Audit finds financial issues with foundations at CCA, other schools

REGION — Nearly a year after two Canyon Crest Academy students published a report alleging a major lack of financial transparency from their school’s foundation, a formal audit has backed up several of their claims and also found issues with the financial practices of the foundations at other high schools.

On Aug. 7, the San Dieguito Union High School District reviewed the results of an audit from firm CWDL, which was hired by the district last November to examine the financials of the school foundations at Canyon Crest Academy, San Dieguito Academy, Torrey Pines High School and La Costa Canyon High School.

The audit was spurred by an investigative report published by now-graduated CCA students Litong Tian and Kevin Wang, alleging financial mismanagement by the CCA Foundation. Soon after, the district board opted for an audit of all four high school foundations. 

The nonprofit foundations are run largely by parent volunteers and support the high school athletics, arts and STEM programming via donations. While the foundations operate on school campuses, they function independently of the district and have their own boards of directors.

CWDL’s report outlined various areas for improvement in the financial practices of all four foundations, as well as the overall operating relationship between the foundations and the district.

The firm issued an opinion that the LCC, SDA and TPHS foundations appear to conform with generally accepted accounting principles. 

For the CCA Foundation, CWDL issued a modified opinion stating that they were unable to ensure the foundation complied with these principles due to the absence of any reporting or tracking of in-kind (non-cash) donations.  

That includes calculating the approximate monthly value of the district property that is utilized by the foundations for offices and operations, and reporting that as revenue, said CWDL audit partner John Dominguez.

“Ultimately, we did believe that was a financial element that was required that was not present,” Dominguez said.

CWDL also noted that there is no formal memorandum of understanding between the district and any of the school foundations regarding their operational relationship, including expectations for financial reporting and use of district facilities, which can lead to inconsistencies and confusion. 

The firm strongly recommended that the district enter into MOUs with each of the foundations to outline expectations. 

All of the trustees except for Jane Lea Smith participated in the discussion of the audit. Smith chose to recuse herself due to her past service on the CCAF board. 

The remaining four trustees agreed unanimously to bring back a discussion about a potential MOU that could be entered into with the foundations. Several community members also supported this idea.

“I think our district owes it to these foundations to help them, to set up policies [and] the MOUs,” said trustee Rimga Viskanta. 

‘We were right’

Tian and Wang, the former students who authored the investigative report last fall, said they feel vindicated after the release of the audit. 

Their original report highlighted concerns about high fees for clubs that exceed those of other foundations, a lack of required salary disclosures for executives and a lack specificity regarding how funds are spent. 

Tian and Wang said their intent was to highlight issues so that the foundation could ultimately serve students and their clubs better, and increase trust from donors. They noted that after publishing their investigation, they faced strong backlash last fall from CCA Principal Brett Killeen, who called their report “grossly erroneous and misleading” in a statement last year, as well as foundation leaders and community members. 

“We were right on so many issues,” said Tian. “My goal was to make sure that the CCAF functions better for students and for the community. My goal was not to decrease the donations, to ruin anyone’s life, no. I want to make this organization work better, because we all know how important their work is.” 

CCAF has historically taken 25% of each donation made to a specific club and allocated it to a general fund for the program for either athletics, arts or STEM, depending on what type of club it is. 

CCAF also takes an end-of-year fee from each club, which varies depending on the total revenue raised, for executive management and salaries. 

The audit found that overall, the percentage of donations that go toward a general program fee or executive fee is between 10%-25% at CCAF, compared to the range of 5%-10% at the LCC, TPHS and SDA foundations.  

Dominguez said this is uncommonly high for a foundation, and that setting a consistent fee between all the foundations would be more practical.

“The lack of standardization among Foundation entities within the District diminishes transparency and could lead to questions regarding fee justification and consistency in donor communications,” CWDL said in their report. 

CWDL also noted that the CCA and LCC foundations both failed to report the salaries of their executive directors to the IRS, with CCAF failing to report from 2018-2020 and LCC failing to report in the 2023-24 year.

The lack of IRS salary disclosures from former CCAF executive director Joanne Couvrette was a main focus of the students’ investigative report last fall. At the time, foundation leaders said they believed they were not required to submit this information based on the expertise of their CPA firm involved in completing their tax filings.

Couvrette left CCAF in May 2024 after 12 years as executive director. She is currently suing the foundation and the school district for alleged wrongful termination, claiming she was fired in response to a Facebook post she made about pro-Palestine demonstrators. 

I-9 forms for CCAF employees were also missing or not accounted for, the audit report said. In addition, the audit found material variances in beginning balances from the foundation, without explanation or supporting documentation to explain the inconsistencies. 

“The recently released audit report highlights many glaring issues within the CCA Foundation’s practices,” said Wang. “In addition to the high 25% fees and missing salary disclosures, there were a dozen more problems — a shocking lack of internal controls, balance discrepancies, missing wage documentation and a lack of clarity regarding the renting out of school facilities.” 

CCAF has already begun to make some changes since the audit was released, including submitting the missing salary disclosure forms as well as reducing the percentage of each restricted donation that is placed into a general program fund from 25% to 20%.

Regina Twomey, the new CCAF executive director, reiterated that the foundation’s objective is to support students every day. 

“The point of an audit is to find issues. If there were no issues, I would be concerned,” Twomey said. “We’re working closely with the school and the district to correct those findings.” 

Wang said while this is a good first step, the foundation needs to do more to regain the trust of donors, including further reducing fees for clubs. 

Several community members said they were disturbed by the findings, and said the two young men should be celebrated for their bravery.

“This level of mismanagement is unacceptable, and potentially puts CCAF’s nonprofit status at risk,” said resident Ming Zhu. 

Other findings 

CWDL observed other issues that were consistent across all four foundations. That included a practice of paying for some expenditures prior to obtaining approval, and in some cases, without ever obtaining approval. 

The report also said none of the four foundations have reported their investments, leading to a material understatement of revenue that could potentially misrepresent the financial positions of the organizations.

CWDL also noted a failure to track net assets at the TPHS and LCC foundations, a lack of credit card payment controls including documentation and authorization (CCA, TPHS and LCC foundations), a lack of regular cash reconciliation (CCA, SDA and LCC foundations), failure to track net assets (LCC and TPHS foundations), incorrect classification of funds in the trial balance (TPHS and CCA foundations) and failure to track in-kind donations of capital equipment (SDAF).

Despite this wide range of findings for all four foundations, trustee Michael Allman claimed that the modified opinion issued for CCAF indicated they “failed” the audit, while the other foundations “passed.”

Dominguez refuted this characterization, noting that while CCAF was missing some financial information, the majority of materials that CWDL observed presented no issues. 

Some community members noted that there were areas of improvement for all of the foundations, which suggests more of a structural issue.

“None of the foundations are perfect,” resident Jen Charat said. “Please, do not mistake incomplete documentation for corruption, administrative gaps for conspiracy.” 

The Coast News reached out to the foundations at LCC, SDA and TPHS to request comments on the audit findings. Representatives of the SDA and LCC foundations said they appreciated the audits and look forward to working with the district to develop an MOU.

“The La Costa Canyon High School Foundation values transparency and intends to continue to collaborate with the District. We appreciate the work of CWDL and we are actively reviewing the recommendations, which we believe will help strengthen our practices and policies,” LCC Foundation Board President RJ Smith said.

“The San Dieguito Academy Foundation has always prioritized sound governance, fiscal responsibility, and transparency in service to our students and community. We are gratified that our audit findings reflect those values and affirm the integrity of our practices,” SDA Foundation Executive Director Sarah Givens said. “We are also grateful for the guidance offered by the auditor to improve our processes, and we look forward to collaborating with the District to develop a Memorandum of Understanding and continued best practices.”

District spokesperson Edwin Mendoza said the district looks forward to working with the foundations going forward to improve operations, and reiterated that the foundations are crucial to supporting student success. 

“We appreciate the opportunity this audit provides for both the district and the high school foundations to gain a deeper understanding of our documentation and processes,” Mendoza said. “We look forward to collaborating in the spirit of continuous improvement to enhance our operational relationship. The school foundations are valued partners in our educational community, operating as independent nonprofit organizations.”