Primary Role of Internal Claims Auditor - New York State ...



Primary Role of Internal Claims Auditor

Purchasing

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|Monthly budget status reports disclose |Requests that budgetary transfer be |The Purchasing Agent is re-emphasizing his/her check |Building administrators are to refer to the budget status |

|that purchase orders are sometimes being |made before the claim can be |for an adequate available budgetary appropriation, |report for their building to ensure adequate budgetary |

|allowed to exceed available budgetary |approved. |prior to issuance of a purchase order. |appropriations. Where insufficient appropriations are indicated|

|appropriations. | | |a budget transfer request form should accompany the purchase |

| | | |request. |

|Supplies were ordered directly from vendor| |A letter was sent by the Purchasing Agent to all |The Board of Education amended its purchasing policy to |

|B by a staff. The Purchasing agent did not| |staff members and all offending vendors stating that |reinforce compliance with the governing laws and regulations |

|initiate the purchase and further vendor | |all purchases that were not initiated by the |and the sole authority of the PA to obligate the district to a |

|A, not vendor B was awarded the bid for | |Purchasing Agent would not be paid by the district. |purchase. It was further stipulated that willful violation of |

|the supplies purchased. | | |this policy would result in the denial of payment by the |

| | | |district. |

|Payments should be based on original |The claim will be held until original|Vendor was contacted & requested to provide both |The District paid the vendor upon receipt of the invoice, and |

|invoices, not on packing slips or |invoice can be produced. |packing slips and the original invoice. |the issue appears resolved. |

|statements. | | | |

|Equipment items were purchased that cost | |The Purchasing Agent shall ensure that all the same |It is hoped that the existence of this new control procedure |

|less than the $10,000 bid threshold, while| |or similar items purchased during the school year |will ensure compliance with the bid law and ensure a better |

|the annual aggregate purchases of the same| |that equal or exceed the bid threshold are grouped |system for inventory control. |

|or similar items far exceeded the bid | |together for bidding purposes. Also inventory levels | |

|threshold. | |will need to be included with all purchase requests. | |

|In the process of preparing the initial | |Purchasing agent will develop an inventory system |The BOE will develop policy requiring a beginning inventory for|

|inventory, staff noticed that a digital | |that will ensure better control of the district’s |all classroom and department areas and end of year inventory |

|camera costing approximately $400 and a | |equipment. |submitted by responsible staff members that includes all |

|glockenspiel costing approximately $1,800 | | |pertinent information on the ultimate transfer, replacement or |

|and 23 portable computers costing | | |disposition of equipment. It is hoped that this will reduce |

|approximately $25,300 had become | | |the likelihood that such losses occur in the future. |

|misplaced. | | | |

|A 7-year installment contract for 9 small |The ICA will hold the claim until the|The purchasing agent referred the issue to the school|Pending |

|fax machines was submitted for audit and |reasonableness and legality of the |attorney for resolution. | |

|payment. The contract length seemed |contract can be supported. | | |

|unreasonable. Further there was no | | | |

|evidence that the contract was authorized | | | |

|by the PA, approved by the voters or that | | | |

|the contract had been bid. | | | |

Travel and Conference Expenses

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|Sales tax added on to a restaurant bill |The ICA reduced the meal |The purchasing agent advised the ICA of Comptroller's|The meal voucher was approved as submitted and no further |

|for meals consumed on authorized business |reimbursement by the amount of the |opinion # 80-163 which states that sales tax added to|action was required. |

|travel. |sales tax. |a bill for meals consumed while on authorized | |

| | |business travel is reimbursable by the district. | |

|Travel advances are not reconciled with |Advise staff that a refund is |Designed new travel advance form: Section 1 |The new form is now filed in the voucher packet for the travel |

|actual expenses incurred. |required to be made to the district |summarizes the purpose of travel, place and amount. |advance. The form was modified to advise that a refund from |

| |for all expenditures not supported by|Section 2 reconciles the amount of the advance to |staff members to the District would be required for all |

| |original invoices. |invoices and cash returned after travel is completed.|expenditures not supported by original invoices. |

| | | | |

Gift of Public Funds

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|The District sent a fruit basket to the |The claim is rejected, as it is an |Contributions are to be solicited from each Board |The Board did not previously associate such purchases as a gift|

|District Clerk who was recuperating in the|unallowable gift of public funds. |member for such purchases |of public funds. The issue appears resolved. |

|hospital. | | | |

|Request to approve $5,000 payment to staff|The claim is rejected. |General fund appropriations will not be used to fund |Staff member was informed that the school district funds will |

|member in support of community Football | |community Football league |not be used to support community Football league |

|league | | | |

Utilities

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|Voucher packets for utility bills | |The Purchasing Agent will not approve voucher packets|The Corrective Action Plan for this issue is in place, but |

|routinely do not show evidence of receipt | |until there is documentation of receipt of goods or |still requires action by the Board to appoint specific |

|of the utilities in the voucher packet. | |services attested to by a board appointed staff |individuals as authorized receivers before it can be fully |

| | |member. |implemented. |

Capital

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|Bids were solicited for the installation | |Future Board resolutions accepting other than the |The elevator was purchased partly with federal grant funding. |

|of an elevator, but the lowest bidder was | |lowest bid will include language that states the |Since the lowest-bidding contractor appeared on GSA’s Excluded |

|not selected. | |reason the Board determined not to select the lowest |Parties List System of suspended or debarred vendors, the |

| | |bidder. |District was unable to use that vendor. |

Expanded Role of Internal Claims Auditor

Travel and Conference Expenses

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|The Superintendent is approving his own |Advise Board that poor internal |Modify Board policy so that the delegation of |The Superintendent continues to approve the travel advances and|

|travel advances and expenses. |controls exist when one is allowed to|authority to approve travel advances & expenses |expenses of staff, while the Board of Education retains |

| |approve his/her own travel advances |excludes those associated with the Superintendent. |authority to approve same expenses for the Superintendent. |

| |and expenses. | | |

|Separate vehicles are sometimes rented for| |Staffs have been requested to be alert to the |An approximate $500 reduction in potential costs to the |

|each staff member attending a conference, | |potential savings in this area. The Account Clerk |District has been achieved in the 3 months that this policy has|

|possibly causing unnecessary District | |will review all travel reimbursement requests to seek|been in effect. |

|expense. | |to reduce duplication of costs. | |

Utilities

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|Long-distance telephone charges are | |The Superintendent directed the Superintendent of |The issue appears resolved. However the BOE requested that the |

|regularly incurred without documentation | |Buildings and Grounds to arrange for District |ICA provide a list of all cell phones provided by the district |

|of their benefit to the District. | |telephones to require either an access code card or |and to include the specific plan purchased. The PA was directed|

| | |routing through the central switchboard for |to evaluate available cell phone plans, pre-paid phone cards |

| | |long-distance calls. The Account Clerk will scan |and list the justification submitted when requesting a cell |

| | |future phone bills for unrecognized cell and |phone. This information will be used by the BOE in the |

| | |long-distance calls and follow up as deemed |development of a cell phone policy. |

| | |appropriate. | |

Federal Funds

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|Most Title 1 expenditures are initiated by| |All future charges to the Title 1 project for |This issue appears resolved. |

|the District’s Title 1 Coordinator, but | |equipment and supplies will be based on requisitions | |

|some expenses are charged to Title 1 by | |supplied only by the Title 1 Coordinator, who will | |

|the Business Official, raising the | |scrutinize them for compliance with grant | |

|potential for lack of compliance with | |requirements. | |

|grant requirements. | | | |

Salaries and Payments to Retirees

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|Medicare reimbursements contractually owed| |The Account Clerk will send a positive confirmation |One retiree was concerned that the District’s requirement of an|

|to retired staff members do not document | |request to each qualifying retiree, and will file the|annual confirmation of continued qualification was not |

|the continued qualification of the | |returned confirmation in the voucher packet. |contractually allowable. District legal counsel advised that |

|retiree. | | |the District was entitled to confirm that the retiree was |

| | | |alive. |

|Material discrepancies were identified |A repayment schedule has been agreed |The amount due the district will be deducted from the| |

|between the salaries paid 6 custodial |upon. |employee's paycheck based on the mutually agreed upon| |

|workers and the negotiated salary | |payment schedule. Period audits of payroll will be | |

|schedule. | |conducted. | |

Banking and Investments

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|The District’s Bond and Note Register did |Amount of interest payment can not be|The firm’s management letter advised that the Bond |The Bond and Note Register has been updated, and original |

|not contain a record of debt parameters, |verified |and Note Register should be maintained up to date, |cancelled notes and copies of unmatured notes are now filed |

|or a copy of the BAN on which interest was| |showing the conditions necessary to compute payments |with it. |

|paid. | |on each outstanding bond and note, and supported with| |

| | |copies of the underlying debt instruments. | |

|Because of new banking regulations that | |The District will endeavor to exercise extreme care |The District’s bank advises that it can provide facsimiles of |

|permit vendors’ banks to notify the | |in the entry of payee names on checks, and seek to |that portion of the District’s cancelled checks that it does |

|District’s bank electronically of cleared | |strengthen internal controls in the check signing and|receive through the national check clearing system, for a |

|checks, no cancelled checks are returned | |mailing process. No other corrective action is |substantial fee. But it points out that a few checks presently|

|to the District. This makes it impossible| |planned at this time, |are never returned to the bank on which they were drawn, and |

|for the District to verify that endorsers | | |that proportion is expected to grow as these new regulations |

|of District checks are actually the | | |gain greater acceptance and use. The Bank currently has no |

|intended recipient of the District’s | | |solution to offer to this issue. |

|payment, or that the District’s Treasurer | | | |

|actually signed the check. | | | |

Capital

|Discovered Condition | Internal Auditor |Corrective action plan |Results of corrective action |

|The 2002-2003 management letter provided | |The Superintendent has directed the Business Official|The District’s financial advisors disagree with the District’s |

|to the District by its independent | |to consult with the District’s financial advisors, to|independent auditing firm, and advise that commingling of |

|auditors advised that Capital Fund budget | |design a policy for these transactions, which meets |project budgets, revenues and expenditures is acceptable. |

|status reports should be prepared | |both applicable law and prudent management concepts. |Accordingly, this issue is not resolved. The Business Official|

|separately by individual project, but this| | |and auditors agree that better budgetary control could be |

|recommendation has not been followed for | | |achieved by separating each project. Additionally, as a |

|2003-2004 expenditures, and it is not | | |byproduct of pro-forma computations to separate the |

|possible to determine from the account | | |expenditures to date, the Business Official has determined that|

|coding which project will be charged for | | |one of the Capital Projects may be overspent by approximately |

|each expense. | | |$77,000. Accordingly, the Superintendent and Business Official|

| | | |are discussing what policy approach to recommend to the Board. |

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