FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
INADEQUATE CONTROLS OVER PROPERTY
The Regional Office of Education #55 did not have adequate
controls over property. For example,
there were no written policies and procedures for equipment monitoring and
control. The inventory list did not
have complete information as to the tag number and acquisition source document
(check number) as well as the purchase order number.
During fiscal year 2003, the Regional Office of Education
#55 established a capital asset reporting threshold of $5,000 in preparation
for the implementation of Governmental Accounting Standards Board (GASB)
Statement #34. Previously, capital
assets costing over $500 were recorded as capital outlay expenditures of the
Governmental Fund and as additions to the General Fixed Asset Account Group
(GFAAG). As a result of implementing
the new policy, the Regional Office reported deletions of fixed assets
totaling $368,024 for fiscal year 2003 to adjust the equipment balances in
the GFAAG to reflect balances in the fixed asset detailed inventory list for
items meeting the new capitalization threshold of $5,000. There was no formal reconciliation of the
balances in the inventory list before the GASB #34 related deletions with the
original balances of the GFAAG to ensure completeness of the list from which
items at or above the threshold amount was derived.
The Regional Office of Education (ROE) Accounting Manual
requires each ROE to maintain detailed fixed asset records for both
accounting purposes as well as insurance purposes. 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 #55 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.
CONTROLS OVER DISBURSEMENTS NEED TO BE
IMPROVED
During the testing of disbursements and expenditures, the
following was noted:
·
Invoices and supporting documents were not stamped
“PAID” and the check number was not recorded on the invoice to indicate that
payment had been made.
·
There is no evidence that the mathematical accuracy
of invoices was checked (footings and extensions) and reconciled to the check
amount. One voucher with invoices
totaling $286.48 was paid with a check amounting to $284.48.
·
Acknowledgement of receipt of the items purchased was
not evidenced in the voucher supporting documents.
·
Supporting documents were not the original invoices.
Sound internal controls over cash disbursements require
invoices to be checked for accuracy and supporting documents to be properly
canceled at time of signature to prevent duplicate payment. (Finding 03-2,
pages 15 and 16).
The Regional Office of Education #55 accepted the
recommendation to ensure that all invoices and supporting documents are
cancelled at the time of signature by stamping “PAID” and indicating the
check number on the invoices and supporting documents to prevent duplicate
and/or unauthorized disbursements.
Mathematical accuracy of invoices to checks written will be
ensured. Items received will be
checked and the initial of the person who received the item will be affixed
to the invoice. When invoices are to
be paid from multiple sources, the copies will identify where the original
invoice has been filed.
OTHER FINDING
The
remaining finding is less significant.
We will review progress toward the implementation of our
recommendations during the next audit.
AUDITORS’ OPINION
Our auditors state the Regional Office
of Education #55’s financial statements as of June 30, 2003 are fairly stated
in all material respects.
_____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:KJM:ro
SPECIAL
ASSISTANT AUDITORS
Our
special assistant auditors were E.C. Ortiz & Co., LLP.
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