Williston Basin School District 1 (WBSD1) was audited because members of the public petitioned the ND state Auditor to do so out of concerns about possible accounting irregularities.
Although WBSD1 had been audited in past years, the school district had not been audited by the state until recently.
AÂ Feb. 1, 2022 audit report released by the North Dakota Office of the State Auditor covered accounting records of financial statements for the year ending June 30, 2021.
Williston Basin School District #7 (WBSD7) Superintendent Dr. Richard Faidley disclosed that District 1 leaders had been advised for several years the district was not following proper accounting practices and procedures.
WBSD1 merged with District 8 in mid-2021 to form WBSD7.
"I've been superintendent of schools for, in excess of 10 years, and I've never seen a financial audit that had this many violations," said Dr. Faidley, who was not serving as the Williston schools superintendent during the years under review.
Dr. Faidley was recruited by WBSD7 in mid-2022.
Shortly after arriving in Williston, Faidley said he requested a review of the district's financial reporting from Sheri Heser, the district's business manager in 2022.
Heser submitted her resignation at his request, Faidley said.
However, the superintendent was quick to clarify that Heser was not responsible for the District's 2021 accounting practices. Faidley said he requested Heser's resignation because she was unable to explain details of the district's financial records from 2020-21.
"She resigned as a result of my request," Faidley said. "The inability to provide financial information — reports, budget information, bank balances and reconciliation of the bank accounts — that was requested of her."Â
Faidley emphasized he is not interested in pointing fingers but is focused on solving ongoing accounting issues arising from the state's audit report of WBSD1's 2020-21 financial records.
"They found 21 audit violations," Faidley said of the state Auditor's report. "Those audit violations were a result of internal controls, processes and a lack of understanding as to how governmental school district accounts work."
Faidley prefaced the accounting procedures in question were for fiscal year 2020-21. He also made it clear WBSD1 no longer exists.
WBSD1 was folded into District 8 to form WBSD7, for which Dr. Faidley was hired.
"My role as the new superintendent, working with a new board and new business manager, is to write a corrective action plan to address each of these [21] audit violations," Faidley said. "To fix these issues, basically."
He said the district's past accounting problems, in his view, were not a result of any deliberate deceptions but occurred due to a lack of understanding about government accounting best practices, "lack of training" and inexperience.Â
"The auditors are basically saying, from a finance perspective...the banking accounts and finance ledger did not reconcile," Faidley said, alluding to WBSD1 audit violations over the past eight years.
As for the possibility of fraud, Faidley said, "I don't think the state auditors can determine that. I don't personally think there is any fraud that existed. I just think it was a lack of understanding of accounting practices and procedures — not understanding the right way to do things."
Faidley was reluctant to refer to past accounting issues as discrepancies, and he stopped short of calling prior business managers incompetent.Â
"I don't want to assign blame to anyone, but I will tell you, as a CFO — as a manager — there must be certain processes and procedures that must be in place to ensure sound financial practices," he said. "And there were not. And that is validated by the audit report that was issued."
Dr. Faidley returned to the Corrective Action Plan (CAP), emphasized in a public letter he signed, released Feb. 1, the same day the state Auditor issued its report on WBSD1's 2020-21 financial records.
The CAP, he said, is "the catalyst to provide transparency to the community regarding how we are spending taxpayer money."
Prior to the state auditor's report on WBSD1 finances, the district hired outside accountants to audit its findings, according to Faidley.Â
"This is the first year that the community petitioned the state audit District 1 for the fiscal year 2020-2021," he said, noting multiple school district business managers and administrators failed to "mitigate" accounting problems from audit findings in the past.Â
"There were findings that things weren't being done as they should have been," Faidley said. "It's factual to say there were many individuals involved."
He applauded the public for requesting (through petition method) that the state audit WBSD1.
"When the community is not informed about how taxpayers' monies are not being spent right, they have a right...to try and get answers to their questions," Faidley said. "Knowing that, as the superintendent of schools, I'm going to answer their questions.
"And I'm going to show them where their money is and how it's being spent at personnel and finance meetings, at [school] board meetings and on the district website," he continued. "Then, if they still have questions, taxpayers and the community can reach out to my office or the business manager's office to have us explain and answer their questions.
"That's our responsibility as public servants," Dr. Faidley said. "Under my leadership, we're...going to be transparent, and I have to earn the trust of taxpayers by my actions."
