When I served as the chair of the board of directors of a community bank in Oswego, New York, where I lived for 16 years, I was amazed that the bank’s chief executive officer approved his own expenses.

This man was an outstanding leader whom we brought in from another state to run the bank. He had impeccable credentials. He was honest, ethical and held himself and his subordinates to the highest standards of performance.

But having him approve his own expenses was not appropriate, even though, at first, the other six board members didn’t seem concerned, especially because of his spotless reputation.

As publisher of the daily newspaper in town, I functioned as the CEO, but I did not approve my travel and other expenses, nor would I have wanted to. I submitted them to a regional vice president once a month.

My persistence paid off. The other board members finally came around, and the bank’s CEO was instructed to turn in his expenses to the board once a month for approval. As chair, the task fell to me to look over his expense account and approve or disapprove payment. Our CEO was not thrilled and saw it as an insult.

I don’t understand why, because every employee — including all administrators and board members — need to be accountable — in the bank’s case, to shareholders, but it is even more important where public funds are in question.

This is what is happening in the Jim Thorpe Area School District, where an audit has been approved to determine whether a district credit card was misused. The board has hired a consulting firm at a rate of $100-$325 an hour to pore over credit card statements to verify that proper expenditures were made by the school superintendent and business manager. It also will try to determine why late charges were assessed and how the rewards points accrued on the card are being handled.

As you probably know from experience, late fees are one of the biggest revenue-producers for credit card companies, which charge near-usurious rates, some as high as 27 percent a year.

The district school board is tasked with oversight to make sure that every penny of taxpayer money is spent legally and efficiently. When talking about annual budgets in the millions, there are bound to be some inefficiencies and waste, but it is the board’s job to make sure that these instances are kept to a bare minimum.

In most districts, the business manager will verify whether expenditures are proper. In cases where he or she has questions, these issues are presented to the superintendent and/or board for resolution before the board approves the bills for payments.

As you might imagine when millions of dollars are spent annually, there are a lot of bills. Some board members give bills a passing glance. Some rubber stamp them, but a few will scrutinize every bill to make sure that there are no red flags.

In a school district, every employee’s expense requiring the spending of public funds needs accountability, and that includes the superintendent and the business manager. Several board members at other districts to whom I spoke said if the business manager has expenses, the superintendent signs off on them; if the superintendent has expenses, the business manager or board president signs off.

If an individual board member has expenses, the full board signs off. As a double-check and legal prerequisite, the board as a whole must sign off on all expenses with a roll-call vote at the regular monthly school board meeting. There are, of course, variations on these procedures, but the point is that no one should be approving his or her own expenses without additional oversight.

At its October meeting, the Jim Thorpe board approved spending up to $15,000 on the audit to quell “rumors and innuendos” about credit card misuse. A district resident obtained credit card statements through the state’s “Right to Know” Act and questioned some of the entertainment expenses.

The credit card, taken out by Business Manager Lauren Kovac, apparently was never authorized by the board, although the board has continued to approve monthly payments.

Several financial expects who specialize in public funds oversight told me that credit card use in districts can be dangerous. “If you must have one, be sure there are tight controls — no personal expenses, monthly statements with receipts and always reviewed by a second party,” a CPA specialist told me.

According to procedures used by school boards in some model districts, when it comes to credit card use, a board needs to give clear assignments of authority and responsibilities. Accountability must be enforced. There needs to be a commitment to competence and to operating with integrity and high ethical values.

By Bruce Frassinelli | tneditor@tnonline.com