Draft corrective action plan for state audit outlined

Superintendent Vicki Wright outlined for members of the RCS Board of Education the first draft of the district’s corrective action plan for the state audit.

The plan – which must be approved by the Board of Education – must be submitted to the Comptroller’s Office within 90 days of the July 26 release of the audit.

In her presentation, Wright said the audit – which reviewed district records from July 1, 2004 through April 7, 2006 – sought answers to three major questions:

•    Has the district established adequate internal controls over payroll and personal services to protect district assets against fraud, abuse and professional misconduct and are those controls effective?  

•    Has the district established adequate internal controls over purchasing and processing to protect district assets against loss, waste and misuse, and are those controls operating effectively?

•    Has the district established adequate internal controls over cash receipts and disbursements to protect district assets against loss, waste and misuse, and are those controls operating effectively?

The answers to those questions, she said, were the state determined:

•   Controls in certain areas were not adequate

•   Other areas were in need of improvement

•     There were no instances of fraud, abuse or professional misconduct and there was no referral of the audit to any prosecutorial agency.

As auditors spent weeks in the RCS offices poring over records, Wright said certain deficiencies were noted and some actions were taken to correct them even before the release of the audit in July.

Those actions included:

•     Cell phone and internet use policies were crafted to include an employment payment policy for use of district cell phones

•    The district’s signature plate disk was secured

•    Contracts for individual services were clarified and are now being sent to the Board of Education for approval

•    Conferences and travel policies instituted requiring prior approval of all conferences by a superior and no prepayment of the conference unless its organizers accept a purchase order

•    Credit cards collected from all holders and secured in the treasurer’s safe, with some cards being cancelled

•    The institution of some payroll controls

•    Food purchases for faculty meetings, Board of Education dinners, community gatherings and all functions where students are not present or involved have been eliminated.  Likewise, the purchase of retirement gifts or incentives for employees has been stopped.

At the same time, Wright reported to the board that policies and procedures are being crafted to address deficiencies in payroll procedures highlighted in the audit. Those actions include:

• All changes in employment (additions and deletions), salary and wage rates, and payroll deductions are going through the proper approval process. 

• Proper employee information (personnel records) will be obtained, filed, and safeguarded. 

• Employees’ holiday, sick, vacation and personal time will be properly accumulated and paid in accordance with the provisions of the District’s union contract and personnel manual. The district is now in the process of developing oversight levels for payroll.

• Employees will be adequately trained for their changing job functions.

• Employees are hired and payroll and personnel policies governing compensation will be in accordance with state and federal laws and regulations. 

• Salaries, wages, and benefits will be paid for authorized work and calculated at the proper rate.

• Corrective actions are being taken so that the salary expense budget will not be overspent. 

• Payroll tax liabilities will be remitted on time in accordance with state and federal laws and regulations. 

• Payroll information reports, ex. Form 941, W-2, etc., will be properly completed on time.

Responding to input from the Comptroller’s office on procurement and payable procedures, Wright said RCS is also establishing the following controls for requisitioning materials:

•     All requisitions for purchases of goods and services must be properly authorized. 

•     The appropriate appropriation to be charged is indicated on all requisitions for purchases of goods and services. 

•     Before a purchase is agreed to, personnel will verify that sufficient un-obligated funds are available in the proper budget line to pay for the purchase.

•     Detailed specifications must accompany all requests for special order, special purpose materials or personal service requests.

•     Purchasing authorization will be structured to give appropriate recognition to the nature and size of purchases and the experience of purchasing personnel. 

•     All purchases and contracts issued must be properly processed and approved.

•     Purchase prices must be periodically reviewed by a responsible employee independent of those authorized to purchase.

•     All purchases, as appropriate, must be completed in accordance with the District’s Procurement Policy. 

•     Splitting of orders will be prohibited to avoid higher levels of approval. 

•     Records of price lists or quotations will be properly maintained

•     Records of suppliers who have not met quality or other performance standards will be maintained.

•     The purchase of materials, services and facilities must be in accordance with grant requirements

•     The purchases of materials, services and facilities not allowable under federal or state grants are identified before the order is placed.

•     Open purchase orders and agreements records should be properly maintained.

•     Bid and performance bonds will be required for all construction contracts.

•     The selection criterion for awarding personal services contracts or construction contract must be predetermined and the award process is adequately documented.

•     Changes to contracts or purchase orders will be subject to the same approvals and controls as the original agreement.

•     All receipts of materials, services and facilities must be properly documented. 

•     All claims against carriers or vendors for shortages or damaged materials will be properly processed.

•     The receipt of goods are accurately counted and examined to see that they meet quality standards.

•     All receipts will be numerically controlled to ensure that all receipts are reported to the Supervisor’s office.

•     With respect to procurements of special purpose materials, services, or facilities, RCS’ technical representative monitors and evaluates the contractor’s performance and approves the receipt of the services. 

•     All goods or services for which payment is made must be received and verified by someone other than the individual approving payment that the goods or services must be received and meet quality standards.

•     All remittances of funds collected must be authorized.

•     All authorized remittances must be made.

•     All remittances made are recorded in the proper amount, time period and proper liability.

•     All remittances processed must be released.

•     Adequate controls will be in place over the supply of unused checks.

•     All banks will be authorized by the Board of Education.

•     Employees handling cash have adequate fidelity insurance.

•     There will be proper of separation of bank accounts as required by law.

•     Adequate procedures to ensure financial reports must be supported by either underlying account records or other documentation.

During her presentation, board members asked a series of specific questions with regards to the audit. Among the requests was for a specific accounting of all credit card charges questioned by the state Comptroller and for the district to pursue – when possible – repayment for any questionable charges identified by the comptroller.

The board also asked Wright to determine if an employee – who was working under two separate contracts for the same job – was over- or under-paid for the time period identified by the comptroller and for any over- or under-payment to be corrected by the district.