The Wellsville Central School District (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.

The District’s budgeted expenditures for the 2006-2007 fiscal year were approximately $21 million, which were funded primarily with State aid, real property taxes, and grants. District financial personnel include a Business Manager, Treasurer, claims auditor, and two clerical personnel. The Business Manager is responsible for administering all purchase activities, including the review of all credit card and travel invoices before they are audited by the claims auditor.

The District has entered into an inter-municipal agreement with the Cattaraugus-Allegany Board of Cooperative Educational Services (BOCES) to perform the internal audit function as of December 2006.

Scope and Methodology

The objective of our audit was to evaluate internal controls over selected financial activities for the period July 1, 2005 through July 13, 2007. We also reviewed the independence of the internal audit function from December 2006 to the end of fieldwork. Our audit addressed the following related questions:

• Are internal controls over credit card usage and travel expenditures appropriately designed and operating effectively?
  
  
• Has the District appropriately established the internal audit function?

Audit Results

The District has not adopted detailed regulations for credit card usage and travel reimbursements. We reviewed 55 credit card and travel-related purchases totaling $33,751 and identified 49 exceptions, ranging from lack of appropriate approvals to lack of an appropriate original invoice. Yet all of these claims were audited and approved by the claims auditor. The exceptions occurred because of the lack of detailed written policies and regulations for administering credit card and travel reimbursements.

We also found that the BOCES employee serving as the internal auditor is not independent in performing the internal audit function. The District’s current arrangement with the BOCES may put this BOCES employee in the position of evaluating significant District services or programs that are provided by BOCES, the individual’s employer.

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.