Pelham Union Free School District

Internal Controls Over Access to the Computerized Financial System -
Introduction

Background

The Pelham Union Free School District (District) is located in the Town of Pelham in Westchester County. The 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.

There are six schools in operation in the District, with approximately 2,700 students and 345 employees. The District’s budgeted expenditures for the 2006-07 fiscal year were approximately $51.8 million, funded primarily with State aid, real property taxes and grants. The District’s major expenditures are employee salaries and related fringe benefits.

The Business Office consists primarily of four employees: the Assistant Superintendent for Business, who is also the purchasing agent; a Treasurer; an account clerk who records deposits and disbursements, enters invoices and is involved in purchasing; and a payroll clerk who performs all aspects of payroll. All accounting transactions are processed on a computerized financial system designed specifically for school districts. For the year ending June 30, 2006, cash disbursements totaled approximately $57 million ¹ and payroll disbursements totaled approximately $28 million.

Objective

The objective of our audit was to determine if controls over the access to the computerized financial system are appropriately designed. Our audit addressed the following related question:

• Are internal controls over the access to the computerized financial system appropriately designed to safeguard District assets?

Scope and Methodology

Our overall goal was to assess the adequacy of the internal controls put in place by officials to safeguard District assets. To accomplish this, we performed an initial assessment of the internal controls so that we could design our audit to focus on those areas most at risk. Our initial assessment included evaluations of the following areas: financial oversight, cash receipts and disbursements, purchasing, payroll and personal services and information technology. Based on that evaluation, we determined that controls appeared to be adequate and limited risk existed in most of the financial areas we reviewed. We did determine that risk existed in the controls over the computerized financial system. Therefore, we examined internal controls over that area for the period July 1, 2005 to June 30, 2007.

We conducted our audit in accordance with generally accepted government auditing standards (GAGAS). More information on such standards and the methodology used in performing this audit are included in Appendix B of this report.

Comments of District Officials and Corrective Action

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 our findings and recommendations.

The Board has the responsibility to initiate corrective action. Pursuant to Section 35 of the General Municipal Law, Section 2116-a (3)(c) of the Education Law and Section 170.12 of the Regulations of the Commissioner of Education, the Board must approve a corrective action plan that addresses the findings in this report, forward the plan to our office within 90 days, forward a copy of the plan to the Commissioner of Education, and make the plan available for public review in the District Clerk’s office. For guidance in preparing the plan of action, the Board should refer to applicable sections in the publication issued by the Office of the State Comptroller entitled Local Government Management Guide.

¹ This amount includes all disbursements including school lunch, capital projects, and other related accounts.