The Keene 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.

Scope and Objective

The objective of our audit was to determine whether the District’s internal controls over financial operations were appropriately designed and operating effectively. Our audit addressed the following related questions for the period covering July 1, 2004 to July 25, 2006:

• Are claims properly audited to ensure that the District is not making inappropriate payments?
  
  
• Are there controls in place to ensure that employees are paid in accordance with their contracts?
  
  
• Are the cash receipt, cash disbursement, and payroll responsibilities appropriately segregated or, if not, are adequate compensating controls in place?
  
  
• Are there controls in place to ensure that the District’s business e-mail is properly secured?
  
  
• Are there controls in place to safeguard laptop computers and other portable technology assets?

Audit Results

Our audit revealed that the duties of the Treasurer were not properly segregated. In addition, claims were not properly audited and payroll was not always calculated properly. As a result, errors occurred which led to the District to incur unnecessary and inappropriate expenses.

Due in part to its small size, the District has not adequately segregated duties over accounting and payroll processes. This allowed some small discrepancies to go undetected. For example, the Treasurer cashed a $79 personal check out of daily District cash receipts. This problem is compounded by the District’s use of accounting software that could not generate the reports needed to properly monitor financial activity, such as change reports showing vendor or payroll changes. Further, the software is not set up to require a password for access.

The claims auditor did not adequately review claims. Of the 25 claims we tested, 17 did not contain evidence of being audited (no signature of claims auditor), six claims were audited after the bill had been paid, and the voucher packages for two claims were missing. In addition, District officials overpaid Champlain Valley Educational Services by $8,488 because they did not properly scrutinize special education services bills.

For the fiscal year ended June 30, 2004, the Treasurer paid 12 employees $8,100 more than their approved salaries. The overpayments ranged between $388 and $1,800. The Treasurer told us that the overpayments represented the accumulated unpaid portion of salaries from previous years for twelve-month employees. However, we traced two of these employees salaries back to 1999 and did not see any years where they did not receive their full salaries.

The District’s capital asset records were not up-to-date. Of the 42 laptops purchased between July 1, 2004 and June 30, 2006, 22 were not included in the inventory. Lastly, the District used a public e-mail system for internal and external e-mail, creating risk that sensitive information could be compromised.

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 generally agreed with our recommendations and have initiated, or indicated they planned to initiate, corrective action.

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Complete Audit in PDF