Enlarged City School District of Middletown Internal Controls Over Procurement and Claims Processing - Executive Summary The Enlarged City School District of Middletown (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. One of the Board’s managerial responsibilities is the establishment of a system of internal controls designed to provide reasonable assurance that District assets are properly safeguarded and purchases are made in accordance with District policy. Once established, District management has the responsibility to monitor them periodically to ensure that they are operating properly. Scope and Objective The objective of our audit was to evaluate internal controls over procurement and claims processing for the period July 1, 2005 through February 5, 2007. Our audit addressed the following related question:
Audit Results The District’s procurement policy did not require the District to obtain written agreements from providers of professional services. Of the five professional service providers tested, we found that the District paid $502,362 for legal counsel without the benefit of a written agreement. We also determined that the District paid $$16,100 to a certified public accounting firm in excess of the written agreement and $15,839 to a professional development consultant in excess of the approved written agreement, without first seeking Board approval. Additionally, the District paid $9,518 to a financial services provider whose claim vouchers included lump-sum payments that did not state who performed the service, the exact service provided or the rate charged. The District’s claims auditor paid the above claims, even though the billed amounts were not approved by the Board or supported by adequate documentation. Although the District’s procurement policy had procedures in place for the acquisition of goods and services in accordance with the General Municipal Law, District officials did not ensure that employees followed these procedures. The District purchased furniture, totaling $29,098, from a State contract vendor, but the particular furniture purchased was not covered by the State contract. The District also purchased various computer components from a vendor on multiple invoices, which totaled $20,434. This purchase was not put out to bid, even though the total cost exceeded the competitive bidding threshold. 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. Appendix B includes our comments on issues raised in the District’s response letter. |