The Brunswick Central School District (District) is governed by the Board of Education (Board) which comprises nine 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.

Scope and Objective

The objective of our audit was to determine if the District has implemented proper internal controls related to its payroll processes and fuel inventories for the period July 1, 2004 to July 31, 2006. Our audit addressed the following related questions:

• Are internal controls appropriately designed and operating effectively to ensure that personal services and benefits are paid in accordance with the established rates and policies?
  
  
• Are internal controls over the District’s inventory of gasoline and diesel fuel designed appropriately and operating effectively?

Audit Results

The District does not have written Board-approved compensation and benefit agreements for ten active and three former administrative and office staff employees. Other than the adoption of yearly salaries, there was no Board approval for payments made for benefits provided to these individuals. Four of these individuals were paid a total of $17,322 for health insurance buy-outs, unused vacation and sick leave, and severance pay without any Board authorization.

The District’s payroll clerk’s duties are not properly segregated. The payroll clerk adds and removes employees in the payroll system, updates employee information, inputs salary detail, maintains employees’ time records and processes the biweekly payroll. Even though the District has some limited mitigating controls in place to address this issue, we noted four instances where material errors, ranging from $1,180 to $28,325, and totaling $44,861 occurred in the payroll process that were detected and recouped but only after the District had initiated wire transfers to the employees’ bank accounts.

The District does not maintain perpetual inventory records for gasoline and diesel fuel. Because of the lack of such records and documented periodic inventories, neither we nor District officials could account for the District’s substantial fuel inventories during our audit period. Our review of the District’s fuel inventory practices disclosed significant weaknesses in the recording and maintenance of fuel inventories as well as inadequate controls over the fuel billings for State users of the District’s fuel dispensing facility. For example, we found that for the 10 month period from July 2005 through April 2006, the transportation supervisor over-reported the number of gallons used by State agencies by 1,187 gallons. Consequently, the business office over-billed these agencies by $2,924.

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 noted in Appendix A, District officials generally agreed with our recommendations and indicated they planned to initiate corrective action. OSC comments on the District’s response can be found in Appendix B.