Background

The Gorham-Middlesex Central School District (District) is located in the Towns of Gorham and Seneca in Ontario County, and the Towns of Middlesex and Potter in Yates County. The District is commonly known as the “Marcus Whitman Central School District.” The 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 appointed an Internal Claims Auditor who assumed the Board’s powers and duties with regard to approving or denying claims against the District.

There are four schools, that are located in three buildings, in operation within the District, with approximately 1,540 students and 340 employees. The District’s budgeted expenditures for the 2005-06 fiscal year were $25 million, which were funded primarily with State aid, real property taxes, and grants.

During our audit period, the responsibilities relating to the District’s finances, accounting records and reports were largely those of the Assistant Superintendent for Business, accounts payable clerk, and the payroll clerk. The Assistant Superintendent for Business also served as the District’s Treasurer, tax collector, and purchasing agent. Subsequent to our audit period, the Board abolished the position of Assistant Superintendent for Business, and established the position of Business Official. While the Business Official continues to function as the District’s purchasing agent, the Board appointed two separate individuals to serve as the District’s Treasurer and tax collector. The District uses a computer software package to process its financial transactions. The District’s financial statements undergo an annual audit by an independent certified public accounting (CPA) firm. Additionally, the District contracted with consultants to review Board policies and procedures, business management practices, and administrative organization..

Objective

The objective of our audit was to examine the District’s internal controls relating to treasury and accounting duties. Our audit addressed the following related question:

• Did the Board implement and monitor internal controls relating to the District’s treasury and accounting duties?
  

Scope and Methodology

Our overall goal was to assess the adequacy of the internal controls put in place by officials to safeguard District assets. To accomplish this, we performed an initial assessment of the internal controls so that we could design our audit to focus on those areas most at risk. Our initial assessment included evaluations of the following areas: cash receipts and disbursements, purchasing, payroll and personal services, and capital assets and consumable inventories. Based on that evaluation, we determined that controls appeared to be adequate and limited risk existed in most of the financial areas we reviewed. We did determine that risk existed in the area of treasury and accounting duties and, therefore, we examined internal controls over treasury and accounting duties for the period July 1, 2004 to January 31, 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 B of this report.

Comments of District Officials and Corrective Action

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 indicated that they agree with our findings and that corrective action has or will be taken on our recommendations.

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.