Sullivan County BOCES

Cash Collections and Claims Audit Process -
EXECUTIVE SUMMARY

The Sullivan County Board of Cooperative Educational Services (BOCES) is an association of eight component school districts governed by a nine member Board of Education (Board) which is elected by the boards of the component districts. The Board is responsible for the general management and control of the BOCES’ financial and educational affairs. The District Superintendent is the chief executive officer of the BOCES and is responsible, along with other administrative staff, for the day-to-day management of the BOCES. By law, the District Superintendent is an employee of both the appointing BOCES and the New York State Education Department. As such, the District Superintendent works under the direction of both the Board and New York State Commissioner of Education.

Approximately 335 full-time and part-time staff work at the BOCES in classrooms and offices throughout the BOCES area. The BOCES’ 2006-07 fiscal year general fund budget of $22 million is funded primarily by charges to school districts for services, Federal and State grants/aids and charges to the public for services and educational programs.

The BOCES’ cash receipts totaled approximately $29.3 million in the 2005-06 fiscal year. Approximately $296,000 of these receipts were collected at locations other than the Business Office. Moneys collected at off-site locations are couriered to the Business Office, entered into the Assistant Superintendent’s cash receipts log, and then given to the Treasurer to enter into the financial accounting software. The Treasurer then prepares a deposit slip, which is couriered with the cash moneys to the bank for deposit.

The accounts payable clerk compiles purchase requisitions, purchase orders, invoices, and supporting documentation into a claims package for the claims auditor’s review. Part of the claims auditor’s review involves making sure that the claim is adequately supported, is added correctly, does not contain a charge for sales tax, and has all appropriate approvals. She also compares the purchase order amount to the claim amount to ensure the claim is kept within authorized limits. She indicates her approval by initialing each claim, signing a warrant of audited claims, or both.

Scope and Objective

The objective of our audit was to determine if the Board adequately safeguarded BOCES’ assets for the period July 1, 2005 to March 9, 2007. Our audit addressed the following related questions:

• Were internal controls over departmental cash collections appropriately designed and operating effectively?
• Is the claims auditor properly auditing BOCES claims?

Audit Results

Although BOCES officials properly accounted for departmental cash collections, we found certain deficiencies in the cash receipts and collection process. We also found a lack of segregation of duties in the Treasurer’s Office. The Treasurer is responsible for cash receipts data entry, preparing deposits, making electronic transfers, and preparing journal entries. Because one person has access to cash and has the responsibility of recording transactions, there is a risk that he could misappropriate cash.

We also found that the Assistant Superintendent’s secretary maintains a cash receipts log for all off-site cash collections, which are couriered directly to her; however, nobody ever reviews this log. The Cosmetology Department does not have set prices for the services they provide, multiple departments do not utilize daily cash sheets, and nobody compares the amounts deposited with the amounts collected at each department. As a result, errors or irregularities could occur without being detected or corrected. Such deficiencies could enable an employee to collect cash and not have it recorded and deposited.

We tested 57 claims totaling $1,021,954 for proper authorization, reasonableness, sufficient support, and indication of claims auditor review. Our testing disclosed that the claims auditor properly audited BOCES claims.

Comments of BOCES Officials

The results of our audit and recommendations have been discussed with BOCES officials and their comments, which appear in Appendix A, have been considered in preparing this report. BOCES officials generally agreed with our recommendations and indicated they planned to initiate corrective action.