The Avon Central School District (District) is governed by the Board of Education (Board) which comprises five 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 Board’s direction.

There are two schools and a transportation building in operation within the District, with approximately 1,100 students and 189 employees. The District’s budgeted expenditures for the 2005-06 fiscal year were approximately $13.9 million, funded primarily with State aid, real property taxes, and grants. The District’s payroll expenditures for the 2005-06 fiscal year totaled $9.1 million.

The District’s Treasurer, School Business Administrator and two account clerks maintain the District’s financial records. The Board approves new hires and sets wages and salaries. The payroll clerk performs payroll processing and maintains the personnel records.

The information technology (IT) department comprises a Director and two support staff. The District has five servers and approximately 600 individual computers, and uses financial software administered by a local regional information center (RIC).

Scope and Objective

The objective of our audit was to assess the District’s internal controls over its payroll function and information technology for the period July 1, 2005 to January 21, 2007. Our audit addressed the following related question:

• Are internal controls over payroll and information technology appropriately designed and operating effectively to safeguard district assets?

Audit Results

The District’s controls over payroll processing and information technology were not appropriately designed or operating effectively. As a result, District assets are not properly safeguarded.

We identified internal control weaknesses in the business office because there was not adequate segregation of the payroll clerk’s duties. We also identified internal control weaknesses in the computerized financial system. Several users of the accounting software had access rights that exceeded the requirements of their duties. The Treasurer’s electronic signature was not password-protected and was widely available to staff. In addition, management did not monitor system use or activity.

Comments of School 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.