When Burnaby school district auditor Lynda Kerr tried to follow the paper trail of 10 randomly chosen cheques during a financial audit at Alpha Secondary School in March 2009, things didn’t add up.
Appearing in B.C. Provincial Court last week, Kerr said she couldn’t finish the audit after two visits because bank statements and copies of cleared cheques were missing, and attempts to get them from Jodi Fingarsen, the school’s bookkeeper at the time, were unsuccessful.
“It created more questions rather than giving me answers,” said Kerr, who has since retired from the district.
Kerr was the first witness in the trial of Fingarsen, who is accused of defrauding the school of about $67,000 during her employment there between April 2008 and April 2010.
‘Carte blanche’
The Crown is arguing Fingarsen created and deposited third-party cheques – made out either to school staff or vendors owed money by the school – into her personal account, avoiding detection because she had “carte blanche” over the school’s finances.
“It’s the Crown’s theory that Miss Fingarsen went to some lengths to avoid getting caught,” Crown counsel Jennifer Horneland said in her opening statement. “She made excuses for inconsistencies in the accounting system, she blamed teachers and staff, intercepted phone calls and mail from angry vendors seeking long overdue payments.”
Kerr’s routine audit in 2009 first revealed to the school district that all was not well with Alpha’s books.
After the unsuccessful audit, Kerr said she presented the school with a set of 15 recommendations for improving practices and procedures, and, in the following school year, she said she pressed Fingarsen a number of times for bank statements and cleared cheques that had gone through the Alpha account.
At the school, meanwhile, some teachers also started noticing inconsistencies with their accounts during Fingarsen’s time as bookkeeper.
James Morton, who was the school’s professional development chair and advanced placement (AP) coordinator, testified last week that about $6,000 had gone missing from an account set aside for the fees students paid to take AP exams.
Applied skills department head Debra Rizzo testified that she had gotten late payment notices for unpaid bills from two vendors, one that supplied her department with aprons and another that supplied workbooks for its FoodSafe course.
Both Morton and Rizzo testified longstanding procedures for submitting cash and cheques to the office from fundraising and fees were changed by Fingarsen, and requests for complete bank statements for their respective accounts were not fulfilled.
Fallout
After the Alpha bookkeeper was suspended in April 2010, Kerr said the district accessed copies of all the cheques that had cleared against the Alpha account from 2008 to 2010 and found about 75 cheques, worth a total of about $67,000, had Fingarsen’s personal bank account number on them.
“My conclusion was that they had been deposited into Ms. Fingarsen’s bank account,” Kerr said.
All had been deposited at President’s Choice (PC) Financial or CIBC bank machines.
One of the cheques, for $907.77, was made out to Rizzo.
When asked if she had ever requested a $907.77 reimbursement cheque or authorized Fingarsen to endorse the back of it and put it into her own personal account, Rizzo said, “No, never.”
When asked if she could think of any reason a school bookkeeper ought to be depositing third-party cheques into her personal account, Kerr said, “No.”
Describing the fallout at Alpha after Fingarsen was fired, Kerr said the school and board budget accounts hadn’t been properly maintained, some deposits hadn’t been made, documentation was missing to show which students had paid which fees, and relationships with unpaid vendors had broken down.
“People had trusted that the bookkeeper was looking after the business of the school, and that wasn’t happening,” Kerr said.
During cross-examination, however, defence lawyer John Banks suggested the officials ultimately responsible for the accounts hadn’t done their jobs.
He pressed Kerr on why she hadn’t finished the audit in March 2009 and opted, after consulting with assistant secretary treasurer Roy Uyeno, to give the school a list of recommendations instead.
In an April 30, 2010 statement to police, Kerr said she had told Uyeno, “We can’t show this to the auditors because it’s a mess.”
In court, Kerr told Banks there were “binders and binders of problems” the audit couldn’t solve and she didn’t know if they were ever shown to the outside auditors who look over the school district’s finances every year as per Ministry of Education requirements.
Banks also pointed out that monthly bank reconciliations should have been looked over by the school’s principal, Ron Hall, and every cheque written should have been accompanied by backup documentation looked over by two school officials with signing authority at the school.
Banks further pointed out that vice-principal Diane Carr had never actually been granted signing authority when she came to the school but signed school cheques for about a year anyway.
“What I’m curious about is how can someone do that over and over and over again and nobody at the school or at the district office, where you were, was aware of it,” Banks said. “Nobody was looking at the accounts, I take it.”
Kerr agreed Carr’s lack of official signing authority had gone unnoticed until Fingarsen was suspended but added that would have had no bearing on third-party cheques being deposited into Fingarsen’s personal bank account, vendors not being paid, or other irregularities.
It may, however, have had some bearing on whether or not the district was able to recoup its fraud losses through its insurance company, according to the school district’s former manager of financial services, Patricia Bisset, who testified Monday.
Banks noted that, in a statement to police in 2010, Bisset brought up the issue of insurance in relation to Carr’s lack of signing authority.
Bisset said she didn’t know if the insurance claim ever went through because she has since resigned from the district.
Banks asked both Kerr and Bisset if, during their investigation or interactions with police, they had ever seen a photo or video of Fingarsen depositing a cheque at an ATM.
Both said no.
Fingarsen's trial was originally expected to last until Friday, but three more days have now been added in November because the proceedings are taking longer than expected.
