The state audit covers a period from July 2005 to June 2006.

The school received $2.7 million in state and county funds in the fiscal year ended June 30, 2006.

Among the audit's findings were:

The executive director (Dorsett-Felicelli), who resides in North Carolina, was rarely on site at any of the Pyramids facilities and did not keep any time and attendance records. When auditors attempted to review a computer network log, which Pyramids officials said would provide evidence of the director's work activity, sufficient evidence was not found.

Auditors also found that the non-profit's Board of Directors consisted of employees; therefore, it did not provide independent oversight or monitoring of Pyramids' financial affairs.

Pyramids claimed $15,308 for legal, accounting and other administrative costs that were not appropriate, including charges for the preparation for the executive director's personal income taxes and fees for lobbying services.

Pyramids improperly awarded $101,335 in bonuses and fringe benefits to staff, including a $10,000 bonus for the executive director that did not meet state reimbursement requirements.

Another $30,133 was improperly claimed by Pyramids for building and equipment depreciation and amortization, food and other unexplained and unsupported expenses. Documentation could not be provided for several furniture and equipment purchases.

SCHOOL'S STAND

In an official response to the audit, Pyramids disagreed with just about all of the comptroller's findings. A letter signed by Dorsett-Felicelli outlined in detail the school's position regarding several of the audit's findings.

For example, Dorsett-Felicelli explained that so-called bonuses were actually wage increases based on the amount of services provided.

Doresett-Felicelli also defended living in North Carolina while running the school.

"The state audit claims there was not enough evidence' to validate the superintendent's physical presence at the facility. The state audit report fails to cite or reference what this amount of time must be in numbers or requirement," Dorsett-Felicelli wrote.

"In fact, there is nothing cited or made reference to in the manual stating how often the superintendent must be physically present nor does the manual require documentation of such activity.

"Moreover, as would be the case with most superintendent positions, this role requires supervision of a multitude of locations, as is the case with Pyramids, and thus it would not seem prudent to dictate how often the superintendent must be physically' present at any one location.