Audit: Saugus records sloppy, illegal

SAUGUS – An independent audit into the Saugus High School student activities account appears to show a pattern of shoddy record-keeping at best and a violation of state law at worst.After months of waiting, the audit into the Saugus High School student activities account has been released to selectmen, and it details student activity funds being used for payroll stipends and “non-compliant” activity accounts dating back 20 years.The audit, which was done by Powers & Sullivan, a Wakefield accounting firm, also states there are several stipends where “no written approval was provided to us and therefore we have questioned the allowability of the payment.”It?s unclear yet whether legal action might be taken regarding the audit findings.Read the entire auditAccording to the audit, the Town Treasurer established a “student activity agency account” in 1991, which was under the control of the town. The treasurer also established a student activity checking account that was controlled by the high school principal.State law says the only deposits allowed for the checking account maintained by the principal are “replenishment of funds received directly from the agency account.”?For the majority of deposits this occurred, however, approximately $32,000 of receipts was deposited directly into the checking account, which is a compliance violation,” said the audit.The audit also states the checking account “correctly disbursed funds for true student activities” but also controlled and disbursed funds for purposes “unrelated to student activities.”?This is a compliance violation of law and regulation,” said the audit.The audit lists the non-student activities, which includes a principal?s discretionary account, scholarship accounts, athletic revolving accounts, athletic booster funds, student IDs, student parking, landscaping and other accounts.?Most of these accounts have a school purpose, and if they had been accounted for properly on the Town?s ledger would not be considered a compliance violation,” the audit states.The audit further states the principal?s discretionary account was in existence prior to Joseph Diorio?s hiring and pre-dated “the last few school business managers.” The audit also notes that since such an account is “not in compliance with the student activity law, then every transaction is questioned.”Diorio has been on paid leave since December and is a finalist for the Lowell High School headmaster?s job. He could not be reached Wednesday, and his attorney said previously Diorio would be making no more statements about the matter.The audit then lists some of the larger payments from the account, which had a balance of more than $83,000 in August 2005 and balance of a little less than $10,000 on Dec. 14, 2012. The audit states this remaining balance was transferred to the Saugus high school gift fund.Payments include: $9,000 for smartboards in 2010, $1,050 for a refrigerator, $1,860 for furniture and $5,765 for landscaping between September 2011 and September 2012.The audit states if most payments were made from a gift/grant account, the majority would have been approved. The audit recommended that the school stop using the discretionary account, which it notes has already been implemented.However, the audit also states that in May of 2012, $1,000 was transferred from the Dorothea Routhier Scholarship Fund to this account.?There was no explanation recorded for the purpose of the transfer and we reviewed the disbursements from this account from May 2011, when the scholarship was received, and found no scholarships being paid from this account,” said the audit.”We are questioning the validity of this transfer.”The audit also details fines the school charged to students who came to school without their identification badges. These fines are paid in cash and the audit states more than $1,000 in cash was found in a file cabinet from these fines when the audit started in December.?There were no records maintained that documented