The Chatham 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.

The Board designated the Business Administrator as the purchasing agent of the District on July 1, 2001. Under the general supervision of the Superintendent, the purchasing agent is responsible for administering all purchase activities. The Board’s adopted purchasing policy governs District purchasing and related activities.

The District’s audited financial statements included capital assets with a total original cost of $22.8 million at June 30, 2005, of which $21.9 million was for land, buildings, improvements other than buildings, and construction in progress; approximately $900,000 was for equipment. Thus, the District’s inventory of capital assets represents a significant investment of resources.

Scope and Objectives

The objective of our audit was to determine if internal controls over capital assets and purchasing are appropriately designed and operating effectively for the period July 1, 2004 to February 28, 2006. Our audit addressed the following related questions:

• Has the District established adequate internal controls to protect capital assets against loss, waste and misuse, and are those controls operating effectively?
  
  
• Has the District established adequate internal controls over purchasing to protect against fraud, abuse and professional misconduct, and are those controls operating effectively?

Audit Results

Internal controls related to capital assets and inventories could be improved. Although the District’s inventory list is updated annually for additions and deletions, the District has not conducted a physical inventory count of its capital assets since 1998. We judgmentally selected 70 pieces of equipment and were able to verify the existence and location of all items tested.