Beaver River Central School District Internal Controls Over Selected Financial Activities - Executive Summary The Beaver River Central School District (District) is governed by the Board of Education (Board) which is 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. The Board had executed collective bargaining agreements with its employee unions and entered into individual employment contracts with the managerial staff. These agreements define leave benefits for those employees. In addition, individual employment contracts address authorized separation payments. One of the Board’s managerial responsibilities is the establishment of a system of internal controls over the procurement of goods and services. The Board is also responsible for establishing procedures to ensure that claims are accurate and supported, and that they are properly audited and approved prior to payment. Scope and Objective The objective of our audit was to examine the District’s internal controls relating to payroll, purchasing and claims processing for the period July 1, 2005 to June 30, 2006. Our audit addressed the following related questions:
Audit Results We examined internal controls over stipends and employee benefits, procurement procedures and claims processing and found they need improvement. Our audit disclosed that leave was recorded incorrectly for employees earning vacation leave, because it was improperly carried over from the preceding year or it was paid out as a past practice even though it was not authorized by contract, Board policy or resolution. Three employees ended District employment during the 2005-06 fiscal year and were paid a total of $7,990 for unused vacation leave to which they were not entitled due to the incorrect accrual of vacation leave. The Board has not adopted a procurement policy as required to address purchases made which are below legal bidding requirements. A District official stated that there was an unwritten policy requiring verbal quotes for purchases over $5,000 but it was not always followed. We reviewed five purchases which fell under this policy requirement and found no record of quotes on file for any of those purchases totaling over $32,000. As a result, the District may have incurred higher costs than necessary for goods and services purchased. Based on our testing we determined that routine claims were audited properly. We identified weaknesses in internal controls over the District’s claims processing specifically with the processing of travel reimbursement and credit card claims. Seven claims totaling approximately $1,100 did not have proper itemization of the mileage being claimed. In addition, eight purchases totaling approximately $2,500 were not properly supported by a receipt or an invoice. 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. Appendix B contains OSC comments on one issue raised by District officials in their response. |