceed $50,000.
Although the district pledged “transparency” in the matter, accusations of a lack of it have arisen at several school board meetings in recent months.
Last month, at an unusual Sunday school board meeting, the last held in person before all Pennsylvania school buildings were shut down, the acceptance of the regular annual audit became a flashpoint for questions about the forensic audit.
Documents related to the forensic audit, including a full timeline, but not the results, have been posted on the “School Board” tab of PASD.com, the school district’s web page.
A timeline posted there indicates the matter began on Monday, Aug. 19 when an employee notified Superintendent Alan Fegley of concerns with one of the district’s “enterprise accounts.”
That day, Fegley confirmed with Phoenixville Federal that Gehris and one other employee had made cash withdrawals.
The internal investigation began the next day.
In that investigation, Gehris told Fegley he had instructed the employee to withdraw cash, and he had put it in a safe. But the cash was not found in the safe.
Gehris was then put on administrative leave, with pay and access to systems was blocked while the investigation continued.
Three hours after being placed on administrative leave, Gehris tried to access a district account at BB&T bank, and Fegley instructed them to lock all accounts, according to the timeline.
The administration recommended dismissal of Gehris in an executive session with the school board. He resigned on Sept. 4, 2019.
The district’s timeline also indicates that the police and district attorney’s office were informed of the problems in 2019, but recommended the district undertake the forensic audit first.
“Both Phoenixville Police and DA’s office confirm they will wait for the forensic audit and move forward after it is received,” according to the timeline.
Also of interest was the notification sent to Gehris that he would not be receiving “payout for vacation and personal days as he owes the district $13,000 to date.”
At Monday night’s school board meeting, held online, Fegley said the firm conducting the annual audit discussed the forensic audit with EisnerAmper in February.
Information from the forensic audit was also shared with the district’s bond counsel and rating agencies, said Fegley.
The matter is of some importance given the purchase last November of 29.5 acres off Hares Hill Road in East Pikeland for $3.5 million, where a new school building is anticipated. That new building will undoubtedly require a major borrowing to finance construction.
Interim Business Manager Richard Fazio reported to the board Monday night that the district’s bond rating had been “double A two with a negative outlook.”
However, Fazio said he and Fegley made two presentations to Moody’s rating service, and, as a result, the rating has been upgraded to “double A two with a stable outlook.”
The change, Fazio said, will save taxpayers between $160,000 and $400,000 “of reduced interest costs” when the district does issue a bond offering.