A spokesperson for Fitch Ratings Wednesday issued a statement indicating that the recent FBI raid of the Beaumont Independent School District's administration office and two homes of employees does not threaten the district's financial rating.
Fitch issued the following news release:
AUSTIN, Texas--(BUSINESS WIRE)-- Fitch Ratings has spoken with officials from the Beaumont Independent School District, Texas ('AA' underlying/Outlook Stable) to clarify Fitch's understanding of the current status of a FBI investigation into two of the district's key finance staff: the director of finance and the comptroller. Based on the initial information Fitch has gathered, Fitch is of the opinion that the current federal investigation of certain district employees does not represent a material threat to the district's underlying financial performance and position or overall credit profile. The scope of the investigation does not appear to be widespread, but focused on the actions of the aforementioned individuals.
The FBI's investigation is based upon allegations of financial impropriety involving improperly diverted funds and bogus accounting of funds. The district reports that it is cooperating fully with the investigation. It is not yet known when this investigation will be concluded. The director of finance and comptroller were placed on administrative leave.
Fitch's review of unaudited bank statements and cash ledgers confirms that the district maintains satisfactory liquidity and fund balance for routine district operations and to protect against unforeseen budget challenges as Fitch outlined in its last rating action dated Jan. 25, 2013. The district maintains a sound financial condition and continues to meet its financial obligations in a timely manner.
Financial operations appear stable despite the key staff vacancies stemming from the federal investigation. Management oversight changes have been underway at the district since the first of the year. The deputy superintendent for financial services remains in place and was appointed to this role well before the investigation began. Additionally, the district recently engaged a financial consulting firm whose staff assists in the support of day-to-day financial operations as well as works with district staff to further improve financial controls and management.
Fitch also understands that management has begun to implement and strengthen certain financial practices and processes, along with a more robust reporting structure for improved oversight and accountability. Fitch will continue to closely monitor developments surrounding the federal investigation and evaluate actions that would impair the district's financial position and overall credit profile.
Additional information is available at 'www.fitchratings.com'.