Michael Kennedy

EDAD 550
26 March 2014
EDAD 550 - IRLF #3 - Fudge
You are the Director of Special Education and report directly to your supervisor, the Superintendent of Schools.
You are completing your first year in the district and are working on a number of projects near the end of the
school term. In preparing for the state review that will take place in the fall, you notice that the figures used to
report the participation of special education students in the district have apparently been 'fudged' to create a
more favorable funding disposition for the district. As a preliminary step, you have reviewed the audit of the
previous year, as well as the documents submitted to the Area Education Agency as required to secure funding.
The current figures appear to be consistent with those of the earlier report, which contained, as far as you can
tell, the same favorably erroneous calculations used during the current year. In reviewing the exit report from
the earlier visit, you notice no blemishes indicated by the auditing team.
You have taken your findings to the Superintendent who has been in his position for the last 12 years. He was
recently named, Regional Superintendent of the Year for the fifth time. Upon hearing your concern, he says,
"We've been doing that for years. It gives us more flexibility with the dollarsIts whats best for our kids."
After some small talk, you leave his office in somewhat of a daze. As you ponder the situation further, several
thoughts run through your pounding temple, including the Superintendents words when you were hired about a
year ago, You are being hired because you are a team player, you have a track record of loyalty, and I know
youll always do the right thing. You also remember how grateful you were to take the job that brought a
significant raise, and has helped ease the burden of raising your three children, ages 15, 13, and 7. Upon further
exploration, you have found that the funds in question have been used for items that are not listed on the any of
the special education students IEPs and that this has been going on for at least four years.
What will you do?
Investigation
The first area that I am investigating is the special education teachers. I explain to the teachers that I am
looking to familiarize myself with the IEPs, particularly the accommodations. From speaking to the special
education teachers, I receive no new information. IEPs are clearly written, accommodations are
Financial records for our district are generally kept by the districts business manager, so he was the next
person I spoke to. I started off by asking him what the roles and responsibilities for different employees of the
district for financial record keeping. He stated that the financial records are kept by him, but he is given
financial records other employees, particularly the Superintendent. He said, Im given our finance information
to organize and balance. I dont have information about the application of these funds, because I dont have an
education background. The Superintendent gives me the financial records to organize and balance for our
auditing team to evaluate and make recommendations.
The next important group to contact is the external auditing service that has performed the school
districts audit. I explained to the auditors that I believed there are some discrepancies in past school district
audits, and asked if it would be worthwhile review the school district audits from the past four years. The
auditing service told me they could look at the district audits, and one of two things would happen. Either
nothing would be found, or discrepancies would be found and the auditors would have to report the

discrepancies to the next in line of the chain of command, which would be the Superintendent. This statement
concurs with the Journal of Accountancy (1997). Furthermore, the auditors are not responsible for detecting any
fraud that may occur, because the auditors had been given reasonable assurance that the statements are free of
material misstatements, whether caused by error or fraud (Mancino, 1997). I responded by thanking the
auditing service and saying that I would be in contact if I would like to pursue this further.
The next area to I decided to investigate is the school district Board Policies. According to Chapter 8,
Section 3 of the Dubuque CSD School Board Policy, Any employee who suspects fraud, impropriety, or
irregularity shall report their suspicions immediately to their immediate supervisor or to the superintendent.
However, suspicion lies with the Superintendent, so board policy specifies that the concern should be brought to
the attention of the School Board President, who has the power to contact the appropriate agencies. The School
Board Policy also states that employees will not be retaliated against for bringing attention to these concerns. If
retaliation occurs, the employee committing the retaliatory act will be subject to disciplinary action up to, and
including, discharge.
I also decided to investigate Iowa whistleblower protection laws. According to Iowa Code 1999: Section
19A.19, state employees are protected from reprisal by their employer when reporting fraud (1984).
Furthermore, civil action can be taken by an employee against an employer if such a reprisal were to occur. The
employer that carries out the reprisal would be guilty of a simple misdemeanor.
Finally, I also investigated the Iowa Board of Educational Examiners. According to Iowa BOEEs
website (n.d.), licensed practitioners can have a complaint brought against them, if the complaint meets a
number of criteria. First, the complaint must be brought about from another licensed practitioner employed by a
school district or educational entity, or a parent or student involved in the alleged complaint. Secondly, the
allegation must be a violation of the Code of Professional Conduct and Ethics (2013). Finally, if someone has a
complaint, they must first try to resolve the complaint at the local level. Only after all of the criteria are met
should a complaint be filed with the BOEE.
According to the Code of Professional Conduct and Ethics (2013), violations of the code include
misrepresentation, falsification of information, and misuse of public funds and property.
Reflection
There are many things to think about when dealing with an issue of this magnitude. I have to think about
the implications of my actions for myself, my family, the Superintendent, the school, and the community. What
I decide to do will have an effect on all of these people. As I investigated this issue, it became more and more
obvious that this was not a small error, but a systemic, perhaps fraudulent, concern. I am incredibly conflicted
with how to feel after investigating the situation. Part of me is very mad that our districts Superintendent, our
leader, has been misappropriating money for years. Im not in a position to decide whether this
misappropriation is fraud, but I dont feel right about what Ive learned. I feel that Ive lost most of the respect
that Ive felt for an individual who is a five-time Regional Superintendent of the year and held in high esteem
within the community.
I also feel conflicted, because I know that our Superintendent has given me a great opportunity to be the
leader of this school. Part of me feels like I owe him for what hes done for me and my career, but I also feel
like the school district owes it to the tax payers of this school district to have their tax money used
appropriately. I dont fear recourse against me for bringing this concern to light, because I know our School
Board Policy, as well as Iowa law protects me. However, what if Im wrong? What if I report this concern, but

district money is not being used unlawfully? Ive already spoken to the Superintendent about my concerns, so
anonymity is no longer an option. If I report this and the concern in not investigated or found to be baseless? I
certainly dont want to burn a bridge with the Superintendent, particularly in my first year. Im fairly confident
that financial wrongdoing has occurred, but this is still a concern.
If I decide to report this concern, I could be ruining the career of the Superintendent. Hes not a bad
person, and I dont want to see him lose everything. He could be fudging our financial statements for a good
cause. On the other hand, does the end justify the means? Does it really matter if the Superintendent had a
good reason to do what he did? And what if I decide to do nothing? I know about the financial issues at hand
and would have decided not to report them. If an investigation were to occur, criminal charges could be brought
against me, which scares me more than anything.

Leveraging
One of the major strengths that I think I have in this situation is my investigation and assessment of the
finances being fudged. I am confident in my assessment and that I have spoken to the necessary individuals to
help me reach my conclusion. I also think that I am a very reflective individual, which is a strength in this
situation. Peoples reputations and careers are on the line with how I decide to move forward. Taking the time to
fully reflect on the situation is a great asset that I possess in this circumstance.
There are a number of resources that I have at my disposal to help work through this issue. First of all, I
have our School Board Policy, which is very useful to direct me toward an appropriate course of action. I also
have Iowa law, which can help to determine the consequences of my decision. The school districts lawyer is
another possible resource I could utilize, which could give me a legal perspective of the entire situation. Finally,
I have the School Board President, which is the next person above the Superintendent in the chain of command
I should follow. Ive already spoken to the Superintendent, so the Board President would be individual that
could assist in resolving the situation.
There are a number of options I have to consider for dealing with this issue. First of all, I could decide to
do nothing. I could ignore the misrepresented numbers and potential fraud that has been occurring for at least
four years. The problem would go away immediately, but could definitely resurface during the state review.
This could be a major problem, because I know about the issue and didnt report it.
Another option is to resign from my position. Taking myself out of the situation would be an immediate
remedy, but it would not solve the problem. If the misappropriation of funds were brought to light, I could still
be held liable for not reporting the issue. Also, this would place a major burden on my family.
I could also report my concerns to the School Districts lawyer, or other legal entities, which would
begin the legal process of resolving this issue. I dont see this as being a smart option to take, because it would
be breaking the chain-of-command that is implied by the School Board Policy. According to the policy, I should
report my concerns to the School Board President. Choosing this option may resolve the issue, but it would also
alienate me from the board and break the trust that exists between me and the board.
I could file a complaint with the Iowa Board of Educational Examiners as well. I think this option could
resolve the issue, but I dont believe I have met the criteria necessary to file a complaint in good faith. I feel

confident that the Code of Professional Conduct and Ethics was violated, but I did not try to resolve the concern
at a local level.
I can also go talk to the Superintendent and give him an opportunity to report the misappropriated funds.
This would be a difficult conversation to have, but it may be necessary. The Superintendent may balk at my
proposition, but I may owe it to him to be given an opportunity to do the right thing. This would go against
Board Policy of reporting a concern immediately, but if the Superintendent does not accept the proposition, the
School Board could be the next party to involve.
Another option is to report the issue to the School Board President. According to the School Board
Policy, all issues of this nature should be reported to the Board President. I see this as a viable option, because
there is concrete direction written in the Board Policy for what I should do in this situation.

Frame
I have decided to give the Superintendent an opportunity to come forward with this information on his
own. To do this, I spoke to him about my concerns.
I wanted to talk to you about our previous conversation regarding special education funding. I have
some major concerns about our financial reports. What I heard you say from our previous conversation is that
special education funding is moved around to create more flexibility in our spending, which is whats best for
our students. Is that right? (Superintendent answers yes) I am very uncomfortable with this arrangement. My
perception is that this borders on fraudulent misuse of funds. This practice also does not align with the
Professional Code of Conduct and Ethics. With our state review coming up next fall, I think there is a distinct
possibility this issue will be brought to light. As the Director of Special Education with knowledge of this
concern, I feel culpable. According to our Board Policy, I should report this concern to the Board President
immediately, but I wanted to speak with you first. However, if I feel it is necessary to report my concerns to the
Board President, I will do so. Ultimately, I want this concern to be resolved. How would you like to proceed?
The Superintendent responded by saying, I can see that you are concerned, but you have nothing to be
concerned about. First of all, you would not be culpable for reports that came out before you became Director of
Special Education. Secondly, I dont think this is a big deal. If it were, our auditors would have told us there was
a problem. Remember, this is what is best for our students. Our job is to do what is best for them.
Based on the conversation I had with the Superintendent, I think this issue must be dealt with head on, in
accordance with the school board policy. I went to speak with our School Board President.
Ive been preparing for our state review that will take place next fall and I wanted to discuss with you a
concern that Ive had with district funds, particularly our special education funds. Ive been spending some time
looking at our financial reports and Im concerned that some of the numbers have been misrepresented or
altered. The funding we receive for special education services does not match the numbers we are reporting out
on. In fact, the numbers we have reported are much more favorable than the reality of our districts financial
situation. I conducted an investigation of my own, speaking with our Special Education Teachers, our Business
Manager, and the firm that has conducted our external audit for a number of years. After investigating, Im very
concerned with how our finances are being reported. My biggest concern stems from the role of the

Superintendent. I spoke with him about my concern, and what I heard was that the numbers were altered
purposefully, and not by error.
I think that my knowledge of the misappropriated funds has compelled me to bring this information to
light. According to our School Board Policy, I am obligated to report this concern to you so that appropriate
action can be taken. The policy states that when a concern of this nature involves the Superintendent, you have
been given the power to contact our lawyer and any other agency to investigate this concern. I have not
contacted our districts lawyer, the Iowa Board of Educational Examiners, or any other agency besides our
external auditor, but I do think this situation requires such attention. Im not in a position to determine if fraud
is the appropriate label for this situation, but that is my concern.
I would like to have a signed document from you that indicates that I brought this matter to your
attention. I dont want to have this issue come out due to a state review or by other means, particularly when we
see what the problem is ahead of time. Please let me know if I can be of any other service to you moving
forward. Thank you.

References
Dubuque community school district. (2009). Board policy: Internal financial controls (Ch.8 Sec. 3). Retrieved
13 March 2014 from
http://www.dbqschools.org/schoolboard/policies/chapter8/8014InternalControls.pdf
Iowa board of educational examiners. (2013). Code of Professional Conduct and Ethics. Retrieved 26 March
2013 from http://www.boee.iowa.gov/doc/ethHndot.pdf.
Iowa board of educational examiners. (n.d.). Complaints. Retrieved 25 March 2014 from
http://www.boee.iowa.gov/complaint.html
Iowa legislature. (1984). Iowa Whistleblowers Act, Iowa Code 1999 19A.19
Mancino, J. (1997). The auditor and fraud. Journal of Accountancy. Retrieved 12 March 2014 from
http://www.journalofaccountancy.com/Issues/1997/Apr/mancino.htm