There were no surprises in a state audit of one Cayuga County school district.
In a final audit report released on Monday, the state comptroller's office found no financial discrepancies in the Moravia Central School District, but identified areas the district could improve upon to prevent any such instance from re-occurring.
The state comptroller's office reviewed whether the district's internal controls over finances were designed appropriately and operating effectively for one year starting June 2006. The review is part of a state initiative to examine all school districts' procedures.
The report's recommendations did not surprise district officials; rather, they already knew where they needed to improve and began implementing a corrective plan before they even knew they were being audited.
“I thought the comptroller's office was great,” said William Tammaro, district superintendent. “They were wonderful to work with. They had very good suggestions and they would answer any questions. They were very helpful. The whole process, it was a very long process, but it was very smooth.”
Specifically, the report illustrated weaknesses in the district's computerized business management system. The current software the district employs to monitor and manipulate finances lacks controls to prevent fraud or misuse of funds.
The district uses a computerized electronic signature stamp to sign checks and to place approving signatures - that of the treasurer and school business officer - on purchase orders. However, the password for the signature is known by both the payroll clerk and accounts payable clerk, and can authorize signatures on checks and purchase orders without the knowledge of the business official.
“When district officials do not control access to the check-signing function and purchase order signatures,” stated the report, “it increases the risk that unauthorized personnel could produce checks and purchase orders for improper expenditures.”
Additionally, the system is not equipped to produce monitoring reports, such as, among others, audit logs or reports showing a history of additions, deletions or changes made to access rights, according to the report. These reports provide an independent review of financial transactions.
Given the lack of controls, auditors reviewed selected claim packets, warrants and canceled checks from January to March 2007. They reviewed 23 of the more than 400 claims and traced 23 of the 487 checks, totaling $10,827 from Jan. 1 to March 31, 2007. Officials found no fraud or abuse.
Auditors also reviewed 90 journal entries made from January to March 2007 and three consecutive payrolls from Oct. 13, 2006 through Nov. 9, 2006, totaling $343,343, $336,727 and $349,990, respectively. Officials did not find any instance of fraud or abuse there, nor after reviewing cash receipts from retirees health insurance billings from July through Aug. 2006 and 53 payroll checks issued to individual employees on Aug. 31, 2007.
Moravia officials learned of these inherent weaknesses in their current system more than a year ago when they were investigating purchasing new software, said School Business Administrator Pat Shaw.
“We were looking at new software ... at all of the other software packages and it made me realize, made us realize, what was lacking in our other program,” she said.
The district is in the process of converting the system to the new software that has greater controls in place.
Access to the signature stamp will be granted only to those authorized.
Additionally, some business functions currently performed in the district will be moved to a central business office at Cayuga-Onondaga Board of Cooperative Educational Services to further separate duties. This will create a defined system of checks and balances, Shaw said.
The report also identified some issues with user rights access in the computerized system. Auditors tested 13 system users and found five that had “inappropriate levels of access.”
To rectify this issue, the district will be assigning user rights that are written into the policies and procedures for the business office with only those requiring user rights being assigned them.
According to the report, the payroll clerk holds the incompatible position of system administrator. With the new software, the role of system administrator will be assigned to the Regional Information System at Onondaga-Cortland-Madison BOCES.
The district's two schools have about 1,100 students and 160 employees. Moravia's expenditures for the 2006-2007 fiscal year were $16.9 million, funded primarily with state aid, real property taxes and grants.
Staff writer Alyssa Sunkin can be reached at alyssa.sunkin@lee.net or 253-5311 ext. 239
The state comptroller's office reviewed whether the district's internal controls over finances were designed appropriately and operating effectively for one year starting June 2006. The review is part of a state initiative to examine all school districts' procedures.
The report's recommendations did not surprise district officials; rather, they already knew where they needed to improve and began implementing a corrective plan before they even knew they were being audited.
“I thought the comptroller's office was great,” said William Tammaro, district superintendent. “They were wonderful to work with. They had very good suggestions and they would answer any questions. They were very helpful. The whole process, it was a very long process, but it was very smooth.”
Specifically, the report illustrated weaknesses in the district's computerized business management system. The current software the district employs to monitor and manipulate finances lacks controls to prevent fraud or misuse of funds.
The district uses a computerized electronic signature stamp to sign checks and to place approving signatures - that of the treasurer and school business officer - on purchase orders. However, the password for the signature is known by both the payroll clerk and accounts payable clerk, and can authorize signatures on checks and purchase orders without the knowledge of the business official.
“When district officials do not control access to the check-signing function and purchase order signatures,” stated the report, “it increases the risk that unauthorized personnel could produce checks and purchase orders for improper expenditures.”
Additionally, the system is not equipped to produce monitoring reports, such as, among others, audit logs or reports showing a history of additions, deletions or changes made to access rights, according to the report. These reports provide an independent review of financial transactions.
Given the lack of controls, auditors reviewed selected claim packets, warrants and canceled checks from January to March 2007. They reviewed 23 of the more than 400 claims and traced 23 of the 487 checks, totaling $10,827 from Jan. 1 to March 31, 2007. Officials found no fraud or abuse.
Auditors also reviewed 90 journal entries made from January to March 2007 and three consecutive payrolls from Oct. 13, 2006 through Nov. 9, 2006, totaling $343,343, $336,727 and $349,990, respectively. Officials did not find any instance of fraud or abuse there, nor after reviewing cash receipts from retirees health insurance billings from July through Aug. 2006 and 53 payroll checks issued to individual employees on Aug. 31, 2007.
Moravia officials learned of these inherent weaknesses in their current system more than a year ago when they were investigating purchasing new software, said School Business Administrator Pat Shaw.
“We were looking at new software ... at all of the other software packages and it made me realize, made us realize, what was lacking in our other program,” she said.
The district is in the process of converting the system to the new software that has greater controls in place.
Access to the signature stamp will be granted only to those authorized.
Additionally, some business functions currently performed in the district will be moved to a central business office at Cayuga-Onondaga Board of Cooperative Educational Services to further separate duties. This will create a defined system of checks and balances, Shaw said.
The report also identified some issues with user rights access in the computerized system. Auditors tested 13 system users and found five that had “inappropriate levels of access.”
To rectify this issue, the district will be assigning user rights that are written into the policies and procedures for the business office with only those requiring user rights being assigned them.
According to the report, the payroll clerk holds the incompatible position of system administrator. With the new software, the role of system administrator will be assigned to the Regional Information System at Onondaga-Cortland-Madison BOCES.
The district's two schools have about 1,100 students and 160 employees. Moravia's expenditures for the 2006-2007 fiscal year were $16.9 million, funded primarily with state aid, real property taxes and grants.
Staff writer Alyssa Sunkin can be reached at alyssa.sunkin@lee.net or 253-5311 ext. 239
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