Wake County school leaders can do more to prevent fraud, but there is no evidence of new fraud in the district, according to an outside audit released Tuesday.

Public pressure had been mounting on the school board to bring in an outside auditor after the theft of money from the transportation department and the cafeteria at Garner High School.

The board hired Birmingham, Ala.-based Summerford Accountancy PC -- chosen over five other firms because it specializes in fraud cases -- in hope of restoring public confidence. The board agreed in November to pay Summerford up to $470,000 to conduct the audit.

Summerford's review didn't find anything to warrant a more detailed fraud examination, but company officials said that steps can be taken to correct situations that could lead to fraud if not corrected.

"Your internal control system is adequate, but you need to be more proactive," said Kelly Todd, the senior manager for Summerford who led the audit team.

School board members focused on the good news about the lack of fraud detected in other departments.

"We're better because of the changes we've made, but other than that one breach, we were not bad before that," said board member Beverley Clark.

Investigators say employees in the school transportation department and Barnes Motor & Parts Co., based in Wilson, conspired to submit at least $3.8 million in fraudulent invoices for parts. Much of the money was used by the employees to buy personal items such as automobiles, campers, golf carts and plasma-screen televisions.

On Friday, Barnes pleaded guilty to criminal charges and agreed to provide an additional $3 million that will go to the school district. The district has recovered $4.8 million from Barnes and the former employees.

Summerford reviewed transactions throughout the school district made between July 1, 2002, and Dec. 31, 2005. Todd said the only red flags were the transportation department's dealings with Barnes.

For instance, the transportation department's payments to Barnes increased 342 percent from 2002 to 2003, an increase of more than $3.7 million. The review also found that almost all of Barnes' transactions one year, and all in another year, were less than the $2,500 that would have required competitive bidding.

They found that on 24 occasions, 50 or more invoices with the same date were submitted. There were 466 invoices dated June 10, 2003, totaling $909,266.

"Given that we know that fraud took place, had we looked at it more proactively, I believe the fraud would have been detected much sooner," Todd said.

Todd said the fact that the district had only one internal auditor at the time didn't allow for a proactive approach.

Although no other fraud was found, the audit raised questions, such as how money is paid to rent school facilities and how detailed cafeteria transaction data are kept only at the school level.

The district has implemented changes such as hiring additional internal auditors, more substantive reviews of invoices and payment requests and creating an anonymous tip line to report fraud.

Overall, the company praised the district for setting a tone that discouraged fraud.

"I commend the school board for taking this stand and sending out the message that fraud will not be tolerated in this organization," Todd said.

Schools Superintendent Bill McNeal said the district will try to implement the recommendations.

Patti Head, chairwoman of the school board, expressed optimism that the audit will accomplish its mission of boosting public confidence, something that will be needed to win public support for a bond issue on the November ballot that could exceed $1 billion.

"I think [the public] will see we're doing everything we can to reassure them and that what happened in the transportation department and child nutrition was an anomaly," Head said.

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