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Audit: "Insufficient evidence of fraud" in account tied to former TUHSD employee

Concerns stemmed from out-of-state account with $100,000 balance
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Posted at 11:37 AM, May 23, 2019
and last updated 2019-05-23 14:37:49-04

A six-month long outside audit of finances for the Taft Union High School District found insufficient evidence of fraud.

The audit was conducted by California's Fiscal Crisis and Management Assistance Team (FCMAT), which sent a seven-page letter dated April 26 to Mary Barlow, Kern County Superintendent of Schools, detailing the investigation.

The letter concluded that "[b]ased on the findings noted in this letter, there is insufficient evidence to demonstrate that fraud, misappropriation of funds or other illegal fiscal practices may have occurred."

The TUHSD says it appreciates the review and that the District is making changes to how it monitors fiscal matters in the future.

On October 15, a press release sent to 23ABC News from the TUHSD Superintendent stated the district was informed the KCSOS had started an extraordinary audit of an out-of-state bank account opened by the district's former business manager, Chuck Hagstrom.

In its notice to the District, KCSOS explained it was seeking the audit to review the opening of the bank account, activity on the account, and failure to report information related to the account by the former business manager to the District’s Board and administration. In addition, the audit will seek to determine whether the former business manager opened the account using false documentation and conducted unauthorized activity on the account.

The account in question, according to the District, showed a $100,000 balance deposited by Hagstrom.

In January, 2018 Hagstrom was placed on administrative leave, according to the district.

He was the lead at the business office for 16 years before being placed on leave. The District Superintendent confirmed Hagstrom resigned from the district effective September 19.

As a result of the audit and the initial concerns, the District states it has reviewed its fiscal monitoring processes and is "taking steps to address concerns."

Those changes are outlined in a statement dated May 20 released by the District regarding the FCMAT audit findings. That statement is available to read below.