Roscoe Central School District Internal Controls Over Financial Operations - Executive Summary The Board of Education (Board), which comprises five elected members, governs the Roscoe Central School District (District). 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 is the lead agency for a consortium of school districts that are implementing a Federal Education Grant program titled “My Freedom, a Teaching American History Grant” (Grant). The Grant is designed to enhance teacher knowledge of American history, improve classroom-teaching techniques, and increase student performance in American history. There are eight school districts located in Sullivan County that report to the District for this Grant. The Grant program spans three fiscal years – 2004-05 to 2006-07– and the total Grant award for the three-year period was about $995,000. The District entered into a contractual relationship with a company named Edushift Inc. (Edushift), which is located in both Colorado and Indiana, to provide Grant proposal work and develop the annual Grant performance report for the District. The District has paid Edushift $98,321 out of the $149,262 owed for the Grant. The District’s inventory of capital assets represents a significant investment of resources. The District’s audited financial statements included capital assets (e.g., furniture, equipment, and computers) with a total net book value on June 30, 2005 of about $4.8 million. The District’s business office has two employees who perform all aspects of cash disbursements, payroll, accounts payable, journal entries, and bank reconciliations. All business office functions are performed on the financial management system. Scope and Objective The objective of this audit was to determine if District officials were properly safeguarding their financial resources for the period July 1, 2004 to April 30, 2006. Our audit addressed the following related questions:
Audit Results We found exceptions related to the administration and related payments of the Grant. George Will (Will), the District’s former Superintendent, cashed out the Grant’s fringe benefit allocation for two years, totaling $13,500, to which he was not entitled because the District paid his health insurance in full. Will traveled on the Grant while not legally excusing himself from his Superintendent duties during 4.5 days, potentially being overpaid $2,754. Further, we found that the District inappropriately charged $4,563 worth of expenditures to the Grant. Our audit also discovered that Will unilaterally entered the District into a contract for professional services (Grant proposal work) – with a company that employs his son – that bypassed District policy requirements and without approval from the Board. We found that the District made errors in calculating the former Superintendent’s annual salary. In total, our testing determined that the former Superintendent received $10,457 in additional salary to which he was not entitled according to the terms of his contract. We found that the District’s Business Manager prepares journal entries, completes bank reconciliations, creates purchase orders, sets up encumbrances, and acts as the District’s system administrator for the financial management system. This position allows her full access to the financial management system and provides her with the responsibility of creating user accounts and monitoring activity. Based on this risk, we tested payments made to the Business Manager. We did not note any exceptions. We further identified that the District could improve controls over its capital assets. Comments of District Officials The results of our audit have been discussed with District officials and their comments, which appear in Appendix A, have been considered in preparing this report. Except as specified in Appendix A, District officials generally agreed with our recommendations and indicated they planned to take corrective action. Appendix B includes our comments on the issues raised in the District’s response letter. |