The Schalmont 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 Treasurer is responsible for cash receipt and disbursement activities in the District. The claims auditor is charged with ensuring that proper documentation and itemization are provided for each claim, payments are for legal purposes, and transactions are properly authorized.

Scope and Objective

The objective of our audit was to examine internal controls over cash disbursements for the period July 1, 2005 to July 18, 2006. In addition, through inquiry of District personnel and observation of District data processes, we obtained an understanding of the design of information technology (IT) controls. Our audit addressed the following related question:

• Are internal controls over cash disbursements appropriately designed and operating effectively to adequately safeguard district assets?

Audit Results

Internal controls over cash disbursements need to be improved. The claims auditor did not properly review 58 out of 89 claims tested. In some cases, purchase orders or claims lacked a signature as to receipt of goods, a required signature by the purchasing agent, or a signature showing department head approval. We also found 15 claims, totaling almost $490,000 that were not audited until after payment had been made and that the duties of the Treasurer, accounts payable clerk and payroll clerk were not properly segregated. As a result, there is an increased risk that errors and irregularities could occur and go undetected and uncorrected.

The District has not developed a formal disaster recovery plan for IT systems and back-up tapes are not stored in a secure, off-site location. As a result, there is a significant likelihood that, in the event of a disaster, critical information systems or data will not be available for District operations.

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 they planned to initiate corrective action.

---

Complete Audit in PDF