The Bainbridge-Guilford Central School District (District) is located in ten towns in Chenango, Delaware and Broome counties. The District is governed by the Board of Education (Board) comprised of 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.

There are three schools in operation within the District with approximately 954 students and 267 employees. The District’s budgeted expenditures for the 2005-06 fiscal year was $13,389,044 funded primarily with State aid, real property taxes, and grants.

The District Treasurer (Treasurer) acts as the payroll clerk and is responsible for performing a variety of payroll-related administrative tasks. The Treasurer also receives and deposits cash receipts and performs monthly bank reconciliations. The District uses computers in its day-to-day operations, including maintaining attendance and grading records and performing financial transactions.

Scope and Objective

The objective of our audit was to examine the District’s internal controls over payroll and information technology for the period July 1, 2005 to February 28, 2007. Our audit addressed the following related questions:

• Did the Board provide adequate oversight over the District Treasurer’s duties to ensure she was accurately accounting for wages, benefits and leave-time accrued and paid in accordance with approved employment contracts?
  
  
• Has the Board adequately safeguarded the District’s computerized data and assets?

Audit Results

We found that the Board did not adequately segregate payroll duties. Since the Treasurer creates employee records, inputs payroll data and prepares employees paychecks, there is a risk that inappropriate changes or payments could be made without detection. Although our tests of compensation payments and related payroll transactions for 22 employees determined that the Treasurer had accurately accounted for the payments, District officials should act to segregate the Treasurer’s duties or provide for a compensating control procedure, to mitigate the risk of future errors or improper payments.

We also found that the Board did not adequately safeguard the District’s computerized data and assets by establishing and implementing appropriate policies and procedures related to access controls, physical security and disaster recovery. District officials should develop and implement such policies and procedures to provide for adequate and deliberate protection of computer systems and data that are essential for District operations.

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.