Hatchet Job of an Audit
Torn Apart One Section at a Time
Part V
A week ago we published Part IV of the expose on Lying Cindy Byrd and her “audit” of the Epic Charter School. First we will go over the previous sections we covered in depth, which can be found at the Archive link at the top of each newsletter.
The first huge lie was about the teacher retirement system payments and we included the actual emails proving exactly how Epic was instructed to report retirement pay to the system and exactly how to calculate the money owed to the retirement fund.
The second huge lie was Chapter 5 on the learning fund and how it was calculated. Again, we provided the actual contract pages and LEA forms where Epic had actually circled the numbers that were REQUIRED to be used by charter schools by the SDE and the State Charter School Board.
The third huge lie was over the Accountability and Oversight section of her “audit”, where it was shown that the State Department of Education, the State Virtual Charter School Board, Rose State College, Epic itself, and the Communities Strategies school board were all doing audits, SDE had done over 60 reviews in the past three years alone.
The fourth lie was over the Oklahoma Cost Accounting System and how Byrd's office ignored existing law and focused on criticizing how the State Department of Education (SDE) asked Epic to handle the bookkeeping.
The fifth lie was in Chapter 4 , the Allocated Dues and Fees. Consisting only of Lying Cindy Byrd's opinions on how things should be instead of how the contract between the school, the management company, and the State Department of Education actually was.
The sixth lie we covered last week, the Community Strategies, LLC. That was an attack on the independent school board that overseas EYS that runs the school. The worst they found in that chapter were some unpaid invoices and a repaid loan that came from the private money that EYS earned. In other words, the EYS earnings paid to the owners and investors, which is not the state's business or concern.
The categories below are from Lying Cindy's own “audit” and the four already addressed are in green type. The one we will cover in this issue is in blue type.
Chapter 1 Accountability and Oversight
Chapter 2 Oklahoma Cost Accounting System
Chapter 3 Payroll
Chapter 4 Allocated Dues and Fees
Chapter 5 Student Learning Fund
Chapter 6 Community Strategies-CA, LLC
Chapter 7 Audits and Reviews
Chapter 8 Other Issues
Lying Cindy's Accusations
Here is a link to the SAI, State Auditor and Inspector “audit”. Scroll down to page 78 through 82 for the discussion of Chapter 7, Audits and Reviews. Those are the actual page numbers, not the PDF page numbers which start counting at the introduction. The PDF number is 88 at the start and goes through 92.
Lying Cindy Byrd admits that both Epic One on One and Blended have had annual financial audits as required by Oklahoma law, performed by a profession auditing company called CBEW Professional Group, LLP. Lying Cindy also admits that Epic and Blended have had 65 reviews, audits, compliance reports, and monitoring documents between 2017 and 2019. Lying Cindy's problems weren't that Epic wasn't audited as required by law; Lying Cindy faults the audits for not going beyond what state law requires. Lying Cindy claimed that EYS was over paid by $686,116.04 between 2016 and 2020, claiming that EYS received 10% of the money given to Rose State College and the SVCSB instead of calculating the payment given to the two schools, Epic One on One and Blended. Lying Cindy's other complaint was the the board members were not nominated by the public but by EYS.
Lying Cindy's next complaint was that Epic was reviewed by OEQA, the Office of Educational Quality and Accountability. They did annual reports that provided a high level overview. Only one issue was identified of concern, low cash flow prior to the mid term state aid adjustment in 2019. Well right before a payday most people and most companies might have low cash reserves. Lying Cindy admitted that 100% of the financial reporting requirements were met but she bitched that about half were “submitted on time”. In other words, nothing was amiss according to the OEQA.
Lying Cindy then talked about the SDE Consolidated Monitoring Reviews of the federal funds that Epic received and they were found to be in compliance for 2017 and 2019. Lying Cindy's problem is that while the reviews were sufficient for federal law, she didn't think they went far enough! Lying Cindy wants Epic to go beyond what is required by law to prove actual compliance with the written policies and procedures. One wonders if Lying Cindy's own office could survive such a harsh demand to go beyond what the law requires to suit the whim of someone grinding a hatchet for a hatchet job. SDE found Epic had ONE deficiency, a late Accreditation report. Lying Cindy criticizes the SDE for basing these reports on what the school district supplies and not doing an on site review and examining the actual records that the data came from.
The SDE also conducted Special Education Services Compliance reviews on Epic to look over money sent to the schools for the special needs students. The standards for these reviews are set by federal law but Lying Cindy complained that the 2017 report didn't cover financial records and the 2018 review didn't comment on specific financial matters. Perhaps because federal law doesn't require that detail?
Next up was the Statewide Virtual Charter School Board (SVCSB) oversight review. Lying Cindy admits that the director of SVCSB consistently attended the Epic school board meetings, has conducted unannounced and undocumented site visits to review the Student Learning Fund transactions, and that they use the SDE reports, the OEQA annual reports, and the CBEW annual reports. Lying Cindy's bitch is that the SVCSB has not done a detailed analysis of all Epic financial records. So the SVCSB is following the actual statutes but the law doesn't go far enough to suit Lying Cindy.
Next up was Rose State College, the sponsor for the Blended Learning Centers. Lying Cindy's complaints are the same, Rose State relies upon the CBEW annual financial reports instead of hiring a CPA to do their own financial reports on Epic. Lying Cindy admits that Rose State chose not to do additional auditing because the CBEW financial statements have been “fairly clean” so they “chose” not to conduct any additional oversight. Once again we see the law being followed and Lying Cindy bitching that more money wasn't spent and more time and resources not directed to looking for problems where there are zero indications of problems.
In the business world, legal world, and government world, we all rely upon audited financial statements prepared by a qualified and licensed CPA. No one is going to pay for that work and then question it unless there are red flags.
Next on the firing line is Community Strategies, the actual school board that oversees EYS running the two schools. They hired an internal auditor who presented a compliance update at the March 23rd 2020 meeting which found few issues other than a few website links and postings that needed attention. Then an audit of the Student Learning Fund presented on July 28th 2020 found issues that were “immaterial in both value, nature, and were not reoccurring issues”
Epic's Response
You can find Epic's response to the State Auditor during actual “audit” at this link. Look on the left upper corner and find the page number text box to quickly go down to the correct page shown below.
Go down to page 13 where Epic's response on Oversight starts. The section stops at the bottom of page 14, right above the heading “Oklahoma Cost Accounting Systems”.
Epic starts out by discussing CBEW, an independent certified public accounting firm that is in the business of reviewing public school financial statements and that CBEW is an approved CPA firm by the State Auditor and Inspectors Office, AKA Lying Cindy's little sand box. They note that State Public School Audit law sets out what is required on these public school audits and specifically states that the audit “must encompass all of the school district's funds”. CBEW also stated that the transactions of EYS, the Charter School management company were NOT to be included in the financial statements. Why? Because EYS is a private contractor. Lying Cindy would like to tell us that anyone that does work or supplies items to a public school has to open their books upon demand. If an office supply company furnished some copy paper, that would give Lying Cindy the right to dig around in their books according to Lying Cindy.
And worse, we find out that these audited annual financial statements done by CBEW were submitted to Lying Cindy every single year and that Lying Cindy had the responsibility to examine all the CBEW audit opinions and the financial statements submitted to determine if the audit opinions and financial statements comply with the provisions of the Oklahoma Public School Audit Law. Lying Cindy was responsible for notifying the school board and CBEW a statement of deficiencies under 70 O.S. Section 22-109. For eight years the State Auditor must not have fulfilled their obligation under Oklahoma law or they reviewed the CBEW audits and found them to be in compliance with Oklahoma law. For the last eight years Lying Cindy has found no fault that EYS's private income and transactions were not part of the audit and rightly so. If Lying Cindy says otherwise now that can only mean that she is incompetent and has failed to do her lawful responsibility for eight years in a row.
Next up Epic talks about the SDE (State Department of Education) oversight. SDE is in charge of administering the Oklahoma Cost Accounting System, not Epic, not Lying Cindy. In the last three years the SDE had done 54 reviews of the two schools and every year the SDE re certified the two schools which is an implicit expression of full compliance with state law and SDE regulations.
Rose State College and the SVCSB have done all the oversight they are required to do by law and have conducted their annual reviews and have been paid $3,750,000 in the last six years for performing their oversight and duties. The sponsors are pleased with Epic's performance, only Lying Cindy has a problem with not going above and beyond what I required or for following state law rather than Lying Cindy's opinions.
The Community Strategies Board has also done its required oversight and is composed of people with experience in nursing, investing, business, real estate, and insurance law, finance, insurance, one is a former Epic student, one being the parent of an Epic student, and another being the grandparent of an Epic student. Epic believes that the qualifications of their board compare quite well with the school boards of the public schools in the state. Further more Epic points out that Lying Cindy didn't actually point out any statutory or regulatory oversight responsibilities that were violated by the board.
