FAC Explorer

Finding 524469 (2024-002)

Significant Deficiency
Requirement
ABEGMN
Questioned Costs
-
Year
2024
Accepted
2025-02-26
Audit: 343824
Organization: Baldwin-Whitehall School District (PA)
Auditor: Jmallc

AI Summary

  • Core Issue: The School District lacks proper segregation of duties due to a limited staff size, increasing the risk of financial mismanagement.
  • Impacted Requirements: Key accounting functions are performed by the same individuals, such as processing payroll and handling cash receipts, which violates ideal internal control practices.
  • Recommended Follow-Up: Consider hiring additional staff to improve internal controls, or implement alternative oversight measures to mitigate risks associated with the current staffing limitations.

Finding Text

2024-2 Segregation of Duties – Child Nutrition, Title I, ESSER Segregation of Duties Criteria: The small size of the School District’s office staff limits the extent of separation of duties. The basic premise in an ideal accounting office is that no one employee should have access to both physical assets and the related accounting records or to all phases of a transaction. Some examples of lack of segregation of duties at the School District are as follows: An individual can process payroll, generate payroll liabilities, generate signed payroll checks, initiate ACH payments, and edit the master payroll file. An individual can accept cash receipts, enter transactions in the accounting system, initiate deposits, make deposits at the bank, and reconcile bank statements. Condition: The School District has a limited number of staff responsible for or access to various stages of the accounting processes. Cause: The District does not have the number of employees necessary in the business office to properly segregate all duties. Recommendation: Ideally, the District would hire the number of staff necessary to segregate all duties. However, we realize segregation of duties is not practical, if not impossible. Because of this internal control situation, the responsibility of the Business Manager is greatly increased because the Board must rely on his knowledge of the everyday operations to discover any material changes in the School District’s financial position. Effect: A lack in separation of duties makes the School District more susceptible to misappropriation of District Assets. Views of Responsible Official and Planned Corrective Action: See corrective action plan included in this report package.

Corrective Action Plan

CORRECTIVE ACTION PLAN Department of Education: The Baldwin-Whitehall School District respectfully submits the following corrective action plan for the year ended June 30, 2024. Name and address of the independent public accounting firm: J. Martin and Associates, LLC P.O. Box 498 Beaver, PA 15009 Audit period: June 30, 2024 The findings for the year ended June 30, 2024 schedule of findings are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Section B – Financial Statement Findings 2024-1 Best Practices Recommendation: Ideally, the District would hire the number of staff necessary to segregate all duties. However, we realize segregation of duties is not practical, if not impossible. Because of this internal control situation, the responsibility of the Business Manager is greatly increased because the Board must rely on his knowledge of the everyday operations to discover any material changes in the School District’s financial position. Management’s Response: The School District recognizes that the limited number of staff adds to the risk associated with the daily operations. To mitigate this risk, the Business Manager has to take an active role in the day-to-day operations of the Business Unit. He actively reviews all reconciliations and receipts to ensure they are posted to the accounting system properly. In addition, he approves all check disbursements through the Positive Pay process and physically signs every accounts payable check that is issued by the School District. Recommendation: We recommend that the District strongly encourage the tax collectors to obtain a SOC report in order to ensure proper controls are in place. Management’s Response: The School District understands the importance of obtaining SOC reports from service organizations and will continue to inquire of the appropriate entities to ensure they obtain the proper reports. In discussion with the Delinquent Tax Collector, they notified the District that it is extremely cost prohibitive for them to go through a review that would end with the issuance of a SOC report. Section C – Major Federal Award Findings 2024-2 Segregation of Duties – Child Nutrition, Title I, ESSER Recommendation: Ideally, the District would hire the number of staff necessary to segregate all duties. However, we realize segregation of duties is not practical, if not impossible. Because of this internal control situation, the responsibility of the Business Manager is greatly increased because the Board must rely on his knowledge of the everyday operations to discover any material changes in the School District’s financial position. Management’s Response: The School District recognizes that the limited number of staff adds to the risk associated with the daily operations. To mitigate this risk, the Business Manager has to take an active role in the day-to-day operations of the Business Unit. He actively reviews all reconciliations and receipts to ensure they are posted to the accounting system properly. In addition, he approves all check disbursements through the Positive Pay process and physically signs every accounts payable check that is issued by the School District. If you have questions about this report or need additional financial information, please contact Mark Cherpak, Business Manager at: 4900 Curry Road Pittsburgh, PA 15236 412-884-6300

Categories

Internal Control / Segregation of Duties HUD Housing Programs School Nutrition Programs

Other Findings in this Audit

  • 524470 2024-002
    Significant Deficiency
  • 524471 2024-002
    Significant Deficiency
  • 524472 2024-002
    Significant Deficiency
  • 524473 2024-002
    Significant Deficiency
  • 524474 2024-002
    Significant Deficiency
  • 524475 2024-002
    Significant Deficiency
  • 524476 2024-002
    Significant Deficiency
  • 524477 2024-002
    Significant Deficiency
  • 524478 2024-002
    Significant Deficiency
  • 524479 2024-002
    Significant Deficiency
  • 524480 2024-002
    Significant Deficiency
  • 1100911 2024-002
    Significant Deficiency
  • 1100912 2024-002
    Significant Deficiency
  • 1100913 2024-002
    Significant Deficiency
  • 1100914 2024-002
    Significant Deficiency
  • 1100915 2024-002
    Significant Deficiency
  • 1100916 2024-002
    Significant Deficiency
  • 1100917 2024-002
    Significant Deficiency
  • 1100918 2024-002
    Significant Deficiency
  • 1100919 2024-002
    Significant Deficiency
  • 1100920 2024-002
    Significant Deficiency
  • 1100921 2024-002
    Significant Deficiency
  • 1100922 2024-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.010 Title I Grants to Local Educational Agencies $964,293
84.027 Special Education Grants to States $718,535
10.553 School Breakfast Program $352,872
10.555 National School Lunch Program $212,042
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $144,189
84.365 English Language Acquisition State Grants $81,238
84.424 Student Support and Academic Enrichment Program $55,938
93.778 Medical Assistance Program $19,713
10.649 Pandemic Ebt Administrative Costs $5,763
84.425 Education Stabilization Fund $5,236
84.173 Special Education Preschool Grants $3,627