Brewster
Central School District
Internal Controls Over The Brewster Central School District (District) is located in the Town of Southeast, approximately 75 miles north of New York City in Putnam County. The 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 Board has designated the Assistant Superintendent for Business to be the Payroll Certifying Agent for the District. This individual is responsible for certifying payrolls through the review of payroll summary reports for any observable variances, disproportionate amounts or inconsistent trends. The District employed 927 individuals and reported approximately $54 million in payroll and related fringe benefits for the year ended June 30, 2005. This amount consisted of $33 million in instructional salaries, $7 million in non-instructional salaries and $14 million in fringe benefits. Scope and Objective The objective of our audit was to examine the District’s internal controls over payroll and personal services for the period July 1, 2005 through October 2, 2006. Our audit addressed the following related question:
Audit Results The internal controls over payroll processing were inappropriately designed and operating ineffectively. The Board has not established formal policies and procedures describing employee responsibilities for the processing of payroll. As a result, the payroll clerk had the ability to create new employee records, update employee information, input salary detail, set up withholdings and direct deposits and print checks. In addition, both the payroll clerk and another clerk (responsible for the recording of employee leave charges and maintaining the leave accrual system) had the ability to override the system without supervisory approval. Finally, District officials did not provide adequate oversight and verification of payroll changes. Despite these internal control weaknesses, our audit did not identify any major discrepancies in the District’s payroll transactions. 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. |