The Yorktown Central School District (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 direction of the Board.

There are six schools in operation within the District, with approximately 4,200 students. The District’s budgeted expenditures for the 2005-06 fiscal year were $72.8 million. The District employs approximately 800 individuals and reported about $53 million in payroll and related fringe benefits for the year ended June 30, 2006. This amount consisted of approximately $40 million in instructional salaries and $13 million in fringe benefits.

Scope and Objective

The objective of our audit was to examine the District’s internal controls over separation payments, claims processing, and computerized assets for the period of July 1, 2005 through March 28, 2007. Our audit addressed the following related questions:

• Were separation payments made in accordance with employment contracts?
  
  
• Does the claims auditor report directly to the Board?
  
  
• Is there an adequate system of internal controls to safeguard the integrity of information processed and stored by the District’s computer system?

Audit Results

We found weaknesses with the District’s internal controls over separation payments, claims processing, and physical security over data generated by the District’s computer system. As a result, there is an increased risk that errors and irregularities could occur and not be detected.

We identified two instances where District management deviated from the terms of Board-approved individual employment contracts and overpaid two former administrators for unused vacation days. District management paid these former administrators a total of $7,531 for unused, accrued vacation leave without any authorizing contractual provision or Board approval. Moreover, the District does not have a system for monitoring leave records for District administrators. These individuals, who operate under individual employment contracts, are allowed to self-report their leave accruals and resulting balances.

The District’s claims auditor was not aware that she was required to report to the Board and has not reported to the Board at any time during her tenure. The claims auditor’s ability to act independently could be compromised if she is placed under the control or supervision of District personnel. This internal control weakness puts the District at risk that inappropriate claims will be paid without being brought to the Board’s attention.

In addition, District officials have not established controls to provide adequate physical security over the Business Office server. The server is located in an open-access storage room with two separate doors that remain unlocked throughout the work day. This significant weakness could result in an unauthorized access to, or the loss of, computer equipment and personal and confidential data.

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 that they planned to take corrective action. Appendix B includes our comments on issues raised in the District’s response letter.