Purpose of Audit

The purpose of our audit was to determine if the District had established effective internal controls over payroll and leave accruals for the period July 1, 2012 through October 31, 2013.

Background

The Argyle Central School District (District) is located in several towns in Washington County. The District is governed by the Board of Education (Board) which comprises five elected members. The District has one school in operation with approximately 600 students and 110 employees. Budgeted appropriations for the 2013-14 fiscal year were $11.3 million, which were funded primarily with State aid and real property taxes.

Key Finding

• The Board had not adopted comprehensive written policies and procedures for processing payroll.
• The bookkeeper’s payroll duties were not adequately segregated. The Business Manager’s and Treasurer’s limited roles related to processing payroll did not provide sufficient oversight or monitoring of the bookkeeper’s work.
• The Superintendent provided an independent review of the payroll process by reviewing and certifying the final payrolls. However, the Superintendent’s reviews were not extensive enough because she did not compare payroll journals to payroll source documents or the paychecks. Additionally, the Superintendent did not always sign payrolls to indicate that she had reviewed them.
• District officials do not periodically review leave accrual records.

Key Recommendation

• Establish comprehensive payroll processing and leave time accrual policies and procedures that incorporate the duties to be completed and records to be maintained for processing payrolls and maintaining leave records.
• Segregate the bookkeeper’s payroll duties so that this individual does not control all aspects of payroll transactions. If it is not feasible to adequately segregate the bookkeeper’s duties, District officials should establish compensating controls to routinely monitor and review the bookkeeper’s work.
• Compare payroll journals to payroll source documents when certifying payrolls and should sign and date the certifications to indicate that they have been approved before the District makes the corresponding payroll payments.
• Review leave time accrual records and balances to ensure accuracy.