Hybla Valley Elementary School Procurement Card Audit

Hybla Valley Elementary School Procurement Card Audit

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Hybla Valley Elementary School Procurement (Credit) Card Audit May 2008 “promoting an efficient & effective school division” Executive Summary Our review of Hybla Valley Elementary School’s procurement (credit) cards revealed that internal controls appeared adequate. In general, expenditures appeared reasonable, properly approved, and supported by appropriate documentation. In addition, the procurement (credit) cards appeared to be in compliance with the Regulation 5350.2, Finance Office Procurement (credit) Card Management for Appropriate Funds (effective 06-16-03). Areas where controls could be strengthened are: • Procurement (credit) card transactions should be documented on a procurement card log • Purchase orders should be completed, submitted and approved for all purchases; and receipts should be on file to support all card transaction. When receipts cannot be obtained, an explanation should be documented. • An Employee Disclosure Form should be on file for all card users • Bank reconciliations/negative reports should be completed monthly and the program manager should sign and date each reconciliation to evidence a timely review process Prior to the completion of the audit, there was turnover in the position responsible for managing the school’s procurement cards. All issues noted in the audit have been addressed and corrected by the new administrative assistant. Therefore, no further follow up of audit issues will be ...

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Hybla Valley Elementary School
Procurement (Credit) Card Audit
May 2008
“promoting an efficient & effective school division”
Hybla Valley Elementary School
Procurement (Credit) Card Audit
1
Executive Summary
Our review of Hybla Valley Elementary School’s procurement (credit) cards revealed that
internal controls appeared adequate.
In general, expenditures appeared reasonable,
properly approved, and supported by appropriate documentation.
In addition, the
procurement (credit) cards appeared to be in compliance with the Regulation 5350.2,
Finance Office Procurement (credit) Card Management for Appropriate Funds (effective 06-
16-03).
Areas where controls could be strengthened are:
Procurement (credit) card transactions should be documented on a procurement card
log
Purchase orders should be completed, submitted and approved for all purchases; and
receipts should be on file to support all card transaction.
When receipts cannot be
obtained, an explanation should be documented.
An Employee Disclosure Form should be on file for all card users
Bank reconciliations/negative reports should be completed monthly and the program
manager should sign and date each reconciliation to evidence a timely review process
Prior to the completion of the audit, there was turnover in the position responsible for
managing the school’s procurement cards.
All issues noted in the audit have been
addressed and corrected by the new administrative assistant.
Therefore, no further follow
up of audit issues will be required.
Background
The purpose of the Fairfax County Public Schools’ (FCPS) procurement (credit) card
program is to provide an efficient, reliable method of procurement to acquire needed goods
and services in a timely and efficient manner.
While the use of a procurement card can
simplify and expedite procurement, its use requires strict adherence to internal control
procedures and a commitment to accompanying accounting procedures.
In most cases,
card use reduces staff procurement efforts and shortens delivery time; however, it
increases the need for financial tracking and control efforts.
The Office of Finance, Accounting Section, is responsible for administering the
procurement card program.
These responsibilities include approval of card application,
assisting departments with dispute resolution, monitoring monthly reconciliations, and
reviewing and remitting payment for the consolidated bill.
Procedures governing the use of
procurement cards are provided by the card service vendor in conjunction with FCPS
Regulation 5350.2.
Scope and Objectives
This audit was performed as part of the fiscal year 2008 Annual Audit Plan. The audit
covered the period from October 1, 2006 through September 30, 2007 and was conducted
in accordance with generally accepted governmental auditing standards. Our audit
objectives were to determine that:
Hybla Valley Elementary School
Procurement (Credit) Card Audit
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Procurement cards were being used in accordance with regulation 5350.2
Adequate control procedures have been implemented and were being followed
Monthly reconciliations were being performed and submitted in accordance with
regulations
For the period under review, Hybla Valley Elementary School managed 4 credit cards that
were used for 84 appropriated fund expenditures.
A total of 50 randomly selected
transactions were reviewed during the audit.
The sample represented 49.7% of the total
card expenditures.
Methodology
Audit methodology included a review and analysis of internal control procedures over card
expenditures and related documentation.
Our audit approach included an examination of
expenditures, records maintained in the department, monthly reconciliations, interviews
with appropriate employees, and a review of applicable regulations and procedures.
We
evaluated the processes for compliance with FCPS Regulation 5350.2.
Information was
extracted from PathwayNet for sampling and verification to source documentation during
the audit; however, our audit did not include an independent review of system controls.
Our transaction testing did not rely on system controls; therefore, this was not a scope
limitation.
The FCPS Office of Internal Audit is free from organizational impairments to independence
in our reporting as defined by generally accepted government auditing standards.
We are
organizationally part of the Office of the Superintendent and report directly to the Audit
Committee.
Organizationally, we are outside the staff or line management function of the
units that we audit.
We report the results of our audits to the management of the
department under review, the appropriate leadership team member, the Superintendent,
and the Audit Committee, and reports are available to the public.
Findings, Recommendations, and Management Response
1. Procurement card log not being maintained
A procurement (credit) card log was not being maintained.
A purchase order (PO) log
was implemented in August 2007.
Of the 50 transactions reviewed 43 were not logged.
Additionally, 9 of the 43 occurred after the implementation of the PO log and 2 of these
9 were not logged.
Regulation 5350.2 IV indicates the program manager shall maintain
a procurement card log that records each procurement card purchase.
Recommendation:
Hybla Valley
Elementary School should record all transactions,
both debit and credit, on a procurement (credit) card log, as they occur, to accurately
reflect all procurement card transactions and provide up-to-date information on funds
expended.
In accordance with Regulation 5350.2, the log should indicate the date card
was issued, vendor, item(s) purchased, amount, card user, signature of user, date card
returned, and the date the transaction posted.
If, however, the PO log is modified to
Hybla Valley Elementary School
Procurement (Credit) Card Audit
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include the required procurement (credit) card log information, then it may used as an
alternative, and will thus serve as a monitoring tool for both PO and credit card
purchases.
Management Response:
Credit card log was implemented in February 2008.
Note:
The Office of Internal Audit has verified the implementation of the credit card
log.
Further follow up is not required for this item.
2. Lack of supporting documentation
Purchase orders were not on file for 41 of the 50 transactions reviewed.
In addition,
receipts were not on file for 2 of the 41.
Regulation 5350.2 indicates that original
charge tickets, receipts, invoices, and other supporting documentation should be
maintained on file at the school or office.
Recommendation:
Hybla Valley Elementary School should have a purchase order on
file for each transaction and maintain receipts, invoices, and online documentation to
support all purchases.
If original documentation is not available, a written explanation
should be on file.
Management Response:
A purchase order log is currently being used for all
purchases.
Note:
The Office of Internal Audit has verified the implementation of the purchase
order log.
Further follow up is not required for this item.
3. Employee Acknowledgement Disclosure forms not on file for card users
Employee Acknowledgement Disclosure forms were not on file for card users.
In
accordance with Regulation 5350.2, each employee must read and sign the
procurement card employee acknowledgement disclosure form before using the
procurement card for the first time.
Recommendation:
All card users should read and sign the employee
acknowledgement form and forms should be maintained on file at the school.
Management Response:
All card users have read and signed the
acknowledgement forms.
Note
:
The Office of Internal Audit has verified the completion of the
acknowledgement forms.
Further follow up is not required for this item.
4. Bank Reconciliation
Bank reconciliations were not being properly completed.
A total of 15 reconciliations or
negative reports should have been on file for the 3 month period being reviewed;
however, only 3 reconciliations could be provided.
Of the 3 reconciliations provided, 2
Hybla Valley Elementary School
Procurement (Credit) Card Audit
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were not dated, therefore, there was no evidence to support a timely process.
Regulation 5350.2
states that bank statements should be reconciled monthly and the
program manager should sign and date the statement to evidence approval of all
transactions.
In addition, if no charges were made against the procurement card for a
billing period, a negative report shall be completed.
Recommendation:
Hybla Valley Elementary School should perform reconciliations
and/or negative reports in accordance with Regulation 5350.2.
In addition, the program
manager should sign and date each reconciliation to evidence a timely review process.
Management Response:
Bank reconciliations and/or negative reports are being
completed in accordance with Regulation 5350.2.
Note:
The Office of Internal Audit verified the implementation of this process.
Further follow up is not required for this item.