Internal Audit Findings Finance Enhancing Processes

Bookkeeper In-ServiceAugust 17, 2011

John Wallingford, Director of Financial ServicesVivian McGettigan, Chief Internal Auditor

Outline

1. Update on Internal Control Advisory Council and/or Finance Guidance

2. Update on Audit Findings

3. How to Avoid Audit Findings

4. Activity Fund Audits

2

Focus Group Meetings Continue and Learning from Initial Audits• Bookkeepers’ Feedback (Standardize

Forms and Provide Guidance)• Regulations/Policies Inconsistent with

Practices:– Nightly Deposits ($25) evening events– Audits of Booster Clubs– Level Associate’s Approval of Meals– Full Accounting for Travel

3

ICAC or Finance Projects

• Nightly Deposits (Evening Events)• Meals (Level Associate Approvals)• Full Accounting (Standard Form and Guidance)• PTA/Booster Club Guidance (Checklist for

Bookkeeper Review)• Expendable Property Management (logs &

labels)• Coaching Supplements Reconciliation

Spreadsheet

4

Enhancing our Anti-Fraud Program

“Unannounced” Audits

Focus on Deterring Fraud

5

Summary Results of Current Audits

• Enhance Physical Security Over Cash:– Secure keys to Safe– Regular Nightly Deposits– Teachers Holding Cash in the Classroom

overnight• Enhance Password Protection:

– Store Passwords Away from the Computer

6

Audit Results - Continued

• Enhance Management of Procurement Cards– Lack of Log– Frequent Late Submissions of Reconciliation– Meals Lacked Level Associate prior approvals– Lack of Supporting Documentation for Meals– Meals for Non-employees (spouses)– Lack of Full Accounting for Travel– Failure to Utilize Sales Tax Exemption– Use of School Activity Fund Cards for Site Based Charges– Tips in Excess of 15%

7

More Audit Results

• Enhance Management Over School Payroll– Lack of Professional Leave Requests– Use of Instructional Supplements to Pay Additional

Coaching Supplements– Set-up of Temp Teachers Prior to HR’s approval– Authorization of Staff Roster resulting in paying a

terminated employee– Lack of Principal’s approval for overtime.

8

Even More Audit Findings

• Enhance Security Over School Division Equipment:– Use of Release Forms – Equipment Removed

from School– Update Inventory for Transferred Assets– Expendable Property Listing not Maintained– Lack of Management of Computer Equipment

9

Lack of Oversight Over Public Funds

• Responsibilities:– Legal– Ethical – Fiduciary (Spectrum of Opinions for

Appropriate versus Non-appropriate)

Reminder - All Purchases are Public Record

10

Lack of Oversight Over Public Funds

• Failure to Cancel Hotel Reservations Resulting in Charge to Procurement Card

• Numerous Expensive Restaurant Charges Contributing to Overspending the Budget

• Expensive Retreat Contributing to Overspending the Budget

• Gifts Purchased for Staff Using Public Funds• Personal Items Purchased with Public Funds

Internal Control Environment is Established Within Each School

11

Frequency of FindingsD

ocum

enta

tion

to s

uppo

rt ch

ecks

& a

ppro

ved

Out

stan

ding

che

cks

Def

icit

bala

nces

Dep

osit

in ti

mel

y fa

shio

n

Stand

ard

Trans

mitt

al fo

rm n

ot u

sed

Out

stan

ding

adj

ustm

ents

Staff

held

mon

ey fo

r dep

osit

Yearb

ook

lost

mon

ey (n

o pr

ofits

)

Post t

o ge

nera

l ledg

er a

fter d

epos

iting

in b

ank

Build

ing

use

not p

aid/

trans

ferr

ed

One

sig

natu

re o

n ch

eck

Ticke

t sal

es le

ss th

an ti

cket

repo

rts

Books

sal

es n

ot m

atch

repo

rt

Che

ck m

ade

paya

ble

to b

kpr,

prin

cipa

l, as

sist

pr s

igne

d by

sel

f

Dep

osit

post

ed m

ulitp

le ti

mes

Inst

rum

ent r

enta

l not

sub

mit

Adjus

tmen

t & T

rans

fer J

ourn

al e

ntrie

s ne

ed a

ppro

val p

rior t

o m

akin

g

Out

stan

ding

Dep

osit

Paid

Sales

Tax

Signa

ture

sta

mp

used

Use

app

ropr

iate

acc

ount

s

Inap

prop

riate

tran

sfer

to fa

culty

acc

ount

from

C &

D a

ccts

Begin

ning

bal

ance

diff

eren

t tha

n en

ding

bal

ance

of p

rior y

ear

Bids

on p

urch

ases

ove

r $30

00

Driv

ers

Ed m

oney

not

rem

itted

per

FG

M

Fundr

aise

r nee

d to

be

sepa

rate

to d

eter

min

e pr

ofit

or lo

ss

Gift

Car

d fo

r tea

cher

, no

rece

ipt o

f giv

en

Min

niel

and

chec

k no

t sen

t to

SBM

Neg

ativ

e ch

eck

Rec

eipt

not

to in

divu

al b

ut g

ener

ic "T

each

er"

Rec

eipt

out

of o

rder

Took

mon

ey o

ut fo

r NSF b

efor

e de

posi

ted

Una

ble

to fi

nd c

lear

d ch

ecks

Unt

imel

y m

onth

ly b

ank

rec

Void

chec

k no

t mut

ilate

d in

sig

natu

re lin

es

Void

chec

ks le

ft ou

tsta

ndin

g

0369

12151821

12

Frequency of Recommendations

Accou

nts

not h

ave

print

gro

up

unre

lated

disb

urse

men

t fro

m p

rofit

cen

ters

Trans

mitt

al fo

rm n

ot in

clude

dat

e

Credit

car

ds s

kews

from

SBM

acc

ount

Buildin

g us

e no

t paid

?tra

nsfe

rred

Depos

it idl

e m

oney

in m

oney

mar

ket o

r CD

Separ

ate

fund

raise

r ro

refle

ct p

rofit

cash

dec

reas

ed d

uring

yr

Check

to b

kpr,

princ

ipal,

assis

t pr s

igned

by

self

Depdo

ts o

ne a

t tim

e, th

en ru

n jou

rnal

for d

ays

no v

endin

g co

mm

ission

not i

mm

ediat

ely s

tam

ped

depo

sit o

nly

one

signa

ture

on

chec

k

trans

fer &

Adj

not s

igned

by

princ

ipal

Unclea

red

adjus

tmen

ts05

101520253035

13

Findings per School

5 5 5 5 5 5 5 5 5 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 2 2 2 20

1

2

3

4

5

6

7

8

9

14

Questions

Vivian McGettigan, MBA, CPA, CIA, CPFOChief Internal Auditor

Prince William County Public SchoolsP.O. Box 389

Manassas, Va. 20108703-791-8991

15

John M. Wallingford, MBA, CPFODirector of Financial Services

Prince William County Public SchoolsP.O. Box 389

Manassas, Va. 20108703-791-8753