The Schuylerville Central School District (District) is governed by the Board of Education (Board), which comprises seven 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.

As of June 30, 2005 the District reported $29.1 million in capital assets, of which approximately $25.4 million is for land and buildings and $3.7 million for equipment. According to the District’s fixed asset inventory, the computer equipment inventory contains approximately 1,400 items (such as CPUs, monitors and digital cameras) and is valued at more than $1 million.

Scope and Objective

The objectives of our audit were to examine the District’s control environment as well as the internal controls over computer and electronic equipment and reimbursements for meal and beverages and employee expenses for the period July 1, 2004 through June 30, 2005. Our audit addressed the following questions:

• Are internal controls over the District’s computer and electronic equipment adequately designed and operating effectively?
• Are internal controls over employee expense reimbursements adequately designed and operating effectively?
  

Audit Results

We found the Board has not established adequate controls over the District’s computer and electronic equipment inventory and reimbursements for meals and beverages and employee expenses. As a result, the District is vulnerable to the possibility of loss, misuse, errors and/or irregularities occurring and not being detected in a timely manner.

The Board and District officials are accountable for the District’s capital assets, and are responsible for protecting them against loss, waste and theft. However, we found that the Board and District officials do not properly account for District computer equipment assets. Our tests found that inventory records did not include 212 items, costing $107,000; 122 of these items had been purchased 4 months before our October 2005 test date, and 90 items had been purchased 15 months earlier. Another 32 items that we observed in place at several District locations were also missing from the records. Other equipment, such as 2 laptop computers and 3 palm pilots, was listed in the records, but could not be located by District personnel. In addition, we observed that at least 40 desk top and 10 laptop computers were stored in an inadequately secured area. The District did not properly account for its computer assets because it lacked a comprehensive capital asset policy, and also lacked effective inventory controls that such a policy would require. As a result, the District’s inventory records are inaccurate and outdated, and District computers and equipment are at risk of loss, waste and theft.

The District reimbursed employees and Board members for a variety of claimed expenses totaling $17,800 without adequate documentation to show these expenses represented actual, necessary and appropriate District costs. The District paid claims that were not properly supported because the Board had not adopted formal written policies that defined reimbursable costs; identified the documentation needed to support those costs; and required that claims be properly reviewed to ensure compliance with the policies. In addition, the Board had not appointed an independent claims auditor to verify claims and approve them for payment. As a result, the District may have paid for unnecessary or inappropriate costs. The District also reimbursed money spent for gifts, which is prohibited by the State Constitution.

Comments of District Officials

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 planned to initiate corrective action.