$55,000 in O.C. Student Funds Missing : Foul-up: Discrepancies at Irvine high school leave clubs in financial limbo. Bad bookkeeping blamed.

IRVINE —  Bad bookkeeping has created a $55,000 discrepancy in the bank accounts of student clubs at University High School, triggering audits of all the district’s three high schools and leaving dozens of student clubs in financial limbo.

Irvine Unified School District officials have concluded that the accounting problems--many traced to a faculty adviser and an accounts clerk--have made it impossible to know exactly how much student organizations such as the French Club and the football team should have in their accounts. The shoddy bookkeeping prompted a police investigation, but it turned up no evidence of intentional wrongdoing.

Paul Reed, the district’s deputy superintendent for business, said two audits found errors such as failure to record expenditures, deposits entered twice, and deposits not entered at all in club accounts. As a result, he said, $55,000 was unaccounted for, and students found that they had less money in their accounts than they believed.

In a move that infuriated students, University High School officials tried to cover the loss by taking 30% of the amount each club had in its account as of June, 1991, when the discrepancies were first noticed, but district officials intervened and ordered the across-the-board cut halted.

The district is now seeking reimbursement from its insurance company for the missing money, Reed said.

“It was very sloppy,” Reed said of University High’s bookkeeping practices. “They really didn’t handle money well.”

One of the audits, by the independent accounting firm KPMG Peat Marwick, found $54,935 unaccounted for from the student funds. Of that, $9,702 was due to checks that were issued but never recorded in a ledger and never cleared the bank; $14,443 was due to cash collected by the clubs but never recorded as deposited, and $30,790 was in deposits that were recorded, but never received at the bank.

Although Reed said the collection and accounting practices of the students and their faculty advisers were sometimes not up to par, he placed the bulk of the blame on an Associated Student Body adviser and an accounts clerk who have since left the district for unrelated reasons.

The audits, which turned up no bookkeeping troubles at the district’s two other high schools, have prompted reforms in the practices at University High, with tighter controls on collection and disbursement of money and closer supervision by district officials.

Before the insurance company was approached for reimbursement, University High School angered students by taking 30% out of each club’s account, without knowing which clubs had mistakes in their accounts.

As a result, some clubs that give partial scholarships to students, such as the Latin Club, are unable to give those funds because of the sudden downward revisions to their accounts. Others found themselves pinched in other ways when they received computer printouts without warning last week showing adjusted balances.

“We didn’t know about it until they had already (adjusted the accounts),” said Claudine Ko, 17, editor-in-chief of the school’s monthly newsmagazine, The Sword and Shield. “They left us with zero in our account. They wiped us out.”

The news staff therefore could not publish its usual 16-page paper of 8 1/2-by-11 inches. Ko said the angry staff decided to “make a statement” by producing a four-page, 3-by-4-inch volume, which told students that “the school took away all our money.” And in a swipe at the school’s accounting practices, it suggested that students should keep their money “in a real bank.”

The news staff wasn’t the only angry club on campus. Jerry Chen, 17, president of the Latin Club and the Speech and Debate Club, said those organizations’ accounts were decreased by $736 and $30, respectively. The yearbook staff reportedly lost $3,000, the Drama Club $2,000 and the senior class council $1,000. Aditi Roy, 17, president of the French Club, said that group lost $150, and the campus chapter of Amnesty International, of which she is vice president, lost $128.

The club leaders said they were angered not only by the loss of funds but also because school officials never consulted with them before debiting their accounts.

“They kept it so secret, it was like they were trying to hide something,” Ko said.

Students tried to attend at least one staff meeting about the bookkeeping problems, but school officials kicked them out, Ko said. News of the debits came from their advisers, who received memos last week stapled to computer printouts of the revised student accounts.

“This solution may seem harsh, but it is the most equitable,” said the memo, decorated with cheery illustrations of a tiny New York Times newspaper. “We apologize for this inconvenience and hope you will be understanding.”

But Chen said he failed to understand the poor accounting that led to the trouble.

“Some people say the money was reinstated, so who cares,” he said. “But we returned from spring break and found the money wasn’t there. The fact that this could even happen has the clubs and the student advisers really upset. We were not even given the responsibility to be consulted on it.”

Reed said he had recommended that the school debit only the student accounts found to have irregularities. He added that he found out about the across-the-board 30% debit on all accounts only after receiving calls from distressed club advisers.

“I advised against doing that from the very beginning,” he said. “I don’t think that’s a fair way of doing it. When we got wind of it, we stopped it.”

University High Principal Leah Laule did not return several calls from The Times. But Ko said that in an interview with the student newspaper, Laule said she notified the district of accounting irregularities when a substitute accounts clerk discovered “a sizable discrepancy” in a routine check last spring. Laule also told the newspaper that it became clear that “bookkeeping procedures were done very poorly” and that over three years, the situation had become “clearly a mess,” Ko said.

Irvine Police Investigator Paul L. Jessup, brought in at the request of Reed and the school board, said his investigation produced no sign of criminal activity. The record-keeping trouble appeared to be “sloppy bookkeeping,” Jessup said.

Greg Smith, president of the district Board of Trustees, said it is a shame that money the students raise for club activities was so badly managed.

“It’s unfortunate (that) these students and parents who have worked so hard to raise this money have to see it wasted by just poor bookkeeping procedures,” Smith said.

“The good news is, most of the money will be restored,” Smith said. “And we’ve learned our lesson. This won’t happen again.”