Background

The Kinderhook Central School District¹ (District) is located in the Town of Kinderhook, Columbia County. The District is governed by the Board of Education (Board), which comprises nine elected members. The Board is responsible for the general management and control of the District’s financial and educational affairs. The Superintendent of Schools (Superintendent) is the chief executive officer of the District and is responsible, along with other administrative staff, for the day-to-day management of the District under the direction of the Board.

There are five school buildings in operation within the District, with 2,276 students attending these schools during the 2004-05 school year. The District has a workforce of approximately 630 employees. The District’s budgeted expenditures for the 2005-06 fiscal year were approximately $30 million, funded primarily with State aid, real property taxes and grants.

The President of the Board is the Chief Fiscal Officer of the School District. However, many of the financial management functions of the District are the responsibility of the Business Administrator and the District Treasurer. The Superintendent, with the assistance of District managers, must establish and maintain an internal control structure to ensure that District assets are safeguarded against loss from unauthorized use or disposition, and that acquisitions are recorded properly in the financial records of the District.

The District’s audited financial statements included capital assets (e.g., furniture, equipment, and computers) with a total net book value of approximately $4 million at June 30, 2005. Thus, the District’s inventory of capital assets represents a significant investment of resources. The District also is responsible for safeguarding consumable inventories such as food used in the cafeterias.

Objective

The objective of our audit was to determine if controls over capital assets and food inventories are appropriately designed and operating effectively. Our audit addressed the following related question:

• Has the District established adequate internal controls to protect capital assets and food inventories against loss, waste, and misuse, and are those controls operating effectively?
  

Scope and Methodology

Our overall goal was to assess the adequacy of the internal controls put in place by officials to safeguard District assets. To accomplish this, we performed an initial assessment of the internal controls so that we could design our audit to focus on those areas most at risk. Our initial assessment included evaluations of the following areas: cash receipts and disbursements, purchasing, payroll and personal services, and capital assets and consumable inventories. Based on that evaluation, we determined that controls appeared to be adequate and limited risk existed in most of the financial areas we reviewed. We did determine that risk existed in the capital assets and food inventory areas and therefore, we examined internal controls over capital assets and food inventories for the period July 1, 2004 to February 6, 2006. We examined actual food service inventories for the period July 1, 2004 through February 10, 2006.

We conducted our audit in accordance with Generally Accepted Government Auditing Standards. More information on such standards and the methodology used in performing this audit are included in Appendix B of this report.

Comments of District Officials and Corrective Action

The results of our audit and recommendations have been discussed with District officials and their comments, which appear in Appendix A, have been considered in preparing this report. District officials generally agreed with our recommendations and indicated they plan to initiate corrective action.

The Board has the responsibility to initiate corrective action. Pursuant to Section 35 of The General Municipal Law, the Board should prepare a plan of action that addresses the recommendations in this report and forward the plan to our office within 90 days. For guidance in preparing the plan of action, the Board may refer to applicable sections in the publication issued by the Office of the State Comptroller entitled Local Government Management Guide. We encourage the Board to make this plan available for public review in the District Clerk’s office.

¹Also known as the Ichabod Crane Central School District.