The Worcester Central School District (District) is governed by the Board of Education (Board) which comprises five 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.

One of the Board’s managerial responsibilities is to establish a system of internal controls designed to provide reasonable assurance that District assets are properly safeguarded from unauthorized use or disposition and are accounted for properly. Such a system reasonably ensures that all purchases are authorized prior to orders being placed, comply with District policies, represent proper charges against the District, are audited, are approved prior to payment, and that related checks are appropriately signed by the District Treasurer. Such a system should also ensure that leave time is accounted for properly, and provide for the timely identification of errors and/or irregularities, which may have occurred, so that corrective action can be taken. Once established, the Board has the responsibility to monitor controls to ensure that they are operating properly.

Scope and Objective

The objective of our audit was to determine whether the District’s internal controls over purchasing, claims processing and leave time were adequate for the period of July 1, 2004 to May 8, 2006. Our audit addressed the following related questions:

• Were internal controls over purchasing, claims processing and leave time appropriately designed and operating effectively to adequately safeguard District assets?
  
  
• Did the Treasurer control the use of his signature disk?

Audit Results

Internal controls over purchasing were appropriately designed but were not operating effectively. The purchasing agent did not approve all purchases and ensure that bidding and quotation requirements were adhered to. In addition, the Board failed to oversee the work of the purchasing agent. As a result, District officials did not obtain competitive bids for 28 computers, costing $19,998; did not seek quotes as required for three out of seven purchases totaling $8,515; and did not generate purchase orders for 44 purchases totaling $47,774.

Internal controls over claims processing were appropriately designed but were not operating effectively. The claims auditor did not conduct a proper audit of claims and the Board failed to monitor the work of the claims auditor. As a result, six claims, totaling $43,684, were not audited; the Treasurer issued 17 checks, totaling $20,697, before the claims auditor audited and approved the claims; and the supporting documentation on file for nine claims, totaling $1,764, was incomplete.

Internal controls over leave time did not prevent errors from occurring. We identified 8.75 days of leave time that was used but not posted to employee records and an overpayment of approximately $175 to an employee upon retirement. Sick leave balances of the Treasurer and Superintendent were overstated by two days and 20 days, respectively, though neither received financial benefit. In addition, 20 percent of personal days used and 46 percent of conference days used were not documented and approved.

The Treasurer did not control his signature disk and did not verify the accuracy of the printed accounts payable checks prior to distribution. Further, he was not notified when his signature was being applied to checks. Our examination of disbursements did not disclose material discrepancies.

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. Except as specified in Appendix A, District officials generally agreed with our recommendations and indicated they planned to initiate corrective action. Appendix B includes our comment on one issue raised in the District’s response letter.

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Complete Audit in PDF