The Regional Office of Education #32 did not have adequate controls over fixed assets. For example, there were no formal policies or procedures to monitor and control equipment and other fixed assets. The inventory list did not indicate the acquisition source document (check number). While the technical coordinator performs an evaluation of computer equipment as to its obsolescence or usefulness, proper forms were not used to document disposal or retirement of assets for items below $5,000. Transfers of equipment from one location to another were not formally documented. The balances in the General Fixed Asset Account Group that were recorded in the general ledger were incomplete. Finally, the detailed fixed asset listings were not reconciled with the balances reported in the General Fixed Asset Account Group.

The ROE Accounting Manual requires each ROE to maintain detailed fixed asset records for both accounting purposes, as well as insurance purposes, for fixed assets costing $500 or more. In addition, sound internal controls require that policies and procedures on fixed assets cover the acquisition and tagging, recording and reporting, depreciation (if applicable), transfers and dispositions, and physical inventory, and that they be formally documented and consistently applied. (Finding 03-1, pages 12-14)

The Regional Office of Education #32 accepted the recommendation, stating they will develop formal fixed asset policies and procedures to monitor property acquisitions, transfers and disposals, and provide for accurate reporting of fixed asset balances.

The Regional Office of Education #32 does not use a uniform disbursement document to process disbursements. For some disbursements, a "Claim for Payment" form is prepared and then signed by the respective program director. In most cases, only the invoice is presented to initiate processing of the check payment. Approval was not evident for 11 out of 35 (31%) invoices selected for testing. The auditors also noted that invoices and supporting documents were not stamped "PAID" and the check number was not recorded on the invoice to indicate payment had been made.

Sound internal controls on cash disbursements require all disbursements to be approved by authorized personnel and supporting documents to be properly canceled at time of signature to prevent duplicate payment. (Finding 03-2, pages 15-16)

The Regional Office of Education #32 accepted the recommendation stating that staff have been notified that no disbursements will be made without an attached "Claim for Payment" form with all the necessary signatures and supporting documentation. The Regional Office will also stamp all supporting documents "PAID" and the check number will be indicated to prevent duplicate and/or unauthorized disbursements

The Regional Office of Education #32 charged salaries paid to employees involved in special projects totaling $12,351.22 to a Due from Other Funds account instead of the corresponding project fund accounts. As of June 30, 2003, the balances pertaining to unexpensed salaries for this account totaled $40,797.82, which represents an accumulation for two years.

Generally Accepted Accounting Principles require costs to be allocated to the respective activity at the time they are incurred. Failure to allocate all related payroll expenses to the respective project funds results in understated expenses. (Finding 03-3, page 17)

The Regional Office of Education #32 accepted the recommendation and will adopt procedures which ensure salary costs are allocated quarterly and project expense reports will reflect a current monitoring of expenses and reimbursement requests.

Our auditors state the Regional Office of Education #32’s financial statements as of June 30, 2003 are fairly presented in all material respects.

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WILLIAM G. HOLLAND, Auditor General

WGH:JRB

Our special assistant auditors were E.C. Ortiz & Co., LLP.