Finding 635045 (2022-001)

Material Weakness
Requirement
ABEHLN
Questioned Costs
-
Year
2022
Accepted
2023-08-09
Audit: 54217
Organization: Stilwell School District I-25 (OK)

AI Summary

  • Core Issue: Stilwell School lacked proper procedures for changing payroll information, leading to unauthorized payments of $10,000 to $14,000.
  • Impacted Requirements: Effective internal controls must include both detective and preventative measures to prevent fraud.
  • Recommended Follow-Up: Ensure all payroll changes are made in person with a signed authorization form to prevent future issues.

Finding Text

INTERNAL CONTROL OVER MAJOR PROGRMAS-UNAUTHORIZED PAYROLL CHANGES CRITERIA: AN EFFECTIVE INTERNAL CONTROL SYSTEM SHOULD INCLUDE BOTH DETECTIVE AND PREVENTATIVE CONTROLS IN ORDER TO PREVENT MISAPPROPRIATION OF CASH AND FRAUDULENT PAYMENTS. CONDITION: STILWELL SCHOOL DID NOT HAVE A PROCEDURE IN PLACE FOR CHANGING PAYROLL INFORMATION THAT INCLUDED REQUESTING THE CHANGE TO PAYROLL ON A STANDARD FORM THAT INCLUDES AN EMPLOYEE'S SIGNATURE AUTHORIZING THE CHANGE SIGNED IN FRONT OF AN ADMINISTRATIVE OFFICE EMPLOYEE AND APPROVED BY THE TREASURER. AS A RESULT, APPROXIMATELY $10,000 TO $14,000 OF PAYROLL PAYMENTS WERE MADE TO UNAUTHORIZED BANK ACCOUNTS. CAUSE AND EFFECT: THE TREASURER RECEIVED TWO EMAILS REQUESTING CHANGES TO DIRECT DEPOSIT ACCOUNT INFORMATION FROM ADMINISTRATIVE STAFF, WHICH RESULTED IN THE TREASURER CHANGING THE DIRECT DEPOSIT ACCOUNT NUMBERS TO FRAUDULENT ACCOUNTS. RECOMMENDATION: WE RECOMMEND STILWELL SCHOOLS IMPLEMENT A PROCEDURE WHERE CHANGES TO PAYROLL INFORMATION MUST BE MADE IN PERSON BY COMPLETING A CHANGE FORM THAT THE EMPLOYEE SIGNS AND DATES IN ORDER TO AUTHORIZE CHANGES TO THEIR ACCOUNTS. RESPONSIBLE OFFICIAL'S RESPONSE: THE SCHOOL IMPLEMENTED SUCH A PROCEDURE, AND NO LONGER ALLOWS PAYROLL CHANGES BY EMAIL.

Categories

Internal Control / Segregation of Duties

Other Findings in this Audit

  • 58602 2022-001
    Material Weakness
  • 58603 2022-001
    Material Weakness
  • 58604 2022-001
    Material Weakness
  • 635044 2022-001
    Material Weakness
  • 635046 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $1.07M
84.010 Title I Grants to Local Educational Agencies $794,195
84.365 English Language Acquisition State Grants $369,090
84.041 Impact Aid $222,235
84.060 Indian Education_grants to Local Educational Agencies $217,936
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $131,689
10.553 School Breakfast Program $120,670
10.555 National School Lunch Program $81,735
93.GSA_MIGRATION Samsha Mental Health $55,028
84.027 Special Education_grants to States $48,711
84.215 Fund for the Improvement of Education $38,190
16.839 Stop School Violence $37,530
15.130 Indian Education_assistance to Schools $33,640
84.048 Career and Technical Education -- Basic Grants to States $33,022
84.358 Rural Education $29,438
10.559 Summer Food Service Program for Children $18,703
84.173 Special Education_preschool Grants $15,886
10.558 Child and Adult Care Food Program $4,259
84.196 Education for Homeless Children and Youth $3,739
84.334 Gaining Early Awareness and Readiness for Undergraduate Programs $75
84.299 Indian Education -- Special Programs for Indian Children $68