The Regional Office of Education #24 did not have adequate controls over fixed assets. For example, there were no formal policies or procedures to monitor and control equipment and other fixed assets. Some items in the inventory list did not include information as to acquisition source document (check number) and acquisition date. A complete annual physical inventory is not performed. Proper forms were not used to document disposal or retirement of assets. Finally, the detailed fixed asset listings were not reconciled with the balances reported in the General Fixed Asset Account Group.

The Regional Office of Education (ROE) Accounting Manual requires each ROE to maintain detailed fixed asset records for both accounting purposes as well as insurance purposes, for fixed assets costing $500 or more. In addition, sound internal controls require that policies and procedures on fixed assets cover the acquisition and tagging, recording and reporting, depreciation (if applicable), transfers and dispositions, and physical inventory, and that they be formally documented and consistently applied (Finding 03-1, pages 12 - 14).

The Regional Office of Education #24 accepted the recommendation stating they would develop formal fixed asset policies and procedures that will include the recommendations of the auditors, to effectively and efficiently monitor fixed asset acquisition, disposals and transfers, and provide for accurate reporting of fixed asset balances.

During testing of disbursements and expenditures, auditors noted 3 of 60 items sampled totaling $1,133 did not have complete supporting documents. For disbursements from local funds, in 20 of 20 items sampled, only the invoice was presented to initiate processing of the check payment, and approval for the disbursement was not evident on the invoices. In addition, invoices and supporting documents for local fund disbursements were not stamped "PAID" nor was the check number on the invoice to indicate that payment had been made.

Sound internal controls over cash disbursements require all disbursements to be adequately supported, approved by authorized personnel, and have supporting documents properly canceled at time of signature to prevent duplicate payment (Finding 03-2, page 15).

The Regional Office of Education #24 accepted the recommendation, responding that all invoices will be approved by the Regional Superintendent before payment is processed. Invoices will be marked with a check number or stamped "paid" subsequent to payment.

The Regional Office of Education #24 did not have proper segregation of duties for accounting in the local and distributive funds. The bookkeeper for the local and distributive funds performs the disbursement functions of invoice processing, check preparation, custodian of blank checks, recording transactions, and bank reconciliations. The bookkeeper also performs the functions of collecting cash, and depositing and recording of cash receipts.

Sound internal controls require adequate segregation of duties to ensure that effective checks and balances are in place to minimize the risk of loss (Finding 03-3, page 16).

The Regional Office of Education #24 accepted the recommendation, noting that the Office has limited staff to provide for adequate segregation of duties. Under current work requirements, the Regional Office stated it is not possible to assign additional duties to staff members nor is it practicable to assign other duties to the bookkeeper. Consequently, supervisory controls will be strengthened by implementing periodic checks on cash receipts and deposits as well as disbursements.

Our auditors state the Regional Office of Education #24’s financial statements as of June 30, 2003 are fairly stated in all material respects.

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WILLIAM G. HOLLAND, Auditor General

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Our special assistant auditors were E.C. Ortiz & Co., LLP.