The Addison 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.

The District’s Treasurer, School Business Administrator and four account clerks (two full-time and two part-time) are responsible for maintaining the District’s financial records. The Board has appointed an independent claims auditor and has recently hired an internal auditor.

The District provides student incentives in the form of gift certificates and movie passes to the attendees of the junior-senior high school. The District uses an accounting software package to process its financial transactions, including the purchasing transactions.

Scope and Objective

The objective of our audit was to examine the District’s internal controls over selected financial operations for the period July 1, 2005 through January 9, 2007. Our audit addressed the following related questions:

• Are internal controls over the computerized financial system appropriately designed and operating effectively?
  
  
• Are internal controls over claims processing appropriately designed and operating effectively?

Audit Results

We found the District’s controls over the computerized financial system and claims processing were not appropriately designed or operating effectively. As a result, District assets are not properly safeguarded.

We identified weaknesses over the computerized financial system. Several users of the financial accounting software have access rights that exceed the requirements of their duties. Furthermore, we noted the Treasurer’s electronic signature is not password protected, and is widely available to various staff. In addition, management does not monitor system use or activity.

We found that the District’s purchase order system was flawed, primarily because District personnel are using “confirming” purchase orders. We also noted the District provides a student incentive program in the junior-senior high school. The District expended approximately $11,600 on student incentives with virtually no internal controls over the incentives.

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. Except as specified in Appendix A, District officials generally agreed with our recommendations and indicated they planned to take corrective action. Appendix B includes our comments on the issues raised in the District’s response letter.