More than a year after Denver auditors raised concerns about oversight, data management, and quality assurance with the city’s tax-funded college affordability program, a follow-up audit found that the Office of Children’s Affairs has failed to implement the bulk of recommended changes made in the original report.

Of the original eight recommendations, auditors noted that Children’s Affairs, which oversees the Prosperity Denver Fund program, had only partially implemented two but had not taken steps to address the risks the other six sought to resolve.

Back in 2018, Denver voters approved a ballot measure known as Prosperity Denver, which called for a 0.08% sales tax — less than one cent on $10 — and would be distributed in the form of reimbursements to nonprofits providing scholarships to Denver students.

“Although Children’s Affairs and Prosperity Denver have made some progress with documenting procedures and training, it did not fully address all the risks associated with our original findings,” Denver Auditor Timothy O’Brien said. “Consequently, we may revisit these risk areas in future audits to ensure the city takes appropriate corrective action.”

During a Nov. 21 meeting, auditors said that significant leadership turnover since the original audit in July of 2023 within the Prosperity Denver Fund may have contributed to some of the implementation delays. In particular, the fund saw three different chief executive officers since February of 2024.

Along with the need for greater oversight of reimbursement and reporting processes, auditors cited the lack of verified student eligibility and added that some organizations the program funds needed more records to confirm payments to every eligible student.

“Children’s Affairs and Prosperity Denver are not identifying weaknesses in the reimbursement process to ensure only eligible students receive tax-funded support for sub-funding,” Julianne Mann, the lead auditor, said. “We verified that Prosperity Denver collected over $33,000 in refunds from supported organizations for payments to students without proper evidence of eligibility, and they paid over $750 to a fifth organization for funds owed for a reimbursement.”

Children’s Affairs has taken some steps to provide greater oversight. Still, until the agency implements more stringent standards such as desk audits, auditors say they will consider their recommendations as ‘not implemented.’

Prosperity Denver CEO Rebecca Arno, who’s been on the job for approximately 90 days, thanked auditors for their work and recommendations, assuring them of efforts currently underway to correct the outstanding items. Arno also offered auditors copies of several new policies she has helped to create.

Arno said the auditors’ follow-up work coincided with Prosperity Denver’s September main distribution cycle, which may have affected the report’s findings.

Prosperity Denver only does two financial distributions per year.

“We really appreciate the opportunity to make some additional improvements following this process,” Katherine Jarvis, the deputy director of strategic sperations for the Office of Children Affairs, told auditors. “As requested, we are updating the contract administration plan to include more specifications around risk management, including reporting and oversight processes and procedures, and we have developed a desk audit process that includes a description of safeguards, but we are building that out more to include not just the ‘what’ but also the ‘how’ so that it can be replicable in the future.”

Since its inception in 2018, the Denver Prosperity has distributed more than $47 million and funded 37,634 scholarships and credentials.

“You guys were the victim of very bad timing,” Audit Committee Member Leslie Mitchell said. “You’ve (Arno) been on the job three and a half months — and we’ve seen this in other programs that Denver has come up with that the voters have voted to support … and then you lose your top management, and then we show up, and audit and find all these things.”

Mitchell asked the auditors to consider if the results would have been better, based on what Properity Denver just presented in response, if the the follow-up was conducted on the same day as the audit committee’s meeting.

“Well, I’m impressed with the progress that you’ve discussed here this morning,” O’Brien said. “I mean, you’ve really talked about solutions, not about excuses. So, thank you, I really appreciate the job you’re doing.”