LAYTON — An audit released by Davis School District Friday reveals fishy financial procedures at Layton High School by principal Paul C. Smith and his head secretary.
Auditors don't make allegations of embezzlement or theft, although a police investigation is under way. "There is no missing money. That is the bottom line," Smith told the Deseret News Friday, adding the school is audited each year by the district.
"I am being painted as a criminal," Smith said.
The auditors do point to a serious mismanagement of money, including a fund for a Russian Club they claim doesn't exist but which at one time contained $38,611.
"The Russian Club was a slush fund, and its purpose was to hide money from the district in order that the funds could be used in any manner determined by the principal," the audit alleges.
However, Smith told the Deseret News it was just a random label of an account which was much like a rainy day fund, a "discretionary fund for special unexpected needs. It has been used for student and school benefit."
Smith said he pointed out the discretionary fund to district auditors during the school's annual audit so "it shouldn't be a surprise."
The audit released Friday also states evidence of mishandling of event ticket sales, including student athletics. Graduation ceremony ticket sales were estimated at $4,000, but the cash was never counted and was given to the head secretary and subsequently used for awards to secretaries and others, according to the audit.
The audit alleges the school didn't turn over 50 percent of its building rental revenue to the district as required, an amount totaling $26,846.
Layton police are investigating. Davis District officials are cooperating with police and giving them documents.
Smith was on paid administrative leave beginning Oct. 12 while the district continued its audit. He returned to Layton High Monday but will retire Jan. 31.
Davis District officials aren't commenting on the audit and don't plan to reveal details until after the police investigation is finalized.
When asked why the district would allow Smith to return to Layton High amid the financial allegations, Davis District spokesman Chris Williams said, "It was the superintendent's desire to place Mr. Smith back at the school. The superintendent felt having Mr. Smith there would help the school and faculty transition to a new principal."
Layton High's head secretary, Leslie "Cookie" Barker, retired Oct. 12, but district officials won't say whether her retiring that day has anything to do with the school's finances, whether it is connected to the principal being placed on leave or whether her retirement had already been planned. Barker didn't return phone messages Friday.
The district has formed a committee to help select a new principal for the high school. The search likely will begin Feb. 1.
The 20-page district audit includes three pages of Smith's responses and several pages of the auditor's responses to Smith's reasoning.
Regarding the Russian Club fund, Layton High's course catalog doesn't list Russian. The school teaches Spanish, French, German, Chinese and American Sign Language.
Smith states in the audit it is money that "has been accumulated as a special reserve general account." He further alludes to saving the money to be used as a rainy day fund to spend on textbooks and technology during the recession.
The audit states: "The question Mr. Smith must answer is where did the funds come from initially? Furthermore, why did Mr. Smith use the name 'Russian Club' since the school has no such club? It is evident that the account was used to hide money from the district. Mr. Smith concurred with this statement during the Nov. 8 meeting when this question was posed by the director of human resources."
Regarding ticket sales, Smith states the money could have been deposited into the 12th grade or graduation party funds and more investigation should be done before fingers are pointed.
Regarding building rental funds, Smith states the district failed to remind the school to send the funding, and further, the auditorium demands multiple repairs and upkeep, including lighting and seats.
Layton High Community Council member Steve Handy, after reading the audit, said he feels the allegations are "fairly harsh," and it appears there were some accounting mistakes that need to be corrected. He doesn't believe anything criminal occurred.
"I don't believe any of the money found its way to Mr. Smith's pockets," Handy said. "It's just sloppy bookkeeping on the part of him and Cookie Barker."
However, Handy says he didn't like hearing about piles of money sitting at the school. "It's common sense not to hold large amounts of cash," he said. "You're just asking for trouble."
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