Joint Meeting With The School Board & Audit Committee

1. Joint Meeting With TheSchool Board & Audit Committee October 25, 2006 Wednesday, 5:00 – 6:00 p.m.

2. ERP Update Information to be provided by Joe Moore & Consultant

3. Types of Audits • Special Requests • Charter School Audits • Internal Funds Audits • Performance Audits

4. Special Requests • Average about 12 projects per year

5. Charter School Audits • Audit of Joseph Littles-Nguzo Saba Charter School, January 13, 2006 • School did Not Perform Criminal Background Screening as Required • School Hired Teachers without Social Security Numbers • School May Have Violated Federal Tax Law • School Hired Non-Certified Instructional Staff • Violations of Life/Safety/Health Codes Uncorrected • Questionable Uses of Public Funds • Vacancies on the Governing Board • Financial Condition • Some Assets Not Listed on School’s Fixed Asset Inventory • School Maintained the Required Insurance Coverage

6. Charter School Audits • Audit of Survivors Charter School of Boynton Beach, and Survivors Charter School of West Palm Beach, January 13, 2006 • Governing Board Poorly Discharged its Fiduciary Responsibilities • Use of Public Resources for Personal Gain • $6,257 in Public Monies Pocketed from Boynton Beach Campus • Public Monies Deposited into Private Bank Account • Nepotism (Boynton Beach Campus) • Inappropriate Uses of Public Monies • Poor Internal Controls • Employees May Not Have Undergone Required Background Screening • Personnel and Payroll Non-Compliance • Instructional Staff Not Properly Certified • Fixed Assets Not Adequately Tagged or Recorded • Schools Not Submitting Required Reports to the District Timely • Governing Board Meeting Held at Restaurant during Dinner • Boynton Charter is Not a 501(c)3 Organization

7. Charter School Audits • Audit of Spanish Academy Charter School, February 11, 2005 • The School President/Founder Gained $6,000 From Leasing Arrangement • Findings Reported by the School’s Independent Auditor • Audit of TerraNova Academy Charter School, November 12, 2004 • Financial Data Incomplete • The School Principal/Founder Profited $35,000 From Leasing Arrangement • $7,400 in Petty Cash Questionable • $4,266 in Office Computers Missing • Questionable Payments • $41,201 in Tax Dollars Could Not Be Accounted for Due to Lack of Records

8. Charter School Audits • Audit of Everglades Preparatory Academy Charter School, February 14, 2003 • Composition of the Governing Board Not Complied with the Charter • Accounting Policies Not Yet Implemented • Former Chairperson of the Governing Board Signing School Checks After Resignation • School Checks Not Always Signed By Two Authorized Signers • Expenditures Incurred By Another Charter School • Transfer of Equipment Not Recorded • Overpayment For Monthly Rent • Overpayment for Invoice • Disbursements Not Properly Documented • Unauthorized Travel Allowance • Tax Exemption Status Not Utilized

9. Charter School Audits • Follow-up on Charter Schools Procedural and Accountability Manual, July 10, 2003 • Differences Among Charters • A standardized Charter School Charter has been developed. • Comprehensive Charter Schools Monitoring Procedure Manual Not Available • A procedures manual has been developed. • Teacher Certificates Not Verified • No exceptions found. • 34% of Charter Schools Employees Fingerprint Records Not Available • No exceptions found. • Educational Facilities Safety Inspections Not Verified • No exceptions found. • School Buses Operated Without Automobile Liability Insurance • No exceptions found. • Drivers Operated District School Buses Without Proper Licenses • No exceptions found. • Transportation Plans Not Available • No exceptions found. • Transportation of Students Not Monitored • No exceptions found.

10. Performance Audits • Audit of Implementation of Corrective Actions in Response to Auditor General’s 2004 FTE Student FTE Audit, August 11, 2006 • ESE Student Records • Records for Vocational On-the-Job Training Off-Campus Time • Teacher Certification • Detailed Findings For Individual Schools • Audit of Implementation of Corrective Actions In Response to Auditor General’s FTE Audit for Student Transportation, August 11, 2006 • Insufficient Documentation • Detailed Tests of Riders • Public Transportation

11. Performance Audits • Audit of Accounts Payable Procedures, March 6, 2006 • Lack of Written Procedures • Unsupported Invoices Payments • Changes of Vendor Status not Documented • Update Access to Vendor and Invoice Master Files Not Controlled • Audit of Payroll and Personnel, August 12, 2005 • Controls Over Processing and Reporting Payroll Transactions were Adequate • Controls Over Check Storage, Printing, Transfer, and Distribution Appeared Adequate • Payroll Checks Issued to Legitimate District Employees • Overtime for Some Employees Could not be Reconciled to Supporting Documentation • Premium Overtime Pay Inconsistent with School Board Policy

12. Performance Audits • Audit of Security for Student TERMS and Educational Data Warehouse (EDW), November 11, 2005 • Network Login Controls Need Strengthening • Mainframe Access Request Form Needs Improvement • No Periodic Review of Access Rights to Student TERMS and EDW • No Monitoring of Invalid Logins and Access to Sensitive Datasets • No User Acceptance Sign-Off Required for Changes to Student TERMS or EDW • Changes to Student TERMS Files Affecting EDW Tables are Not Formally Documented • Access Control Not Based on Job Responsibilities at the Schools for Student TERMS • Too Many Employees with Student TERMS Security Access • Ability to Access Student TERMS At All Locations • No Audit Trail for Student TERMS • Inadequate Segregation of Duties • EDW Access Levels are Insufficient • No Firewall Policy Documentation or External Technical Review of Network Security • Formal Documentation for EDW Processing Procedures Needs Completion • Miami Date County School District has “Update” Access to our System

13. Performance Audits • Audit of Fees Collection at Community Schools, May 13, 2005 • Fees Not Properly Accounted For • Course Fees Not Promptly Deposited • Incomplete, Incorrect, or No Student Attendance Rosters • Fees Transmittal Forms Not Properly Completed • Inaccurate/No Transmittals • Invoices Overpaid • Course Fee Hourly Rates • Course Fees Recorded in Wrong Accounts

14. Performance Audits • Audit of Computer Incidents, May 13, 2005 • Lack of Written Procedures for Incident Response • Computer Incidents not Logged or Reviewed • No Intrusion Protection System • Lack of Training for Computer Security Incidents • Audit of Information Technology Disaster Recovery, March 11, 2005 • School Information Backups Not Sent Off-Site • Fuel Tank in IT Generator Not Full for Hurricane Frances • Temperature Not Properly Regulated in Off-Site Backup Storage Vault • A 19% Discount for a Hot-Site Contract not Captured • Two CD’s Containing Critical Information for Students and Employees Should be Stored in Off-Site Location • Disaster Recovery Documentation • Network Servers Not Backed up and Sent Off-Site Weekly

15. Performance Audits • Audit of Community Use of School Facilities, February 11, 2005 • Fee Structure to be Re-examined • The Need for Fully Completed, Accurate, and Documented Leases • Utilities, Insurance and Extra Services Fees Not Transmitted • Audit of Exception Reports, February 11, 2005 • Database Access Exceptions Not Reported to Management for Follow Up • Exception Report for Unsuccessful Attempts Not Printed or Reviewed • Exception Reports Not Reviewed • Large and Obsolete Exception Reports Could be Stored on Disk, Viewed Online, or Discontinued • Audit of Major Purchases, February 11, 2005 • Internal Control System in Enforcing Contracted Prices for Major Purchases Appeared Adequate.

16. Performance Audits • Audit of Criminal Background Checks for New Employees, November 12, 2004 • Background Checks for Temporary and School Age Child Care Employees • Audit of Sales Tax Exemption, November 12, 2004 • Control Procedures Adequate and District Saved $9,600,00 in Sales Tax • Some Sales Tax Savings Opportunities Available • A direct-Material Purchase Provision should be added to the Design/Bid Build Contract • Audit of Football Stadium Taxes, October 15, 2004 • Stadium Taxes Collections • Stadium Taxes Not Sufficient to Cover Maintenance Costs

17. Performance Audits • Audit of School Cafeteria Revenue Collection, October 15, 2004 • Reconciliation of the District’s Cafeteria Bank Account Not Performed for over Nine Months • No Review of Cash Overage/Shortage for Each School • Negative Balances of $59,107 • Audit of Security for Enterprise Data and Programs, July 19, 2004 • Obsolete User IDs Not Removed • Controls for Remote Access • Access to Computer Room • Disaster Recovery Documentation • Concerns Also Raised in Other Audits

18. Performance Audits • Audit of 3D/International Inc. Contract, June 17, 2004 • Did 3DI Meet Performance Goals? • Can In-House Staff Replace 3DI, for Less/More Cost? • Meetings not Held and Performance Bonuses not Invoiced Quarterly as Required • Schedule of Payments Revised Without Staff Approval, and Some Invoices Not in Agreement Payment Schedule • Additional Services Not Authorized in Advance, in Writing, as Required by the Agreement • 3DI Maintains the Required Insurance Coverage

19. Internal Funds Audit

20. Internal Funds Audit

21. Internal Funds AuditSchool Audit Ranking (2005)

22. Internal Funds AuditSchool Audit Ranking

23. Internal Funds Audit

24. Internal Funds Audit

25. Internal Funds Audit

26. Internal Funds AuditMajor Findings for 2005 Adult Education • Finding: $1.8 million in overspending in salary variance, absorbed by FEFP funds • Corrective Action: Beginning 2006, employees’ actual salaries are is used instead of district average salary rates

27. Internal Funds AuditMajor Findings for 2005

28. Internal Funds AuditMajor Findings for 2005 Community School Program • Student Registration and Attendance Records Not Maintained • Improvement Needed for Payroll Processing

29. Internal Funds AuditMajor Findings for 2005

30. Internal Funds AuditMajor Findings for 2005 School Age Child Care Program • Student Records Not Properly Maintained • Payroll Not Properly Documented

31. Internal Funds AuditMajor Findings for 2005 Community Use of School Facilities • Lease Prequalification Not Available • Inadequate Proof of Insurance • Lease Agreement Not Properly Completed • Undercharged Rentals and Late Payment

32. Internal Funds AuditMajor Findings for 2005 Receipts/Revenues Collection • Access to Drop Safe • Monies Not Deposited Timely • Monies Collected Not Adequately Documented • Fundraisers Not Adequately Documented

33. Internal Funds AuditMajor Findings for 2005 Disbursements/Expenses • Disbursement Not Properly Approved and Documented • Monies and School Checks Not Adequately Safeguarded

34. Internal Funds AuditMajor Findings for 2005 Other Findings • Bank Reconciliation Not Completed Timely • Staff Performing Incompatible Duties • Field Trips Not Properly Approved • Prenumbered Documents Not Adequately Controlled

35. Remedial Actions/New ProceduresIn Response to Audit Findings Monies Collection Procedures • Monies Collected Reports (MCR) • Sponsors keep the yellow copy as temporary receipt • Sponsors to indicate the source of funds (i.e. cash or checks) on MCRs • Increase frequency of armored car service for picking up and deposit in banks.

36. Remedial Actions/New ProceduresIn Response to Audit Findings Monies Collection Procedures (Continued) • Bookkeeper shall not open incoming mails • MCRs should be prepared for checks received in the mail and be turned in to the bookkeeper for deposit • Developed a Drop Safe Log for sponsors to record monies deposited in the drop safe

37. Remedial Actions/New ProceduresIn Response to Audit Findings Leasing of School Facilities • Central Office to provide additional support and training for school centers • Developed a Leasing Checklist to ensure leases are properly administered

38. Remedial Actions/New ProceduresIn Response to Audit Findings School Age Child Care (SACC) Program After Care Programming Department: • Performs site visits and compliance reviews • Provides additional support and training for schools • Reviews SACC program budgets monthly and provide fiscal management training for SACC directors

39. Remedial Actions/New ProceduresIn Response to Audit Findings Community School Program • Several committees have been formed to address the audit findings • Monthly review and monitoring of Community School budgets

40. Remedial Actions/New ProceduresIn Response to Audit Findings Others • New procedures needed for unauthorized discard of records, to be developed by Accounting & Personnel Departments

41. Audit Approach and Current Focus • Same audit scope and objectives but focus may vary depending on the nature of findings from ongoing audits • We will perform surprise checks of cash on hand and verification of deposit bags • We sample the disbursements from Administrative Courtesy Account to determine the appropriateness

42. Audit Approach and Current Focus (Continued) • Request a joint management response from current and former Principals for schools with change in administration • Focus on those with material weaknesses • Immaterial findings are communicated through verbal discussion

43. Projects for 2006-07 Audit Plan