Purpose of Audit

The purpose of our audit was to examine the claims auditing process for the period July 1, 2011, to April 30, 2013.

Background

The Southold Union Free School District is located in the Town of Southold, Suffolk County. The District is governed by the Board of Education which comprises five elected members. Appropriations budgeted for the 2012-13 fiscal year were approximately $27 million, funded primarily with real property taxes. During our audit period, the District paid claims totaling $24,547,479.

Key Finding

District officials have established adequate controls over the claims processing function that ensure claims are audited in a timely manner and are properly supported. The claims auditor generally conducts a thorough and deliberate audit of each claim before the Board authorizes payment.

• Even though the claims auditor appeared to be properly auditing claims, the purchasing agent did not always formally approve all purchases prior to ordering goods and services. We selected and reviewed 25 claims, totaling $145,637 to determine if purchase orders were issued prior to the ordering of the goods and services, and if claims were for legitimate District purposes and audited prior to payment. Despite minor deficiencies that were discussed with District officials, the claims we tested did appear to be for a proper District purpose and audited prior to payment. However, purchase orders for six of the 25 claims totaling $33,539 were confirming purchase orders which were prepared after the invoice was received from the vendor.

Key Recommendation

• Ensure that purchase orders are prepared and approved in advance of any purchase and limit the use of confirming orders to emergency situations.