Jericho Union Free School District Internal Controls - Executive SummaryThe Jericho Union Free School District (District) is governed by the Board of Education (Board), which comprises five 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 Treasurer is the District’s chief accounting officer and is responsible for the receipt and disbursement of all District moneys. The District uses both computer-generated and hand-drawn checks to make disbursements of District funds. The Board has appointed a claims auditor whose responsibility is to review and approve District claims prior to payment. The District also purchases and stores vehicle fuel for District use. Scope and ObjectiveThe objective of our audit was to examine the internal controls over cash receipts and disbursements, administrative expenses, claims processing and vehicle fuel inventories for the period of July 1, 2004 to June 30, 2006. Our audit addressed the following related question:
Audit Results We identified several weaknesses in District controls over cash receipts and disbursements. The Treasurer performs incompatible duties involving the key financial functions of authorization of transactions, custody of assets and recordkeeping. When these duties are not segregated, there is a significant risk that errors or misuse of funds could occur and not be detected. We also found that no bank reconciliations were prepared for two money market accounts with significant activity, the general fund checking account was not reconciled to District records, and a flexible spending account was not included in District accounting records. In addition, the Treasurer did not maintain adequate control over her signature disk to prevent unauthorized disbursement of District funds. We also found that the Board did not establish a dollar limitation on the amount of budgetary transfers that the Superintendent can approve without Board approval. The Superintendent negotiated a 39-month lease purchase agreement for an automobile for his personal use at a total cost to the District of $26,626. The contract, which was signed by the purchasing agent, was not approved by the Board, and the Board did not indicate why this lease was in the District’s best financial interest, as required by the Education Law. In addition, this installment purchase contract was not competitively bid, even though it was subject to the competitive bidding requirements of General Municipal Law. We found the Board did not provide authorization for fringe benefits provided to seven administrators who were not covered under union contracts. Instead, these employees received an annual letter from the Superintendent which notified them of their vacation and sick leave benefits, and insurance and retirement benefits. While the District has adopted policies over the use of credit cards and meals and refreshments at meetings, we found the policies were not always followed. All 89 claims for meals for District officials and employees that we tested, totaling $10,656, lacked an explanation why the meals were necessary to serve a District business purpose. In addition, our examination of 241 credit card charges totaling $32,092 identified 67 charges totaling $10,320 which were either not supported, not itemized, or were not in compliance with District policy. The District has not established a perpetual inventory record or system of controls over vehicle fuel to provide assurance that fuel is used appropriately. 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. District officials agreed with many of our recommendations and indicated they either had taken, or planned to take, corrective action. Appendix B includes our comments on several issues raised in the District’s response. |