Finding 389693 (2023-002)

Condition  For three of 40 general expenditures tested, totaling $156,144, the District did not retain a vendor invoice to support the disbursement of funds.  For one of five travel reimbursements selected, the District did not retain supporting documentation for the amounts paid.  For 12 of 40 expenditures tested, the District issued the purchase orders between one to 83 days after receipt of the invoice.  For five of 25 invoices selected for federal compliance, the District could not provide documentation to support the expenditure. Criteria Arizona Revised Statutes 15-271 states: "A. The auditor general shall determine the accounting systems, accounting methods and accounting procedures for school districts to use. B. The auditor general in conjunction with the department of education shall prescribe a uniform system of financial records (USFR) for all school districts to use each fiscal year." USFR VI-B Source documents states: "Source documents are used to initiate accounting transactions and should be retained to support each entry recorded in the accounting records." Uniform Guidance §200.333 Retention requirements for records states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report..." Cause Internal controls were not developed to ensure new staff was properly trained to maintain accounting records in a complete manner. In addition, controls were not monitored to ensure complete documentation was retained. Effect Financial information the District uses to make decisions and reports provided to the state for oversight could have been materially misstated throughout the fiscal year. Recommendation The District should procure a consultant or modify the organizational chart of the District Finance Office to ensure individuals with the skills, knowledge and expertise prepare, review and retain required source documentation. In addition, material transactions of the fiscal year should be reviewed and replacement documentation should be obtained to replace missing invoice information.