The Lyons Central School District (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 District’s Treasurer, Assistant Superintendent for Business, and three account clerks are responsible for maintaining the District’s financial records. The Board has not appointed a claims auditor, instead retaining to itself the powers and duties of approving or disapproving claims against the District.

Scope and Objective

The objective of our audit was to evaluate management controls over the financial management system and the procurement process for the period July 1, 2004 to March 31, 2006. Our audit addressed the following related question:

• Are internal controls over the financial management system and the procurement process appropriately designed and operating effectively to adequately safeguard District assets?

Audit Results

We found the District’s controls over the financial management system and the procurement process were not appropriately designed or operating effectively. As a result, District assets are not properly safeguarded.

We identified weaknesses in internal controls over the financial management system. Specifically, that the duties and access rights for various users of the system have not been sufficiently segregated and that multiple copies of the Treasurer’s signature disk, which is not password protected, are widely available to various staff. In addition, management does not monitor system use or activity, or ensure that complete and independent bank reconciliations are performed.

The Board did not audit claim vouchers or appoint a claims auditor to audit the claim vouchers. We also found that the District’s purchase order system is ineffective, primarily because District personnel are routinely using “confirming” purchase orders, which are purchase orders filled out after goods have already been ordered. Furthermore, the Board was not diligent in monitoring the District’s budget status reports to ensure there were no over-expended or over-encumbered appropriation accounts. Although accounts were over-expended throughout the school year, the Assistant Superintendent for Business prepares budget transfers only at the end of each fiscal year.1

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 indicated that they planned to take corrective action.