Mount Sinai Union Free School District

Internal Controls Over Financial Operations - EXECUTIVE SUMMARY

The Mount Sinai Union Free 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.

Scope and Objective

The objective of our audit was to examine the District’s internal controls over financial operations for the period July 1, 2005 to October 2, 2006. Our audit addressed the following related questions:

• Has the District effectively developed policies and procedures for information technology to ensure that electronic data is appropriately safeguarded?
• Did the Board solicit requests for proposals when procuring professional services?
• Are internal controls over cash disbursements appropriately designed and operating effectively?

Audit Results

The Board has not adopted comprehensive information technology (IT) policies and procedures. We found that the District does not adequately restrict access to its financial accounting software based on users’ duties and responsibilities. The District also does not have a formal disaster recovery plan to provide guidance on the prevention of the loss of computer information as well as the recovery of data in the event of a disaster. Additionally, District officials did not implement procedures to produce and review audit logs to identify users who accessed the system and the transactions they processed. Furthermore, physical access to the server room is neither restricted nor monitored. As a result, the District’s IT system and electronic data are subject to increased risk of loss or misuse.

The District’s purchasing policies and procedures do not require that RFPs be used to solicit professional services. We found that the District did not solicit competitive proposals for a professional service provider who was paid a total of $319,399 for therapy and special education services during the fiscal year 2005-06. Additionally, the District did not enter into a written agreement with a provider that was paid a total of $23,050 for tutoring services during the fiscal year ended June 30, 2006. The failure to adopt and implement comprehensive purchasing policies and procedures relating to the procurement of professional services results in District officials not having adequate assurance that these services were obtained in the most prudent and economical manner.

Finally, we found that the District’s internal controls over cash disbursements were appropriately designed and operating effectively to safeguard cash.

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. Appendix B contains OSC comments on issues raised in the District’s response.