Internal Audit

1. Internal Audit Presented by: Carol Oman Director of Internal Audit

2. What is Internal Audit? • Internal Audit reviews or audits procedures and processes to determine if a school or department handles areas properly and to make suggestions on improving these areas. • If concerns are noted, Internal Audit works with pertinent personnel to resolve the concerns and prevent them in the future.

3. Responsibilities • Determine if internal controls (checks & balances) are in place to safeguard assets. • Determine if procedures are being followed. • Provide an independent / objective perspective. • Conduct investigations of fraud. • Uncover problems and concerns before they become material.

4. Reporting Structure • Reports functionally to the Board of Trustees. • Reports administratively to the Superintendent. • Follows the Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing.

5. Annual Audit Plan • Projects performed annually • High Risk Areas based on a risk assessment • Requests from Board / Superintendent / Associate Superintendents / Principals • Special Projects & Questions

6. Major Project Areas • Annual Financial Audit • Conflict of Interest • Employees with Primary Purchasing Responsibilities • Vendors • Officers (Superintendent) & Board Members • Financial Audits – Schools & Departments • Human Resources / Payroll • Salaries • Parent Organizations • PTOs • Booster Clubs • Travel Expenditures

7. The Auditor is Coming!!!

8. Audit Process • Contact Principal about the audit (unless a surprise audit). Petty cash is always a surprise audit. • Document procedures and processes. • Perform testing. • Discuss results of the work.

9. Audit Process • Draft Report is provided to the Principal. • Details and results of testing performed. • Commendations for areas being handled well. • Recommendations if concerns are noted. • Final Report is issued.

10. Financial Audit - Schools Money Received All money received should be: • receipted, • counted in front of the person turning in the money, • recorded to the proper account, and • deposited daily.

11. Financial Audit - Schools Money Handling • Money should not be kept in a desk, filing cabinet, or other location. All money should be kept in the safe. • Activity funds are centralized; therefore, no bank accounts, except those set up by the Finance Office, should be used.

12. Financial Audit - Schools Money Handling • All money received must be submitted to the Financial Secretary daily. Money cannot be heldto make change and cannot be used to make purchases. • Money received cannot be used to cash personal checks. • All petty cash funds or change funds must be approved by the Principal and the Finance Office.

13. Financial Audit - Schools Money in Safe • When money is to be placed in the safe and a face-to-face count cannot be done at that time: • Money should be put in a sealed courier bag with the name of the person turning in the money, the date, the club or reason money was collected. • Financial Secretary should also sign and date the sealed courier bag and then secure the bag in the safe. • The sealed courier bag should not be opened unless the person turning in the money and the Financial Secretary are present.

14. Financial Audit - Schools Fund-Raisers • Fund-Raising Activity Report • Permission to hold fund-raiser • Account for the fund-raiser • School / School Group Fund-Raisers • Financial Secretary - Verify the deposits and expenditures reported on the Operating Report. • PTO / Booster Club Fund-Raisers • Treasurer – Verify Operating Report information.

15. Financial Audit - Schools Fund-Raisers – IRS Prohibitions • Cannot require anyone to participate in a fund-raiser. • Cannot require that a certain amount be sold or that a certain amount be donated in lieu of fund-raising. • Cannot penalize anyone for not participating in a fund-raiser. • Cannot use individual accounts. • Cannot credit an individual based on revenues raised to offset that individual’s expenses. • Amount raised must benefit a campus / organization as a whole.

16. Financial Audit - Schools Purchases Money expended should be: • Approved prior to order being placed, • paid to appropriate vendors, • for school-related expenses, and • paid through the District’s Accounts Payable Department.

17. Financial Audit - Schools Purchases • Are funds available for the purchase? • Are the items being purchased appropriate for the school? • How was the vendor selected? Has this vendor been used before?

18. Financial Audit - Schools How to select a Vendor for a Purchase • Available from the Distribution Center? • Included in a Bid or Contract? • If not in bid or contract, then estimate annual district purchases of type of item. • Less than $5,000 – No Quotes • $5,000 to less than $25,000 – Written Quotes • $25,000 or more – Competitive Bids / Proposals by Purchasing Dept.

19. Financial Audit - Schools Purchases • Bid or Contract • Use the bid or contract price. • Document bid or contract # on PO. • Quotes - $5,000 or more and less than $25,000 • Receive written quotes. • Complete quotation form. • Indicate quote # on the PO. • Submit the quotation form and written quotes to the Finance Office.

20. Financial Audit - Schools Petty Cash • Money on hand plus receipts must equal the petty cash amount allocated for your school. • No cash advances should be made. • No personal checks should be cashed.

21. Financial Audit - Schools Reconciliations • Financial secretary must reconcile the school’s accounting records with the general ledger balances monthly. • Document the reconciliations. • Principal should review and approve the monthly reconciliations.

22. Financial Audit - Schools Spot Checks by Principal • Suggest that the Principal do surprise counts of petty cash periodically. • Suggest that the Principal check the contents of the school safe periodically to ensure that money is being deposited timely. • Have the financial secretary and another person present when these counts / checks are done. • Maintain a log of when these counts / checks are conducted and have pertinent people initial the log.

23. The Auditor is Coming!!!

24. Who Audits the Auditors? • In accordance with the Institute of Internal Auditors’ Standards, a quality assessment review of the Internal Audit Department must be performed every five years by an independent external reviewer. • Conroe ISD performed the last review and the next review is planned for the current year.

25. Websites • Finance – http://inside.cfisd.net/depts/finance/default.htm • Sales Tax Tips • Purchasing – http://inside.cfisd.net/depts/purchasing/purchasing.htm • Requirements for Competitive Quotes and Bids • Bid and Contract Awards

26. Websites • Fund-Raisers – http://inside.cfisd.net/policies/fundraiser.htm • Fund-Raiser Guidelines • Word Version of Fund-Raising Activity Report • Approved Fund-Raiser Vendors List • Booster Clubs – http://www.cfisd.net/campuses/booster/booster.htm • PTOs – http://www.cfisd.net/campuses/pto/pto.htm

27. Internal Audit Staff • Carol Oman, CPA, CIADirector of Internal Audit281-897-4111carol.oman@cfisd.net • Pat StefanInternal Auditor III281-517-6537patricia.stefan@cfisd.net • Janett Tapia-GonzalezInternal Auditor II281-517-2941janett.tapia-gonzalez@cfisd.net

28. Contacts • Audit, Fraud, PTO & Booster Club Questions • Internal Audit • Financial Questions Karen SmithAssistant Supt. / Business & Financial Services281-897-4020karen.smith1@cfisd.netMable IslesDirector of Financial Services281-897-4067mable.isles@cfisd.net

29. Contacts • Accounts Receivable and Sales Tax Sha Shena CooperAccounts Receivable Specialist281-897-4106shashena.cooper@cfisd.net • Fund-Raisers Marty EdwardsDirector of General Administration281-517-6367terry.edwards@cfisd.net

30. Handouts • Finance Webpage • Purchasing Webpage • Requirements for Competitive Quotes and Bids • Fund-Raiser Information Webpage • Record Retention – School Financial Records • PTO and Booster Club Webpages Questions???