Audit reveals improper spending at local charter school

The South Bronx School for International Cultures and Arts.
The South Bronx School for International Cultures and Arts.

The South Bronx Charter School for International Cultures and the Arts overpaid its principal $23,000 to supervise an after-school program she was already under contract to oversee, according to a new audit released yesterday by the City Comptroller’s office.

In addition, the audit states that $16,000 in unlimited Metrocards destined for 143 parents went unaccounted for.        

The audit alleges that the dual-language, k-5 school at 164 Bruckner Blvd. in Port Morris made about $105,000 in payments that were not properly documented, and about $31,000 in charges that were not properly authorized, between July 2012 and June 2014. In all, the the auditors red-flagged roughly 15 percent of the $876,000 in payments they reviewed.

The financial probe is the first of four charter school audits Comptroller Scott Stringer announced in October 2014. The schools were selected “based on objective criteria, including geography, size and publicly available financial data,” Stringer announced then.

The auditors questioned whether the school’s board of trustees had proper internal controls in place to ensure responsible oversight of its fiscal affairs during the two years covered by the audit.

The school “bypassed controls that require proper documentation and authorization by using a school-based account, which is intended for small purchases and emergency payments that require less documentation and approvals, instead of the main checking account,” Stringer said in a press release. However, despite the overpayments, he pointed out that the school “has generally reported its revenue and expenses accurately.”

“The South Bronx Charter School for International Cultures and the Arts must take immediate action to correct overpayments and overhaul its financial oversight,” he added.

Auditors also found that about a quarter of the $40,263 in credit card transactions they sampled had insufficient or no documentation. That included $230 for an unexplained car rental on the credit card of school principal, Evelyn Hey, along with phone bills, meals and shipping charges.

$7,129 in credit card charges had no itemized receipts, of which $6,473 were for meals, while $7,125 in travel expenses for Hey were not approved by the board for trips to Boston, Albany, and Las Vegas, the audit states.

The school, with a student body of just under 400, opened in 2014 to unite classes that had previously been housed in two separate buildings in Mott Haven that were blocks apart.

The chair of the school’s board of trustees, Pricilla Ocasio, responded to the auditors’ charges within the audit, countering that the school had been in the process of moving during the time it was conducted, so that “it is not surprising that documentation and evidence of authorization could not be located for a relatively small percentage of expenditures.”

Ocasio added that the school has since developed a new manual to document its financial policies and procedures, and that the board was “pleased that the audit found no evidence of wrongdoing or inappropriate spending.”

The Comptroller’s Office issued a series of recommendations, pushing the school to update its written policies to strengthen internal oversight, improve receipts and record-keeping and refer the principal’s after-school payments to the board for review.

“There’s no excuse for thousands of dollars to slip through the cracks, and it’s even more concerning when those funds should have gone toward the education of our schoolchildren,” Stringer said.

The school was embroiled in a financial scandal in 2009 when then-chairman of its board of trustees, Richard Izquierdo Arroyo, was charged and later convicted of embezzling $200,000 from a nonprofit group, SBCC Management Corp., that managed low-income Bronx apartment buildings. Izquierdo Arroyo’s aunt, Maria del Carmen Arroyo, who was city councilwoman at the time, had sponsored $1.5 million in capital funds in 2008 to help construct the new school building. The school later decided not to accept those funds.

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