Background

The Sherburne-Earlville Central School District (District) is located in 11 towns in Chenango and Madison counties. 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 Board’s direction.

There are three schools in operation within the District with approximately 1,646 students and 344 employees. District officials expended nearly $22 million during the 2005-06 fiscal year, primarily funded by State aid, real property taxes and grants.

The District Treasurer is responsible for all aspects of cash receipts and disbursements. In addition, the District has a payroll clerk who is responsible for processing District payroll transactions.

Objective

The objective of our audit was to determine if the Board adequately safeguarded District assets. Our audit addressed the following related questions:

• Did the Board adequately segregate the Treasurer’s duties over the cash disbursement process or implement compensating controls?
  
  
• Is there adequate segregation of duties over the payroll process to ensure that payments of wages and benefits are in accordance with Board authorizations and approved employment contracts?

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 condition and oversight, cash receipts and disbursements, purchasing, payroll and personal services, and information technology systems. Based on those evaluations, we determined that controls appeared to be adequate and limited risk existed for most of the financial areas we reviewed. We did determine that risk existed in the areas of cash disbursements and payroll and, therefore, we examined those areas for the period July 1, 2005 to April 24, 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 generally agreed with our recommendations and indicated they planned to initiate corrective action.

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.