Steamboat Pilot & Today

Steamboat Springs — There's a first time for everything, but this is one first the Steamboat Springs School District would just as soon forget.

After years of near-flawless audit reports, incomplete financial records from the North Routt charter school caused the school district to receive its first qualified audit, finance director Dale Mellor said.

"This is not good," Mellor said. "This is definitely not good. It's something we have to have cleaned up by the end of the (school) year."

An audit becomes qualified when information needed to verify financial records is not provided or not available to the auditing firm. Therefore, the firm cannot issue an opinion as to the financial status of the audited organization. Receiving a qualified audit report can jeopardize the school district's ability to seek elective bond issues as well as grant money, Mellor said.

The audit, which was for the 2001-02 school year, was qualified specifically because the North Routt Community Charter School failed to provide enough information to the auditors, Mellor said. Denver-based BONDI & Co. performed the audit.

"The charter school did not provide any records to us to say what their fixed assets were," Mellor said. Records needed to verify the charter school's accounts receivable and accounts payable also were incomplete, he said.

Charter school director Mary Bramer said discrepancies between what the auditors needed and what the charter school provided led to the problem.

"I have no doubt that we've made some mistakes," Bramer said. "We are a young organization and we're doing our best."

All the school's financial records are complete, Bramer said.

"There are no deficiencies," she said. "All of our financial records are available to the district. I don't want this to be an issue that gets blown out of proportion."

The qualified audit has upset the school board, board President Paul Fisher said.

"Just like a credit report, (the qualified audit) is on our books," Fisher said. "By statute and by contract, the charter school and its members are responsible for the financial well-being of the school."

"We regard it as a serious matter," board member Tom Sharp said. "It's not only embarrassing, but it's a violation of loan covenants."

The school board has insisted members of the charter school's board attend Monday's district board meeting, when the auditors will publicly present their report.

Bramer said the charter school's board would like to know what is needed of them before they agree to attend the meeting.

"I think we still need to have some dialogue between the district and myself," Bramer said. "There's a communication issue we need to deal with."

The relationship between the charter school and the school district has been good thus far, Bramer said.

"We hope to be able to continue to work with the RE-2 district in a spirit of cooperation," she said.

It's unclear what ramifications, if any, the qualified audit will have for the school district.

"It could have been worse, but it's not good, especially when the district's never had anything but an unqualified audit," Mellor said. "It's not something insurmountable."