Frewsburg Central School District Internal Controls Over Selected Financial Operations - Introduction

Background

The Frewsburg Central School District (District) is located in the Towns of Carroll, Poland, Kiantone, South Valley and Busti in Chautauqua and Cattaraugus Counties. 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 Business Manager oversees the operations of the Business Office, which is largely responsible for processing all financial transactions.

There are two schools in operation within the District, with approximately 975 students and 145 employees. During the 2005-06 fiscal year the District had general fund operating expenditures of approximately $11.5 million. The major revenue sources are real property taxes, State aid, and grants; the major operating expenditures are employee salaries and related fringe benefits. For the fiscal year ending June 30, 2006, salaries totaled approximately $5.8 million.

The Board has overall responsibility for District operations. The Board is also responsible for establishing a good internal control environment. Adopting effective policies that guide the overall direction of the District is one way District officials can establish a strong control environment. Included should be policies and procedures concerning recording and reporting of leave time benefits, and controls over reimbursements for travel related expenses. The Board should also ensure that its policies are monitored for compliance, including the District’s Code of Ethics.

Objective

The objective of our audit was to evaluate internal controls over selected financial operations. Our audit addressed the following related questions:

  • Are internal controls over the recording and reporting of leave time appropriately designed and operating effectively to adequately safeguard District assets?

  • Did District officials appropriately monitor compliance with their adopted Code of Ethics to effectively detect and prevent potential conflicts of interest?

Scope and Methodology

We examined leave time accounting and conflicts of interest of the District for the period July 1, 2005 to September 28, 2006.

We conducted our audit in accordance with generally accepted government auditing standards (GAGAS). More information on such standards and the methodology used in performing this audit are included in Appendix C of this report.

Except as specified in Appendix A, District officials generally agreed with our recommendations and indicated they planned to take corrective action. Appendix B includes our comment on one issue raised in the District’s response letter.

Comments of District Officials and Corrective Action

The Board has the responsibility to initiate corrective action. Pursuant to Section 35 of the General Municipal Law, Section 2116-a (3)(c) of the Education Law and Section 170.12 of the Regulations of the Commissioner of Education, the Board must approve a corrective action plan that addresses the findings in this report, forward the plan to our office within 90 days, forward a copy of the plan to the Commissioner of Education, and make the plan available for public review in the District Clerk’s office. For guidance in preparing the plan of action, the Board should refer to applicable sections in the publication issued by the Office of the State Comptroller entitled Local Government Management Guide.

Complete Audit in PDF