September1,2017

GeorgeFarah
TheLawOfficesofGuerraandFarahPLLC
DearMr.Farah:
Wewereengagedtoconductforensicservicesrelatedtocertainallegationsofimproperand/or
fraudulentconductonthepartofDonnaIndependentSchoolDistrict(theDistrict),employees
(formerandcurrent),contractors,vendorsandothers.Theperiodexaminedwas2013through
the present. We identified a number of situations indicating improprieties which we have
investigated.Thefollowingisourreportontheabovereferencedissue.
ManyofthebelowdescribedeventswereauthorizedbythepreviousBoard(Boardexistingprior
totheNovember2016election).
OverviewofProceduresPerformed
Weusedfreeforminterviewtechniquesanddocumentreviewtoensureourunderstandingof
the District and its administrative practices. When conducting free form interviews we had
certainquestionsandtopicstocoverduringtheinterview.However,alargepartoftheinterview
wasfocusedonprobingintoinformationprovidedbytheinterviewsubject,eithervoluntarilyor
inresponsetoourdirectquestions.
Weinvestigatedsignificantitemsidentifiedinthecourseofourinterviewsanddocumentreview.
This portion of our work included activities such as analysis of 98,911 emails across 14,472
mailboxes,311,097purchaseorders,18duplicatevendors,1,090TEAMSlogins,over300posted
policiesandoperationaldocuments,and6,741journalentries.
Duringthefinalportionofourinvestigationweperformedtargetedinterviewswithkeyprocess
managementownerstoconfirmthevalidityofourfindings.Thefinalportionoftheinvestigation
includedadditionaldocumentreview,research,andultimatelytheaggregationofourfindingsas
describedinthisreport.
Overthecourseofourinvestigationweconductedover50freeformandtargetedinterviews.
EnvironmentOverview
Thecontrolenvironmentisacriticalportionoftheinternalcontrolstructureofanyorganization.
Thiscanbethoughtofasthestructurethatsupportsthetoneatthetop.Itiscriticalthatthe
Districtmaintainaneffectivesystemofinternalcontrols.However,thosecontrolscaneasilybe
renderedineffectualbyanineffectiveorinappropriatetoneatthetop.
Management override is a term used to describe any situation where an employee or Board
MemberinstructsanotheremployeetoignoretheDistrictspoliciesorstandardpracticesand
procedures.

DistrictCulture
During our interviews, our document review, and followup we identified the following key
pervasivecharacteristicsoftheDistrictsculture:

Fear of Retaliation: District employees have a deep seated fear that any report of
potential wrongdoing will result in retaliation. Employees were reluctant to be seen
talkingtous.Employeeswereoftenreluctanttorespondtoourrequestforaninterview.
Asaresultweconductedthemajorityofourinterviewsinthetechnologywingsothat
employeescouldarriveanddepartwithoutbeingseenbyadministration.Someinterview
subjectsaskedtobeinterviewedafterhoursatlocationsnotassociatedwiththeDistrict.
Employeeswereoftentearfulduringinterviewsandwouldopenlydescribetheirfearof
losingtheirjobsasaresultofwhattheytoldus.

Employeesinformusthatfearofretaliationhasexistedformanyyears.ThecurrentBoard
hasinheritedthiscultureandshouldbeawareitexists.

Malaise Regarding Wrongdoing in the District:Many District employees expressed the
beliefthatnothingwillchangeintheDistrict.Weweretoldrepeatedlythattheemployees
didnotbelievethenewBoardwouldbeanydifferentthantheoldBoard.

Highly Active Rumor Mill: The rumor mill is highly active in the District. As with most
rumormillsitissometimesaccurateandsometimesinaccurate.Theinaccuraterumors
areasdisruptiveastheaccuraterumors,sometimesmoreso.Rumormillsarefueledby
anactualorperceivedlackoftransparencyonthepartofadministrationortheBoardas
wellasbythefirsttwoculturalcharacteristicsdescribedabove.

ManagementOverride:EmployeesoftenreportedthattheywilldowhatevertheBoard
ortheSuperintendenttellsthemtodoregardlessofstandingpoliciesorprocedures.This
stemsfromthefirsttwocharacteristicsmentionedabove.
RepairingtheDistrictscultureandcreatinganatmosphereoftrustwilltaketime.
StructureofthisReport
Asaresultoftheculturalcharacteristicsidentifiedabovewehaveorganizedthisreporttofollow
theDistrictsadministrativeorganizationchartwithsectionsrelatedtotheSuperintendentand
certainofhisdirectreports.

Section1.Superintendent
Background
FernandoCastillo(CastilloortheSuperintendent)hasbeenemployedbytheDistrictsince
the19861987schoolyear.ImmediatelypriortobeingnamedDistrictSuperintendent,Castillo
servedasDeputySuperintendent(January21,2015June29,2016),ChiefAcademicOfficer(July
21,2014January20,2015)andAssistantSuperintendent(20092014).1
SuperintendentQualificationandDutiesRegardingFiscalManagementoftheDistrict
BJA(LOCAL), Update 79, issued November 7, 2006 Superintendent Qualification and Duties
statesthatthesuperintendentshalldemonstrateeffectiveplanningandmanagementofDistrict
administration, finances, operations, and personnel. Specifically with regard to fiscal
managementBJA(LOCAL)statestheSuperintendentshalldothefollowing:
2.e.Overseeabudgetdevelopmentprocessthatresultsinrecommendationsbasedon
Districtpriorities,availableresources,andanticipatedchangestoDistrictfinances.
2. f. Oversee budget implementation to ensure appropriate expenditure of budgeted
funds,toprovideforclearandtimelybudgetreports,andtomonitorforeffectivenessof
theprocess.
2. g. Ensure that District investment strategies, risk management activities, and
purchasingpracticesaresound,costeffective,andconsistentwithDistrictpolicyandlaw.
2.h.Maintainasystemofinternalcontrolstodeterandmonitorforfraudorfinancial
improprietyintheDistrict.
BJA(LOCAL)statestheSuperintendentmaydelegateresponsibilitiestootheremployeesofthe
DistrictbutshallremainaccountabletotheBoardfortheperformanceofallduties,delegatedor
otherwise.2
OnJuly1,2015CastillonotifiedMaricelaValdez(Valdez)thatshewasbeingreassignedfrom
Director of Testing/Evaluation to Chief Financial Officer (CFO). The Superintendent did not
reviewtheDistrictsjobdescriptionforthepositionofCFOpriortomakingthereassignmentand
was not aware that the job description requires the CFO to have a CPA certificate. The
Superintendentwasalsounawareofotherrequiredandpreferredqualificationslistedonthe
CFOjobdescription.
UponinquiryCastillostatedthatwhenselectingValdezforCFOheconsideredherexperience
with HEB Grocery (HEB) as a key factor in selecting her for the CFO position. Valdezs job
applicationshowsapproximately10yearsofexperienceasaservicemanagerwithHEB.Valdezs

1
SeeSuperintendentExhibit01.
2
SeeSuperintendentExhibit02.

experienceasaservicemanagerwithHEBisnotthetypeofexperiencenecessarytoprepareher
forthepositionofDistrictCFO.
TheSuperintendentdelegatedhisdutiesforfiscalmanagementtoanemployeethatdidnotmeet
the minimum qualifications for the position and did not have the necessary skills, education,
training,andexperiencetoholdtheposition.3
ExcessiveNumberofDirectReports
ThemostrecentDistrictAdministrativeorganizationchartindicatesthattheSuperintendenthas
12directdownlinereports.4UponourinquirytheSuperintendentindicatedthattheportionof
theorganizationchartrelatedtoprogramssuchasBilingualEducation,SpecialEducation,etc.is
inaccurate.CastillostatedthatthoseindividualsalsoreporttotheAcademicOfficers.
Duringourinterviewswelearnedthatthedirectorsofthoseprogramsbelievetheirreporting
responsibilities align with the organization chart. This leads to confusion and a high risk of
important issues such as monitoring the use of public funds being neglected. As we often
encounteredinourinterviewsDistrictemployeestendtorejectresponsibilitiesforjobfunctions
andlimittheirworktothefunctionsthatwereperformedinthepastortowhichtheyhaveaccess
onTEAMS.5
ManagementRepresentationLetterstoOrozco
The Superintendent was asked to sign letters to the Districts former auditor, Luis C Orozco
(Orozco)inJanuary2017regardingtheDistrictsfinancialstatementsfortheyearendedAugust
31,20166andagaininJanuary20167regardingtheDistrictsfinancialstatementsfortheyear
endedAugust31,2015.TheSuperintendentacknowledgedthathesignedthelettersrequested
byOrozco.
Eachoftheseletterscontainsmorethan50representationsbyCastillotoOrozco.Forpurposes
of illustration we are addressing only four of representations; however, each of the
representationsareimportant.
Thefirstfourrepresentationsintheletterare:
1) Wehavefulfilledourresponsibilities,assetoutinthetermsoftheauditengagementletter
datedMay31,2016includingourresponsibilityforthepreparationandfairpresentationof
the financial statements in accordance with U.S. GAAP and for preparation of the
supplementaryinformationinaccordancewiththeapplicablecriteria.

3
SeeSection2ofthisreportformoreinformationregardingtheDistrictsChiefFinancialOfficer.
4
SeeSuperintendentExhibit03.
5
SeediscussionofSecurityRolesinSection2ofthisreport.
6
SeeSuperintendentExhibit04.
7
SeeSuperintendentExhibit05.

2) ThefinancialstatementsreferredtoabovearefairlypresentedinconformitywithU.S.GAAP
and include all properly classified funds and other financial information of the primary
governmentandallcomponentunitsrequiredbygenerallyacceptedaccountingprinciplesto
beincludedinthefinancialreportingentity.
3) We acknowledge our responsibility for the design, implementation, and maintenance of
internalcontrolrelevanttothepreparationandfairpresentationoffinancialstatementsthat
arefreefrommaterialmisstatement,whetherduetofraudorerror.
4) We acknowledge our responsibility for the design, implementation, and maintenance of
internalcontroltopreventanddetectfraud.
WeaskedSuperintendentCastilloabouttheselettersandheacknowledgedthathedoesnot
have any accounting training and does not have an understanding of U.S. GAAP. The
Superintendentshouldnothavesignedthelettertotheexternalauditorunlesshewascertain
theDistrictCFOhadthenecessaryskills,education,training,andexperience.8
Further, by signing the letters Castillo acknowledged the Districts responsibility for design,
implementation and maintenance of a systemof internal controls. Castillo does not have the
skills, education, training, or experience necessary for him to make these representations to
Orozco.NeitherdoestheCFOchosenbyCastillo,MaricelaValdez.9
OrozcoAdvisoryComments
AtthecompletionoftheauditoftheDistrictsfinancialstatementsfortheyearendingAugust
31,2015OrozcosentadvisorycommentstotheBoardofTrustees.Theseadvisorycomments
addressed (1) untimely reconciliations of the General Fixed Asset Group of Accounts, (2)
paymentsmadeforpurchaseswithoutproperpurchaseorderrequisition(afterthefactpurchase
orders)and(3)acontractapprovalwithouttheproperbiddingprocess.10
AttheconclusionoftheauditofthefinancialstatementsfortheyearendingAugust31,2016
Orozco informed Castillo that he has not received a Corrective Action Plan for the items
mentionedintheprioryearletterofadvisorycomments.11
TheareaspointedoutbyOrozcoareimportantandshouldhavebeenaddressedpromptlyupon
Castillos receipt of the letter. Since the CFO was on administrative leave when the
SuperintendentreceivedtheletterfromOrozcoheshouldhavedirectedsomeoneintheBusiness
OfficetopromptlyprepareaCorrectiveActionPlan.TheabsenceofaCorrectiveActionPlan
demonstrates either a lack of concern for or a lack of understanding on the part of Castillo
regardingtheimportanceoftheDistrictsinternalcontrolsoverfinancialreporting.

8
SeeSection2ofthisreportformoreinformationontheDistrictsChiefFinancialOfficer.
9
Ibid.
10
SeeSuperintendentExhibit06.
11
SeeSuperintendentExhibit07.

Hotline
TheDistrictoffersananonymousreportinghotlinethroughacontractwithLighthouseServices
(Lighthouse).ThestatedpurposeofthehotlineistoassisttheDistrictwithidentificationof
improper activity. Lighthouse keeps a record of incoming hotline reports and notifies the
Districtsdesignees.PriortosubmittingtheinformationtotheDistrictLighthouseremovesany
informationthatmightrevealtheidentityoftheindividualmakingtheanonymousreport.
The Districts current designees are Superintendent Castillo, the CFO and the assistant
superintendent of Human Resources, Jose J. Villanueva (Villanueva). Castillo acknowledged
thathedoesnotprovidetheBoardwithinformationregardingtheanonymousreports.
Thevalueofananonymoushotlinecannotbeoveremphasized.Inits2016ReporttotheNations
onOccupationalFraudandAbuse(2016ReporttotheNations)theAssociationforCertified
FraudExaminers(ACFE)reportedthatin28%ofreportedfraudcasesinorganizationswithout
a hotline the fraud was initially detected because of a tip from a whistleblower. However, in
organizationswithhotlines47%ofreportedfraudcaseswereinitiallydetectedbecauseofatip
fromawhistleblower.
However,thehotlinemustbeproperlyimplementedinordertoachievethebenefitsitcanoffer.
TheDistrictdisplaysalinktoLighthouseonthehomepageofitswebsite.Thelinkisinconspicuous
anddoesnotincludeadequateinformationtoprovideDistrictemployeesorDonnacitizenswith
anunderstandingofthepurposeofthehotlineaswellasthepotentialpenaltiesforfalseclaims.12
Hotline services usually provide a phone number for hotline reports as well as a webbased
reportingmechanism.WewerenotabletolocateapublishedphonenumberfortheDistricts
anonymoushotline.
WerecommendtheDistricttakeactivestepstoinformDistrictemployeesandDonnacitizens
abouttheexistenceoftheanonymoushotline.
The current hotline reporting structure is fundamentally flawed. An obvious concern is what
wouldhappentoareportmaderegardingCastillo,Valdez, orVillanueva.TheSuperintendent
informedusthattheDistrictdoesnottrackhotlinereportsortheresolutionofthosereports.He
alsoinformedusthattheBoardisnotadvisedregardingreportsmadetothehotline.Underthe
current structure there is no assurance that anonymous reports are being appropriately
investigated.
TheDistrictshouldconsiderestablishingapolicyregardingthehotline.Thepolicyshouldaddress
whoistaskedwithdeterminingwhichreportsrequireinvestigation,howanyinvestigationsare
to be handled, and how the investigations are to be shared with the Board. Additionally, the
Districtshouldconsiderestablishingapolicyofnonretaliation.Werecommendincludinggeneral

12
SeeSuperintendentExhibit08.

counselandaBoardmemberasDistrictdesigneestoreceivereportsformLighthousetoensure
thatstepstakenfollowDistrictpolicyandareappropriatelymonitored.
ApoorlyhandledhotlinecaneasilyperpetuateproblemscurrentlyexistingwithintheDistrict.As
mentionedearlierinthisreport,thecurrentcultureintheDistrictleansheavilytowardfearof
retaliation for reporting potential wrongdoing combined with a malaise resulting from
employeesbeliefsthatreportsofwrongdoingwillnotbeaddressed.
WeaskedCastilloandVillanuevaindividuallyaboutthehotline.Eachindependentlyprovidedas
their first response anecdotal information about an employee they believe to be abusing the
hotline.Itispossiblethisisinfacttrueanditisanunfortunatecostofhavingananonymous
hotline.However,theactionsofCastilloandVillanuevainresponsetothisperceivedabusecould
completelyunderminethevaluethatcanbeachievedfromhavingahotline.
Both Castillo and Villanueva volunteered that they attempted to identify the employee they
believetobeabusingthesystem.Recallthatthishotlineissupposedtobeanonymous.Instead
ofrespectingtheprocess,CastilloandVillanuevajointlyaskedthetechnologydepartmenttotry
toidentifythepersonsubmittingthereports.WhenthisfailedCastilloandVillanuevareached
outtothePoliceDepartmenttorequestassistanceinidentifyingtheemployee.Thisattemptalso
failed.ActionstakenbyCastilloandVillanuevatoferretouttheidentityoftheanonymoustipster
areinappropriate.
TheotherpervasivecharacteristicoftheDistrictscultureistheefficiencyoftherumormill.If
informationleaksthattheSuperintendentandtheAssistantSuperintendentofHumanResources
aretryingtodeterminetheidentityofananonymoustipstertheefficacyofthehotlinewillbe
greatlydiminished.Suchactionsperpetuatetheperceptionthatmanagementretaliatesagainst
whistleblowersandmayalsoviolatetheTexasWhistleblowerAct.
RecordsManagementOfficer
The Superintendent has designated Patricia Ramirez (Ramirez) as the Districts Records
ManagementOfficer.WetouredtheRecordsManagementOfficeandmetwithRamirez.After
learningthatRamirezreportstoHumanResourceswealsometwithVillanuevatodiscussthe
Districtsrecordsmanagementpractices.
BothVillanuevaandRamirezindicatethatRamirezsresponsibilitiesforrecordsbeginswhenthe
recordsarriveattheRecordsManagementOffice.Recordsstoredintherecordsmanagement
officeareprimarilystudentrecordsandrecordsfromotherdepartmentswhentheyrunoutof
storagespace.
Ramirezshowedustherecordsmanagementoffice.Theofficeiswellmaintainedandtherecords
appearorganized.Ramirezhasinstitutedprocedurestolabelrecordsandimproveidentification
ofrecordsinstorage.Villanuevastatedthathehadnotvisitedtherecordsmanagementoffice.

Therecordsmanagementofficeshowssignsofroofleakswhichcoulddamagethepaperrecords.
Additionally,paperrecordsarehighlysusceptibletolossfromfire.AccordingtoRamirezsomeof
therecordshavebeenscannedbuttheflashdriveswiththescannedfilesareheldintherecords
managementoffice.Ifafiredestroyedthepaperrecordsitwouldlikelydestroytheflashdrives
aswell.
Business Office records are stored in the business office with paper records from prior years
storedintheattic.Theretentionpoliciesfollowedbythebusinessofficearetostorerecordsuntil
theyrunoutofroomandthensendtherecordstotherecordsmanagementoffice.Welearned
thatoneyearofprocurementfileswerescannedandbackeduptoaflashdrive.However,the
flashdriveisstoredinthebusinessofficeaswell.Ifafiredestroyedthepaperrecordsitwould
likelydestroytheflashdrive.
Weinquiredwiththetechnologydepartmentastotheretentionpoliciesforpreviousversionsof
thewebsite.ThisinquiryrevealedtheDistrictdoesnothaveawebmasteranddoesnotretain
copiesofpreviousversionsofitswebsite.
WerecommendtheDistrictreviewitsrecordsmanagementpolicieswithattentiontoprotection
oftheDistrictsrecords.Wealsorecommendgivingthedesignatedrecordsmanagementofficer
responsibilityforallDistrictrecords.
EmailRetention
DuringourreviewofemailswenoticedthattheSuperintendentoftendeletesemailsthathe
sends. After deleting the emails he empties the trash can so that the emails are no longer
storedintheDistrictsMicrosoftOffice365platform.
ThedistrictcurrentlyusesajournalizationserveroutsideoftheMicrosoftOffice365platformto
retainallemailssentandreceivedwithaDistrictemailaccount.Ajournalizationserveractsasa
monitorthatrecordsallelectronictrafficandstorestheinformationinalocalstoragemedium.
This means an individual user may believe emails are being deleted and cleared from their
personalemailfolderresultingintheemailsbeingunrecoverable.Howeverwehavebeentold
thatallemailsareavailableforsearchviathejournalizationserver.
We were unable to verify the information provided regarding the email backup on the
journalizationserver.Accesstotheserverwasnotprovideduntilthefinaldayofonsitefieldwork
attheDistrict.Thejournalizationserverisconfiguredsothatitonlyallowsaccesswhileonsite
andconnectedtotheDistrictnetwork.Weattemptedtoconnecttotheserverduringourfinal
onsite visit on August 18, 2017 and were unable to access the server due to the significant
quantitiesofdataincludedandourlimitedtimeonsite.
We recommend the District test the backup process to ascertain that emails deleted by the
SuperintendentorotheremployeesareproperlyretainedasrecordsoftheDistrict.

Section2.ChiefFinancialOfficer
Background
MaricelaValdez(Valdez)hasbeenemployedbytheDistrictsinceAugust1993.Valdezhas
heldthefollowingpositionswiththeDistrict:

ChiefFinancialOfficer(CFO)(2015throughthepresent)
DirectorofTestingandEvaluation(20132015)
DirectorofFederalPrograms(20102013)
Principal(20002010)
CurriculumSpecialist(19992000)
ElementaryTeacher(19921999)
ValdezreceivedaBachelorofSciencedegreeinAugust1992fromtheUniversityofTexasPan
American (UTPA) School of Education. Her major was in Health Education with a minor in
PhysicalEducation.InadditiontohereducationcoursesValdeztook9collegehoursofbusiness
classes:IntrotoBusinessInformationTechnology,andComputersandSociety.Valdezdidnot
takeanyaccountingcourses.13
ValdezreceivedaMasterofEducationdegreefromtheUTPASchoolofEducationinMay1999
with a major in Educational Administration. Valdez took a class named Administration and
OrganizationofSchoolandBusinessServices.Valdezdidnottakeanyaccountingclasseswhile
obtaininghermastersdegree.14
ValdezreceivedherTexasTeacherCertificateonSeptember1,1993.15Valdezcurrentlyholds
TexasEducatorCertificatesforSuperintendentandMidManagementAdministratorGrades(PK
12) that are valid through November 30, 2017.16 Valdez holds provisional certificates for
ElementarySelfContainedGrades(18)andElementaryHealthEducationGrades(18)thatare
validforlife.17
OnJuly1,2015ValdezwasnotifiedbythenDeputySuperintendentFernandoCastillo(Castillo)
that she was being reassigned from Director of Testing/Evaluation to Chief Financial Officer.
Castillo indicated that he would meet with Valdez to discuss her duties.18 This reassignment
increasedValdezsannualpayfrom$80,756.74to$100,793.42foratotalincreaseof$20,036.68

13
SeeCFOExhibit01.UnofficialtranscriptobtainedfromValdezspersonnelfile.Thefiledidnotcontainanofficial
transcript.
14
SeeCFOExhibit02.
15
SeeCFOExhibit04.
16
ConfirmedbyphonecallwiththeTexasEducationAgencythattheMidManagementAdministratorsCertificate
iswhatisnowknownasthePrincipalCertificate.Thenameofthecertificationremainsthesameaswheninitially
received.
17
SeeCFOExhibit03obtainedathttp://tea.texas.gov/Texas_Educators/Certification/Certificate_Lookup/.
18
SeeCFOExhibit05.

(a25%increase).19Valdezstatedthatshedidnotapplyforthepositionandnointerviewwas
conducted.
ValdezwasplacedonpaidadministrativeleaveonJanuary20,2017.20
CFOJobDescriptionSummary
TheDistrictsjobdescriptionforCFOsummarizestheCFOroleasfollows:
Directandmanagetheoperationofallfinancialandbusinessaffairsofthedistrictincluding
accounting, payroll, purchasing, risk management, and tax collections. Serves as the chief
financialadvisortothesuperintendentandboardoftrustees.AttendanceatallRegularand
SpecialBoardMeetingsismandatory.(emphasisadded)21
ValdezstatedthatshebelievedtheBoardshouldnotgetinvolvedingovernanceandshouldonly
legislatepolicy.ThisdemonstratesasignificantlackofunderstandingoftheroleoftheBoardand
oftheCFOsroleaschieffinancialadvisortotheBoard.
CFOJobDescriptionQualifications
TheDistrictsjobdescriptionforCFOliststhefollowingqualifications:

Education:Bachelorsdegreeinabusinessrelatedfieldoreducationaladministration.22
AsdiscussedaboveValdezdoesnothaveaBachelorsdegreeinabusinessrelatedfield
butdoeshaveaMastersdegreeineducationaladministration.
ItisrecommendedthattheDistrictconsiderrequiringeitheranundergraduatedegreeor
mastersdegreeinaccountingforthepositonofCFO.23

Experience:Fiveyears[sic]experienceinschoolbusinessmanagement.24
Asshownbythelistingofpositionsabove,Valdezhadnoexperienceinschoolbusiness
managementpriortobeingreassignedtotheCFOposition.
ItisrecommendedthattheDistrictconsiderrequiringmoreextensiveexperienceforthe
positionofCFO.25

19
SeeCFOExhibit06.
20
SeeCFOExhibit07.
21
SeeCFOExhibit08.
22
Ibid.
23
SeeCFOExhibit08.AlsoseeSection4ofthisreportforadditionalinformationandrecommendationsregarding
theDistrictsjobdescriptions.
24
SeeCFOExhibit08.
25
SeeSection4ofthisreportforadditionalinformationandrecommendationsregardingtheDistrictsjob
descriptions.

10

 Licenses,Certificates,Registrations:CertifiedPublicAccountantCertificate(Required)26
ValdezdoesnothaveaCertifiedPublicAccountant(CPA)Certificate.Valdezwouldnot
currentlybeabletoobtainaCPAcertificatebecauseshedoesnotmeettheeducational
requirementstositfortheexam.27
ItisrecommendedthattheDistrictupdateitsCFOjobdescriptiontorequirenotonlya
CPA certificate but a valid CPA license from the State of Texas with an obligation to
maintainthatlicenseatalltimeswhileholdingthepositionofCFO.28

OtherSkillsandAbilities:29
Advancedtechnicalknowledgeofschoolfinance,budgeting,accountingsystem[sic]
andeconomics
Workingknowledgeoffinancialapplicationsandaccounting
Valdezacknowledgedthatshedoesnothaveanaccountingdegreeandhasnoaccounting
background.ShestatedthatsignificantaccountingknowledgeisnotrequirediftheCFO
surrounds herself with the appropriate expertise. However, she admitted that she
decidednottofillthepositionofAccountingDirectorwhenDavidRobledoresigned.
Valdezadmittedshedoesnotunderstandaccountingrulesforschooldistricts.Valdezalso
admittedshedoesnotunderstandGenerallyAcceptedAccountingPrinciples(GAAP).
ValdezfurtheradmittedshedoesnotknowhowtopreparetheComprehensiveAnnual
FinancialReport(CAFR).
ValdezstatedthattheCFOrolewasnotfocusedontheaccountingfortheDistrictbut
rather on strategic planning, generation of more money through better return on
investments,andreductionofoperatingcosts.
January26,2016Letter
OnJanuary26,2016ValdezsignedaletteraddressedtothenBoardpresident,AlbertoSandoval,
the Members of the Board of Trustees and the Citizens of the Donna Independent School
District.30Followingissomeoftheinformationcontainedinthatletter:

26
SeeCFOExhibit08.
27
SeeCFOExhibit09obtainedfromhttp://www.tsbpa.state.tx.us/examqualification/examination
requirements.html.
28
SeeSection4ofthisreportforadditionalinformationandrecommendationsregardingtheDistrictsjob
descriptions.
29
ThisisapartiallistingofOtherSkillsandAbilities.SeeCFOExhibit08foradditionalskillsandabilitieslistedon
thejobdescription.
30
SeeCFOExhibit10.

11

Thefirstparagraphoftheletterreadsasfollows:
WearepleasedtopresenttheDonnaIndependentSchoolDistrict(theDistrict)
Comprehensive Annual Financial Report (CAFR) for the year ending August 31,
2015.ThereportwaspreparedbytheBusinessandFinanceOffice.Responsibility
forboththeaccuracyofthepresenteddataandthecompletenessandfairnessof
thepresentation,includingalldisclosurescontainedinthereport,restssolelywith
theDistrict.(emphasisadded)
Thesecondparagraphofthelettercontainsthefollowingassertions:
Toprovideareasonablebasisformakingtheserepresentations,managementof
the District has established a comprehensive internal control framework that is
designedbothtoprotectthegovernmentsassetsfromloss,theft,ormisuseand
to compile sufficient reliable information for the preparation of the Districts
financialstatementinconformitywithGAAP.(emphasisadded)
As management, we assert that, to the best of our knowledge and belief, this
financialreportiscompleteandreliableinallmaterialrespects.
Even though Valdez has no accounting background, no understanding of GAAP, and no
knowledgeofhowtopreparetheCAFRshesignedtheaboveJanuary26,2016letter.Valdezdoes
nothavethenecessaryskills,education,trainingorexperiencetomaketheseassertionstothe
BoardandthecitizensoftheDistrict.
OrozcoAdvisoryComments
AtthecompletionoftheauditoftheDistrictsfinancialstatementsfortheyearendingAugust
31,2015theDistrictsthenauditor,LuisCOrozco(Orozco),sentadvisorycommentstothe
Board of Trustees. These advisory comments addressed (1) untimely reconciliations of the
General Fixed Asset Group of Accounts, (2) payments made for purchases without proper
purchaseorderrequisition(afterthefactpurchaseorders)and(3)acontractapprovalwithout
theproperbiddingprocess.31
AttheconclusionoftheauditofthefinancialstatementsfortheyearendingAugust31,2016
Orozco informed Castillo that he has not received a Corrective Action Plan for the items
mentionedintheprioryearletterofadvisorycomments.32
ACFOshouldeitherpromptlyprepareaCorrectiveActionPlanuponreceiptofOrozcosletteror
assignthattasktosomeoneintheBusinessOfficeandfollowuptoassureitscompletion.The
absence of a Corrective Action Plan demonstrates either a lack of concern for or a lack of

31
SeeCFOExhibit11.
32
SeeCFOExhibit12.

12

understandingonthepartofValdezregardingtheimportanceoftheDistrictsinternalcontrols
overfinancialreporting.
Technology
TheDirectorofTechnologyhasreportedtotheCFOsinceatleastNovember26,2014.33Although
not mentioned in the CFO job description Valdez has been responsible for the Technology
DepartmentatalltimessincebecomingCFO.34
Valdezadmittedthatshedoesnothaveatechnologybackground.Whenaskedquestionsabout
the technology department using common technology terms of art Valdez asked for an
explanationofthosetermsofart.
Valdez does not have the skills, education, training, or experience necessary to supervise the
TechnologyDepartment.
SecurityRoles
The District restricts access functionality within TEAMS through the use of rolebased access
controlscommonlyreferredtoassecurityroleswhichareappliedtoindividualuserprofiles.The
Districthas243rolesforapproximately2,600employeeswhichisanunusuallyhighnumberof
roles.Additionally,securityrolesarenotconsistentforeachjobtitleandmultipleinstancesoccur
where the security roles negate expected segregation of duties (e.g. an accounts payable
supervisorhavingauthoritytosetup/maintainvendors,create/approverequisitions,andmake
cashdisbursements).
As of the date of this report there is no mechanism in place for a periodic review of TEAMS
functionalityassignedtoDistrictemployeestoensurethateachemployeesaccessisalignedwith
their current job duties, all segregation of duties issues are identified, and any necessary
compensatingcontrolsareimplemented.
The technology department assigns security roles. As previously indicated the technology
departmentreportstotheCFO.
The Districts CFO Job Description lists the following as one of the essential duties and
responsibilitiesoftheCFO:
Evaluate according [sic] procedures, systems, and controls in all district
departmentsandrecommendimprovementsintheirdesign,implementation,and
maintenance.35

33
SeetheDistrictAdministrativeOrganizationChartforthe20142015schoolyearatCFOExhibit13.
34
SeetheDistrictAdministrativeOrganizationChartsforthe20152016and20162017schoolyearsatCFOExhibit
14.
35
TheJobDescriptionreferstotheseasaccordingprocedures.Basedontheremainderofthesentenceit
appearstobereferringtoaccountingprocedures.SeeCFOExhibit08.

13

Valdez did not evaluate the controls over security roles and did not direct anyone in the
technologydepartment(underhersupervision)todoso.ThisresultedinunduerisktotheDistrict
ofinappropriateaccesstoTEAMS.
OverrideofInternalControls
ItiscriticalfortheCFOtonotonlyevaluatetheaccountingprocedures,systems,andcontrols
buttoabidebythoseprocedures,systems,andcontrolatalltimes.36However,weuncovered
thefollowingduringourreviewofDistrictrecords:

December5,2016:DanielValdez(Valdezshusband)sentanemailtoValdezaskingfor
assistanceonapurchaseorder.37
o ThepurchaseorderwasforshirtsfromCBSportswear
o D.Valdezwantedthepurchasedonebeforetheholidays
December5,2016:Valdezrespondsbyemailthatshewillrequestanemergencypurchase
order.38
December6,2016:Thepurchasingclerkapprovestherequisition.39
December7,2016:SandraMartinezapprovesthepurchaseorder.40

ValdezdeniedinvolvementinanyemergencypurchaseordersforCBSportswear.Valdezstated
thatemergencypurchaseorderswereonlyforemergencyrepairsorunforeseencircumstances
such as when weather causes differences in expected purchase requirements.41 The order of
shirtsdoesnotmeetanydefinitionofanemergencypurchaseorder.

This bypassing of accounting procedures, systems, and controls by Valdez is concerning for
severalreasons:
TheemergencypurchaseorderwasdoneattherequestofValdezshusband.
Theemergencypurchaseorderwasforapurchasefromacompanyownedbythefather
ofHumanResourcesSupervisor,AdolfoCampos,Jr.
As CFO Valdez is responsible for the proper execution of the Districts accounting
procedures,systems,andcontrols.
ValdezacknowledgedtheimportanceoftheDistrictsinternalcontrolsintheJanuary26,
2016lettertotheBoardandthecitizensoftheDistrict.42

36
SeeadditionaldiscussionoftheDistrictscontrolenvironmentonpages12ofthisreport.
37
SeeCFOExhibit15.
38
SeeCFOExhibit16.
39
SeeCFOExhibit17.
40
SeeCFOExhibit18.
41
ThisdefinitionofemergencypurchaseorderwasconfirmedbyotherDistrictpersonnel.
42
SeeCFOExhibit10.

14

ValdezsContactwiththePriorBoardRegardingReassignment
AlthoughValdezadvisedthatshedidnotapplyforthepositionofCFOshedidreachouttothe
priorBoardinanefforttobeconsideredforapromotion.Valdezstatedthatshesentherresume
andkeyskillstotheBoardtokeepinmindincasetherewasapositionforwhichherskillscould
beutilized.
Thisisconcerningbecauseitisacircumventionorbypassingoftheprocessofapplyingforanew
positionwithintheDistrict.Additionally,shebypassedherdirectsupervisor,Castillo,inaneffort
tohavetheBoardplaceherinanewposition.Thisinsertedanunnecessaryandinappropriate
politicalcomponentintotheassignmentofjobpositions.
UnusualLogOnActivitywithValdezsTEAMSpassword
ValdezspasswordwasusedtologontoTEAMSfromalocationinWeslaco,Texasthatismore
than 5 miles from Valdezs home. TEAMS is the Districts Enterprise Resource Planning
Application which houses the Accounting, Purchasing, Inventory, Warehouse, Payroll, and
School/StudentmanagementfunctionsoftheDistrict.
AllowinganemployeeonadministrativeleavecontinuedaccesstoTEAMSfor11daysaftershe
was placed on leave exposed the District to significant risk of manipulation or destruction of
records.
The IP address for these logons indicates a location in the vicinity of Texas Boulevard and E.
Business83inWeslaco.Therewere277logonsfromthisIPaddressusingValdezspasswordprior
to Valdezs suspension. The activity was particularly high in December 2016 (65) and January
2017(64).Someofthelogonswereduringearlymorninghoursonaweekend.

Valdezexpressedsurprisewhenpresentedwiththisinformationandcouldoffernoexplanation
fortheselogons.Whenwepointedoutthatthiswasapproximatelythelocationofthelawfirm
ofWalshGallegosTrevinoRusso&KyleP.C.(WalshGallegos)Valdezdeniedthatshehadever
beentotheWalshGallegosoffices.43

WhenaskedwhethershehadsharedherTEAMSlogonpasswordwithanyoneValdezadvised
thatsheprovidedittothetechnologydepartmentoncetocorrectanissueonhercomputer.
Valdezvolunteeredthatshekeptalistofherpasswordsonasheetofpaperonthecredenza
behindherdesk.AccordingtoValdezthelistincludespasswordtoTEAMS,passwordsforthe
Districtsbankaccounts,etc.

43
WalshGallegosRioGrandeValleyofficeislocatedat105East3rdStreet,Weslaco,Texas.Thisisoneblock
removedfromtheintersectionofTexasBoulevardandE.Business83inWeslacoandwithintherangeofthe
identifiedIPaddress.

15

ThelistofpasswordswhichValdezcarelesslykeptonhercredenzaexposedtheDistricttoundue
riskofmisuseofthosepasswords.Valdezsfailuretoproperlysafeguardherpasswordsfurther
demonstratesherlackofknowledgeandunderstandingofherroleasCFObothinregardsto
accountingprocedures,systems,andcontrolsandinregardstothetechnologydepartment.

ChildNutrition

TheDistrictisallowedtorecoverindirectcostsforreasonableandallowableexpensestobeused
for the Child Nutrition Department.44 The Child Nutrition Director, Diana Quintanilla
(Quintanilla) asserts she contacted Valdez as early as October 4, 2016 because she was
concerned about the Indirect Cost calculation.45 Quintanilla further states that Valdez was
informed during a meeting on November 1, 2016 that the recovery of indirect costs was
calculatedincorrectlyforthe20132014and20142015schoolyears.46Quintanillaassertsthat
RegionOneFinanceDirector,FrancesGuzman(RegionOneFinanceDirector),informedValdez
duringtheNovember1,2016meetingthat:

Valdezwasusingthewrongmethodologytocalculatetherecoveryoftheindirectcosts.
Valdezshouldcorrectthecalculationforthe20152016schoolyearbecausetheentry
hadnotbeenmadeyetandtheauditbyOrozcowasnotcomplete.
TheDistrictmustbeabletojustifythatrecoveriesofindirectcostswereusedinoneway
orformtoimprovethechildnutritiondepartment.47
InspiteofinformationValdezobtainedduringtheNovember1,2016meetingajournalentryfor
the20152016schoolyearwaspostedonDecember16,2016usingtheincorrectmethodology.48
QuintanillafiledareportregardingtheincorrectentrieswiththeDistrictPoliceDepartmenton
December 22, 2016.49 Quintanilla also filed a Level One employee complaint regarding the
incorrectentrieswiththeDistrictHumanResourcesDepartmentonDecember22,2016.50
Acorrectionforschoolyear20152016waspostedonJanuary11,2017just7dayspriortoa
scheduledauditbytheTexasDepartmentofAgriculture(TDA).51

Valdezcorrectlystatedthattheincorrectcalculationandentryforthe20132014schoolyear
wasmadebeforeshewastheCFO.However,ValdezwastheCFOwhentheentrywasrecorded

44
RecoveryofindirectcostsmeansmovingindirectcostsfromtheChildNutritionDepartment(restrictedfunds)to
theLocalFund(unrestrictedfunds).
45
SeeCFOExhibit19.
46
Ibid.
47
Ibid.
48
SeeCFOExhibit20.
49
SeeCFOExhibit21.
50
SeeCFOExhibit19.
51
SeeCFOExhibit22.

16

incorrectlyforthe20142015schoolyear.Valdezeitherdirectedorallowedtheincorrectentry
forthe20152016schoolyearafterbeinginformedthatshewasusinganincorrectmethodology.

Valdezfurtherstatedthattheerrorsweremadebecauseshewasusingaformulaprovidedby
theTexasEducationAgency.AsCFOValdezisexpectedtoimplementthepoliciesestablishedby
federalandstatelaw,StateBoardofEducationrule,andlocalboardpolicyintheareaofbusiness
operations.52AsCFOValdezshouldbeexpectedtounderstandthattheformulashewasusing
causedadoublerecoveryofindirectcostsandtoresearchtheregulationstodetermineifthe
calculation was proper. At a minimum after the error was pointed out by Quintanilla and
confirmedbytheRegionOneFinanceDirectortheincorrectentryshouldnothavebeenposted
onDecember16,2016.

ValdezacknowledgedthattheDecember16,2016entrywasincorrectbycorrectingtheentry
beforethearrivaloftheTDAauditor.Whenaskedwhyshedidnotcorrecttheentriesforthe
priortwoyearsValdezrespondedthatshedidnotfeelitwouldbeappropriatetochangethe
financial statements. This indicates a lack of familiarity with GAAP which provides guidance
regardinghowtohandleerrorsinprioryearfinancialstatements.

ValdezconfirmedthatshedidnotinformOrozcothattherewerepotentialerrorsamountingto
$1,795,000inprioryearfinancialstatements.Thisinformationshouldhavebeenprovidedtothe
externalauditor.

Valdez alleged that Castillo told her Quintanilla filed the report with the District police
department in retaliation for the termination of the former purchasing agent, Luz Rodriguez
(Rodriguez).ValdezalsoallegedthatRodriguezisaffiliatedwithcurrentBoardpresident,Efren
Cerniceros.ValdezfurtherstatedthatMr.CerniceroscontactedCastilloeachtimeValdezwould
writeupRodriguezandthatCastillowouldthencallValdezaboutthewriteup.

ValdezfurtherallegedthatshewasinformedbytheDistrictChiefofPolicethatQuintanillawas
forcedbyunnamedBoardmemberstomakeallegationsagainstValdezinreturnforbeingnamed
CFOtoreplaceValdez.

52
See#17ontheCFOjobdescriptionatCFOExhibit08.

17

Section3.BusinessOffice
ThebusinessofficehasreportedtoValdezatalltimessinceValdezsreassignmenttoCFO.The
followingparagraphsaddressconcernsrelatedtospecificfunctionswithinthebusinessoffice.
Budgeting
TheBoardraisedquestionsregardingthenumerousbudgetamendmentrequestsmadebythe
District.ThebudgetispreparedbytheDistrictusingthefinancialinformationfromtheprioryear
asthestartingpoint.Itfollowsthatiftheprioryearinformationisincorrectthebudgetwillnot
beaccurate.AsismorefullydiscussedintheRestrictedFundssectionofthisreport,therewere
numerousinappropriatesalariesandotherexpensespaidoutofrestrictedfunds.Theseincorrect
allocationsmakeithighlylikelythatabudgetpreparedusingtheprioryearnumbersisgoingto
requirenumerousamendments.
The Board is correct to assume that in the absence of an unusual set of circumstances the
existenceofnumerousbudgetamendmentrequestsindicatessystemicproblemsinthefinancial
recordsunderlyingtheoriginalapprovedbudget.
Procurement
The purchasing agent job description lists as an experience qualification Three years of
professionallevelpurchasingagentexperienceinthepublicsector.
Olga Noriega (Noriega) advised she was hired as the District purchasing agent in July 2016.
Noriega further advised she had no purchasing agent experience before being hired by the
District.PriortocomingtoworkfortheDistrictNoriegawasahumanresourcescoordinatorfor
a Montessori school and prior to that worked as an administrative secretary. Noriega further
advisedherdegreewasintechnologymanagement.
ValdezadvisedthatNoriegawashiredinspiteofthehiringcommitteesrecommendationtohire
adifferentcandidate.ValdezadvisedthatthepriorBoardmadethedecisiontohireNoriega.
ThepurchasingagentperformsacriticalfunctionintheDistrictandistheDistrictsfrontline
defenseagainstvendorimproprieties.Uponinquiry,Noriegawasunfamiliarwithmanyofthe
requirements in the Districts procurement manual. Noriega does not have the training or
experiencerequiredtoproperlyfunctionastheDistrictspurchasingagent.
Adherencetointernalcontrols
We noticed during our review of business office documents that the adherence to internal
controlpracticeswasdonebyrotewithoutanunderstandingofthepurposeofthecontrol.In
addition,wewererepeatedlyinformedthatcontrolswereusuallyfollowedbutifrequestedby
theSuperintendentoraBoardMembertodosomethingoutsideofthecontrolstheemployees
woulddoasinstructed.

18

Sandra Martinez has shown that she will question both the Superintendent and the Human
Resourcesdepartmentinregardstoinstructionswhichshebelievesareoutsideofpolicy.
NoCPAsintheBusinessOffice
Therearepresentlynocertifiedpublicaccountantsworkinginanybusinessofficefunction.
NoBackgroundSearchesonVendors
We recommend the District run background searches on vendors. These searches will reveal
relationshipsbetweencompaniesandpossible relationshipswithDistrictemployeesorBoard
members.
TheDistrictpresentlydoesnotdoanyindependentworktodeterminewhetheravendorhasa
conflict of interest. Instead the District relies solely on selfreported conflicts. Background
searcheswillgoalongwaytowardpreventingproblemssuchastheDistrictexperiencedwith
theFlagmasterstransactions.

19

Section4.HumanResources
JoseJ.Villanueva(Villanueva)wasnamedAssistantSuperintendentforHumanResourceson
July29,2015bythenDeputySuperintendentCastillo.53ThisreassignmentincreasedVillanuevas
annualpaybyfrom$92,374.50to$100,520.65foratotalincreaseof$8,146.15(a9%increase).54
Villanueva met the job description requirements55 for education and had five years of
administrative experience. However, Villanueva did not have experience in human resources
before being reassigned to this position by Castillo. Absent previous experience in human
resources Villanueva did not have the skills, experience and training necessary to fulfill the
essentialdutiesandresponsibilitieslistedonthejobdescription.56
ThejobdescriptionforAssistantSuperintendentforHumanResourcesindicatesitwasrevised
onJanuary28,2008.Howeverthepropertiesfortheworddocumentindicateitwascreatedon
September1,2011.
JobDescriptions
Most of the Districts job descriptions have not been updated since 2008. Many of the job
descriptionsnolongermatchthejobtitlescurrentlyatuseintheDistrict.Forexamplethereis
no job description for the Chief Special Programs Officer. However, the job description file
contains a job description for a nonexistent position, Assistant Superintendent for Special
Programs.57ThejobdescriptionforAssistantSuperintendentforSpecialProgramswascreated
in2001andlastupdatedin2008.58
WerecommendtheDistrictreviewalljobdescriptionstoensurethatallarecurrent.Additionally,
theDistrictshouldconsiderincreasingtherequiredqualificationsforcertainkeypositions.As
discussed in the CFO section of this report, five years of experience in school business
managementsetsthebartoolowfortheCFO.59
The Districts job descriptions are kept in Microsoft Word documents with the usual practice
beingtooverwritethepreviousversionofthejobdescriptionwhenmakingrevisions.Withrare
exception no record of previous versions is kept. Each of the job descriptions indicates it is
ApprovedbyBoardofTrustees.However,uponinquiryCastilloandVillanuevabothresponded
thattheBoarddoesnotapprovechangestothejobdescriptions.

53
SeeHumanResourcesExhibit01.
54
SeeCFOExhibit06.
55
SeeHumanResourcesExhibit02.
56
Ibid.
57
SeeHumanResourcesExhibit03.
58
Informationobtainedfromareviewofthepropertiesfortheworddocument.
59
ItisalsorecommendedthattheCFOberequiredtohaveavalidCPAlicensewhileholdingtheCFOpositionand
thattheDistrictreviewtheCFOsbackgroundtomakesuretheirCPAlicensehasneverbeenrevokedor
suspended.

20

PublicInformationActRequests
Requests under the Public Information Act are responded to by the Human Resources
Department. The requests are filed by name of requestor after a response has been given.
AccordingtoVillanueva,theDistrictdoesnotemployanymechanismtocalendarrequestswhen
receivedtoensurearesponseisgivenwithin10businessdays.Wenotedthattherequestsare
writtenonanerasablewhiteboardinVillanuevasofficeuntilhandledbythehumanresources
department. We recommend the District consider calendaring the requests whenreceived to
ensureresponsesaretimelyandproper.
CFOAdministrativeLeave
ValdezwasputonadministrativeleaveonFriday,January20,2017.WelearnedthatCastilloand
VillanuevawarnedValdezlateinthedayonWednesday,January18,2017thatshewouldbe
suspended two days later. After being told she would be suspended in two days Valdez was
allowed to return to her office unaccompanied to collect her personal belongings. Valdez
reportedthatshedidnotreturntotheBusinessOfficeonJanuary19,2017orJanuary20,2017
eventhoughshewasnotformallyplacedonleaveuntilJanuary20th.
ValdezsaccesstoTEAMSwasnotremoveduntilJanuary31,2017.
Bestpracticesforterminatedorsuspendedemployeesincludesescortingtheemployeetotheir
office to retrieve their personal belongings, collecting the employees keys, and immediately
removingtheemployeesaccesstoDistrictemailandnetwork.Thefailuretofollowbestpractices
eitherindicatesalackofknowledgeandexperienceand/oradisregardforbestpractices.
TheletterinformingValdezshewasbeingplacedonadministrativeleavealsoinformsValdezshe
is prohibited from contacting any District employee.60 In spite of that instruction Valdez
contacted Villanueva regarding her contract for the 20162017 school year. Villanueva sent
ValdezhercontractwhichshesignedandreturnedtotheDistrict.61
Verificationofcurrentlyvalidteachingcertificates
HumanResourcesdoesnothaveapracticeofensuringallteachersholdacurrentlyvalidteaching
certificate.Areviewof34personnelfilesfound12fileswherethelatestverificationofcertificates
usingtheTEAwebsitewasoutofdate.
WerecommendtheDistrictrequiretheHumanResourcesDepartmenttoupdatefilesannually
toensurethatallrequiredcertificatesarecurrentlyvalid.
PerformanceAppraisals

HumanResourcesdoesnothaveaprocesstoensurethatperformanceappraisalsareperformed
anddocumentedannually.Areviewof34personnelfilesfound2fileswherethemostrecent

60
SeeCFOExhibit07.
61
SeeHumanResourcesExhibit04.

21

performance appraisal was for the 20122013 school year, 9 files where the most recent
performanceevaluationwasforthe20132014schoolyear,and6fileswherethemostrecent
evaluationwasforthe20152016schoolyear.
We recommend the District institute a tracking procedure to ensure that all performance
appraisals are done on a timely basis. At a minimum performance evaluations should be
completedbeforeawardingcontractsforthesubsequentschoolyearandbeforedetermining
compensationforthesubsequentschoolyear.
EmployeePaySheets
Areviewof34personnelfilesrevealedoneormoremissingpaysheetsasfollows:

Missingfor7previousyears:2files
Missingfor4previousyears:8files
Missingfor3previousyears:3files
Missingfor2previousyears:5files
Missingfor1previousyear: 5files

WerecommendtheDistrictcreateachecklistofinformationthatisrequiredtobemaintainedin
thepersonnelfiles.AftercreatingthechecklisttheDistrictshouldrevieweachpersonnelfileto
ensurethatallrequireddocumentationispresent.
JobCodingforms
The general ledger account code for District employees is assigned by the Human Resources
department.Villanuevainformedusthatwhenanemployeeishiredtofillanexistingposition
thesameaccountcodingisassignedaswasusedforthepreviousemployee.
WelearnedthatnoDistrictdepartmentbelievesitholdsresponsibilityforthepropercodingof
employeepayrollexpenses.Humanresourcesindicatestheaccountcodingisreviewedbythe
program directors or school principals. Program directors and school principals believe the
businessofficeisresponsibleforaccountcoding.TheBusinessOfficebelievestheresponsibility
restswiththeHumanResourcesdepartment.
Theproprietyoftheaccountcodeforeachemployeeistheproverbialhotpotato.Nodepartment
acceptsresponsibilityoraccountability.ThisisacriticalweaknessthattheDistrictshouldaddress
immediately.Errorsinaccountcodinghaveledtoimproperuseofrestrictedfunds.
WerecommendtheDistrictconsiderreengineeringtheprocessforassigningaccountcodesto
individualemployees.Thisprocessshouldinvolvethedirectorsresponsibleforrestrictedfunds,
the Human Resources department and the Business Office. Guidelines to establish which
departmentbearsfinalresponsibilityforpropercodingofemployeecostsshouldbeagreedto
byallthreedepartments,bedocumentedandbeclearlyexplainedtoemployeesresponsiblefor
implementingthenewprocesses.

22

AttentiontoDetail
Itisimportantthatinternalcontrolsandapprovalsbepracticedwithcareandattentiontodetail.
A signature on a document is meaningless if the person signing the document does not pay
attentiontowhattheyaresigning.Bywayofexample,Villanuevasignedanemployeepaysheet
whichshowsafullyearsalaryof$1,976,921.44.62Additionally,thedatenexttothesignatureis
typedinsteadofhandwritten.Thismeansitisnotpossibletotellwhentheformwasactually
signed.
Additionally certain documents are added to the personnel files without the appropriate
signaturesfromVillanueva.63
InappropriateSexualHarassmentTraining
WewereadvisedthatwhilepresentingasexualharassmenttrainingvideoVillanuevaexplained
thatifheandoneofhisdirectreportsinHumanResourceswerehavinganaffairthenthereisno
problembecausebothindividualsagreetotherelationship.
This is inappropriate information particularly coming from the Assistant Superintendent of
HumanResources.
CBSportswear
DuringourreviewofemailswenoticedemailsfromHumanResourcesSupervisor,AdolfoCampos
Jr.(Campos)relatedtoCBSportswear.TheseemailsweresentusingaDistrictemailaddress
andduringaDistrictworkday.64
TheemailswereforquotesforshirtsbyCBSportswear,abusinessownedbyCamposfather.
ThequotesweresenttotheDonnaPoliceDepartmentandtheDonnaCrossCountryteam.There
aretwoconcernsregardingtheseemails.
First,CamposwasconductingcommercialbusinessduringtheworkdayandusingaDistrictemail
address.SecondtheemailsweresenttoDistrictemployeesthatdidnotfindthisactivityunusual.
WithoutrevealingdetailsweaskedCastillohowhewouldhandleasituationwhereanemployee
was conducting commercial business during a District workday. Castillo responded that such
activitywouldbegroundsfordismissal.

62
SeeHumanResourcesExhibit05.
63
SeeHumanResourcesExhibit06.
64
SeeHumanResourcesExhibit07.

23

Section5.RestrictedFunds
Duringthecourseofourinvestigationweuncoveredproblemsrelatedtotheadministrationof
theDistrictsrestrictedfunds.
BilingualEducation
TheDistrictreceivesallotmentsfromthestateofTexasforbilingualeducation.Theseallotments
arerestrictedforuseinaccordancewithguidelinessetoutbytheCommissionerofEducation.65
According to guidance from the Special Allotment Monitoring Program the District is not
permittedtorecoupthesalaryfortheprogramdirectorfromtherestrictedfunds.Duringthe
20142015 school year and the 20152016 school year the salary for the Director of Bilingual
educationwaspaiddirectlyfromrestrictedfunds.
Wereviewedpersonnelfilesforaselectionofbilingualteachersandfoundthefollowing:

20142015SchoolYear:20employeeswereselectedforreview.
o Classrostermissingfor1of20
o BilingualCertification:
Notcertifiedornocertificationinfile12of20
Expiredcertification5of20

20152016SchoolYear:19employeeswereselectedforreview.
o Classrostermissingfor3of19
o BilingualCertification:
Notcertifiedornocertificationinfile14of19
Expiredcertification4of19

20162017SchoolYear:20employeeswereselectedforreview.
o BilingualCertification:
Notcertifiedornocertificationinfile1of20
Expiredcertification12of20
Parttimetutorsarealsopaidoutoftherestrictedfunds.AreviewofTEAMSindicatesthereisno
documentationthattutorswereworkingwiththebilingualprogram.
During the 20152016 school year approximately $26,000 of reimbursements were made to
teachers taking college courses for a masters degree. This is not an allowable use of the
restrictedfunds.
The current director, Gregorio Arrellano, lacks knowledge of the guidelines for use of the
restrictedfunds.

65
TexasEducationCommissionersRules,Chapter89,SubchapterBB

24

CareerandTechnology
TheDistrictreceivesallotmentsfromthestateofTexasforcareerandtechnology(CT).We
reviewedaselectionoffilesforteacherspaidusingCTfundsandfoundthefollowingimproper
paymentsfromfundsrestrictedforCT:

20142015schoolyear:Thesalariesforamathteacher,thePEIMSclerk/SecretaryofFine
Arts,andasubstituteteacherwereinappropriatelypaidwithCTrestrictedfunds.
20152016 school year: The salaries for an English teacher and two PEIMS
clerk/SecretariesChild Nutrition Services were inappropriately paid with CT restricted
funds.
Additionallyduringthe20152016schoolyearanunallowablechargeforDistrictwidecopiers
wasmadeagainstCTrestrictedfunds.
GiftedandTalented
TheDistrictreceivesallotmentsfromthestateofTexasforitsgiftedandtalentedprogram(GT).
TheTEArequiresthatatleast52%ofthefundsallottedfortheGTprogrambeusedfordirect
expensesrelatedtotheprogram.TheDistrictappearsnottohavemetthisrequirementforthe
20122013and20152016schoolyearsevenifallexpensescodedtotheGTprogramarecorrect
andeligible.
We reviewed expenses charged to GT and found numerous expenses improperly paid out of
theserestrictedfunds.TakingthisintoaccounttheDistrictfailsthe52%testforthe20132014,
20142015,and20152016schoolyears.
SpecialEducation
The District receives allotments from the State of Texas for its Special Education Program
(Special Ed). We reviewed 20 random teachers the 20132014, 20142015, and 20152016
school years. For each teacher we obtained rosters for one month out of the test year from
TEAMS.TherosterprovidesthenumberofstudentsandhowmanyareclassifiedasSpecialEd.
Ourreviewrevealedthefollowing:

20132014schoolyear:
o 10teachersmettherequirements
o 3teachershadnoteacherrosterfortheschoolwheretheirsalarywascharged.
o 3teachershadaclassrosterwithnostudentsclassifiedasSpecialEd
o 3teachershadnorosteronTEAMS
o 1teacherhadnostudentslistedontheroster

25

 20142015schoolyear:
o 6teachersmettherequirements
o 6teachershadnoteacherrosterfortheschoolwheretheirsalarywascharged.
o 2teachershadaclassrosterwithnostudentsclassifiedasSpecialEd
o 4teachershadnostudentslisted
o 1teacherwasassubstitutewithnostudentslisted
o 1teacherhadnoinformationonTEAMSotherthanapayrollcharge

20152016schoolyear:
o 8teachersmettherequirements
o 3teachershadnoteacherrosterfortheschoolwheretheirsalarywascharged.
o 6teachershadnostudentslisted
o 2teachersweresubstituteswithnostudentslisted
o 1teacherhadnoinformationonTEAMSotherthanapayrollcharge
AllRestrictedFunds
We were repeatedly advised by directors of programs with restricted funds that payroll was
codedbyHumanResourcesandthedirectorsdidnothaveTEAMSaccessthatwouldallowthem
tomonitorsalariespaidoutofrestrictedfunds.WewereadvisedbyHumanResourcesandthe
BusinessOfficethatdirectorsmonitorthesesalariesandareresponsibleformakingcertainthe
salariespaidoutofrestrictedfundsmettherequirementsoftheprogram.Thisindicatesthatno
Districtemployeeisproperlymonitoringthesefundstodeterminewhetherallrequirementsare
metandallchargesareappropriate.
This report is provided to the District and its legal counsel for whatever action deemed
appropriate.

26