PRAIRIE CITY - Bob Armstrong likened conducting his first financial audit at Prairie City School to walking into a dark room.
When deputy clerk Kim Rolanda Kimball, 38, was arrested June 12 on 28 charges of first-degree forgery and first-degree aggravated theft, questions arose of how dark the room must have been for two different auditors and three different superintendents to have missed the clues that something was wrong in the business office of Grant County School District No. 4.
"A majority of fraud is never found by auditors," cautioned Armstrong. Typically, he said, tips lead to the discovery of embezzlement.
A tip yielded information in District 4 that led to Kimball's arrest, according to Armstrong.
"Basically, we were approached by someone outside the district entirely, (someone) having seen a pattern of activity with Kim that didn't seem to make any sense to them," he said.
The informant, according to Armstrong, was a Prairie City merchant who provided "some rather specific information." Armstrong, who already had been contracted to complete the district's fiscal year audit for 2002-2003, dug deeper, and he said he found the same issues that the tipster had identified.
So, while the dark room at District 4 had remained cluttered with disorganization and chaos for years, Armstrong said the tip shed some much-needed light on the problem.
"We spent most of the morning looking at some specific disbursements that were made by the district," he recalled.
Armstrong said he presented this information to superintendent Gene Mills. Then, Mills, principal Kevin Purnell and Armstrong confronted Kimball.
"Kim really had no explanation for what went on," Armstrong said.
Repeated efforts to solicit comment from Kimball were unsuccessful. The school board of District 4 also declined comment, referring questions to Steve Herron, attorney with the Crook Deschutes Education Service District. Herron issued a press release on behalf of the district, stating, "The district's investigation revealed that Mrs. Kimball had not followed district procedures for processing payroll draws and issuing reimbursement checks to herself, which was the basis for the dismissal. Unreimbursed payroll draws and improperly disbursed reimbursement funds are preliminarily estimated to exceed $70,000."
The district is trying to recruit a bookkeeper to close out this year's books and help unravel the mess that officials said still haunt the business office in the wake of Kimball's employment. The school district confirmed that Kimbell was fired on June 13, the day after her arrest. She was arraigned in Grant County Circuit Court on Tuesday, June 24.
Initially, Kimball was placed on a temporary suspension by Mills, who subsequently declined renewal of his contract with the district and returned to Culver. Efforts to contact him were unsuccessful.
However, Gerald Slind, a former superintendent who worked for the district from July 1, 1997 to February of 2001, was willing to comment on his years with the district. He said problems in the business office remained well disguised, at least during his tenure.
The news of Kimball's arrest "knocked me right off my seat," he said.
Slind was the one who hired Kimball. She was the sole candidate for the job after a second candidate turned it down, he said. Although the State of Oregon offers no formal training for school deputy clerks, Kimball entered with decent credentials, Slind recalled.
"She had worked in some offices and kept books for a couple of different companies in the county. ... She met the qualifications put out by the school board," he said.
Slind said he had no suspicions of problems with the district's finances.
"When I left there they had a $700,000 cash carryforward. According to the audit, when I left they had $700,000" in the bank, he said.
As for Kimball, Slind said, "In my opinion, at the time I was employed there, she was doing an adequate job."
In the June 17 press release, the district defended its oversight of Kimball.
"When we hire individuals to pay the district's bills and handle the district's money, to some extent we are trusting that person to not take advantage of their position," the press release states. "We can't hire two people to do every job, and so we rely on the honesty of our employees to a certain degree. Unfortunately, if the person person handling our funds makes unauthorized disbursements to his- or herself, and works at covering his or her tracks in our accounting system it is very difficult to detect."
Slind agreed that audits, like any kind of inspection, may not unearth the kinds of abuses that are alleged in District 4.
"It's a never-ending battle to try and keep up with them," he said. "She's hired to keep the books. And that was her job, and it was to work with the auditors, and as an administrator, you recommend the hire and fire and you run the day-to-day operations of the school. It's like math, I couldn't teach math, but I can hire a math teacher."
During public meetings, Armstrong and Mills emphasized the need for more training in the business office. Clearly, school leaders wanted to give Kimball the benefit of the doubt and help her succeed.
But the good impression and trust fostered by Kimball could not entirely hide the fact that the business office of Prairie City School was plunging into disarray, the auditors recalled.
"We were talking about massive pieces of the accounting that were not being dealt with," Armstrong said.
Brian Whitman, another certified public accountant from John Day, audited the books at District 4 before Armstrong. Starting in 1991, Whitman worked for the district under Dave Freeman, then took over the job of auditor himself in 1995 and continued auditing the district's books up through the end of the 1999-2000 school year. He agreed that the school's business office was sloppily run. Kimball failed to file invoices, receipts and other financial documents, according to Whitman.
However, when delays began to occur with completion of the yearly audits, Kimball blamed Whitman for not getting the work done, Slind recalled.
"The board was under the impression that it was our accountant's fault that we didn't get our audit in on time," he said.
Whitman complained that books were not provided in a timely manner and that the records he received were incomplete.
What was the board's response?
"We changed accountants," Slind said.
Armstrong won the contract of auditor in 2000. At that point, Kimball had been working in the business office for three years. Armstrong was chief auditor for the 2000-2001 and 2001-2002 school years, and his firm, Oster Professional Group, delved into a series of high-profile budget breakdowns with the school board in January.
The $700,000 carryforward that Slind recalled nearly evaporated in two school years, according to information from the district. This year's starting balance was $39,000. Armstrong emphasized that the depletion of reserves did not relate directly to the Kimball investigation. Rather, he blamed poor budgeting. However, he acknowledged that the problems in the business office might have contributed to inadequate warnings about this trend by the district's budget committee and school board toward "budgeting to spend more than they would bring in."
Armstong will remain to prepare the 2002-2003 audit. Meanwhile, the community will ponder how a well-regarded deputy clerk, a hometown girl who graduated from Prairie City High School, could be arrested for forgery and theft.
Prairie City Chief of Police Dave Welch said he was contacted by District Attorney Lee Carter regarding the suspicions of theft, and he along with Oregon State Police Detective Mike Durr met with school officials and Armstrong to discuss the situation.
"Kimball was interviewed and was subsequently arrested," Welch said.
She was booked into the Grant County Jail and given a conditional release.
Armstrong speculated that more information will come out as the allegations move through the courts.
"There is this ongoing investigation, and at some point in time, we'll be able to speak freely on the specifics," he said.
Slind, who reviewed a stack of checks at the police department and said of the endorsements, "they certainly weren't my signature," tried to remain circumspect as well.
"As far as I'm concerned, she's innocent until she's proven guilty, but it looks pretty bad," he said.