Jun. 17—ANDERSON — A special audit by the Indiana State Board of Accounts is asking the former food service manager for the Anderson Community Schools to repay $1.1 million.
Carla Burke was hired by the Anderson Community School Corporation in 1998, and was named food service department bookkeeper in 2006.
Burke resigned in 2019.
The report was forwarded to the Madison County Prosecutor's office, the Indiana Attorney General, U.S. Attorney, FBI and Internal Revenue Service.
The audit found that from 2014 to 2019, Burke cashed 312 checks from the school lunch fund extracurricular bank account totaling $976,773.
Madison County Prosecutor Rodney Cummings said Friday his office is initiating a criminal investigation.
"All of the 312 checks were made payable to, endorsed, and cashed by Burke," read the audit. "The Department's records, including the check registers and purchase authorizations for the 312 checks, indicated the payments were made to vendors, not Burke. Vendor invoices were not provided to support the payments made to Burke."
Burke did not remit payroll withholding tax payments in a timely fashion to both the federal and state government, which resulted in $20,109 in penalties and interest, read the report.
The Indiana State Board of Accounts racked up $121,442 due to the special investigation.
The State Board of Accounts says Burke needs to pay $1,118,325.26 back to the taxpayers for unauthorized transactions, penalties and interest as well as special investigation costs.
"Carla Burke, former Food Service employee with Anderson Community School Corp., orchestrated an elaborate scheme to steal money from the department's School Lunch Fund Extra-Curricular account," ACS said in a statement. "At the moment the theft was first uncovered, we immediately reported this to the proper authorities and took corrective action.
"While Ms. Burke's theft was significant, since it was done over several years, it did not cause any disruption in services to our students. ACS takes theft of any kind seriously," the statement read.
The audit indicates that ACS had insurance policies that covers employee dishonesty in the amount of $500,000 for the years included in the audit.
The state agency conducted the special audit for the period from Jan. 1, 2014 to Dec. 31, 2019.
The audit said Burke was responsible for maintaining the financial records of the School Lunch Fund and her responsibilities included posting receipts and disbursements, maintaining the cash balance records and reconciling bank accounts.
During the audit it was found checks that indicated payments were made to vendors were found to be issued and cashed by Burke.
The state audit is also critical of the ACS financial record keeping.
"Bank statements and canceled checks were not reviewed, so school corporation officials were not aware that cancelled checks or check images were not being provided by the bank," the audit states.
Burke was one of two required signatures on any checks, but when the checks were created electronically it applied the dual signatures on the documents.
Auditors outlined additional gaps including the software used by Burke that allowed transactions to be changed at any time, including after audit.
"The failure to establish these internal controls enabled misstatements or irregularities to go undetected," read the audit.
In its statement, ACS said the corrective action taken includes additional internal control measures in place and purchasing new financial software that will help prevent a situation like this from happening in the future.
Follow Ken de la Bastide on Twitter @KendelaBastide, or call 765-640-4863.