Starpoint Central School District

Internal Controls Over Cash Receipts and Electronic Fund Transfers - Introduction

Background

The Starpoint Central School District (District) is located in the Towns of Cambria, Lockport, Pendleton, Royalton, and Wheatfield, in Niagara County. The District is governed by the Board of Education (Board) which comprises nine 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 four schools in operation on one campus within the District, with approximately 2,900 students and 550 employees. The District’s budgeted expenditures for the 2006-07 fiscal year were $39 million, funded primarily with State and federal aid, real property taxes and grants. The District also receives money from other miscellaneous sources. For example, the District receives donations from local organizations, vending machine income, and retirees’ required contributions for a portion of their health insurance premiums. The Business Office records this activity in the accounting records and prepares bank deposits. Once the money is deposited, it is transferred between District bank accounts by electronic fund transfers.

Objective

The objective of our audit was to evaluate internal controls over cash receipts and electronic fund transfers. Our audit addressed the following related question:

• Are internal controls over cash receipts and electronic fund transfers appropriately designed and operating effectively to adequately 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, and payroll and personal services. 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 cash receipts and electronic fund transfers area and, therefore, we examined internal controls over the cash receipts and electronic fund transfers area for the period July 1, 2005 to May 26, 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.