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AC SSD 2013 ManagementLetter (D 1 4)

AC SSD 2013 ManagementLetter (D 1 4)

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Published by Julian A.
AC SSD 2013 ManagementLetter (D 1 4)
AC SSD 2013 ManagementLetter (D 1 4)

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Published by: Julian A. on Jul 23, 2014
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07/23/2014

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 June 19, 2014 Board of Directors Seattle School District Seattle, Washington Management Letter This letter includes a summary of specific matters that we identified in planning and performing our
accountability
 audit of the Seattle School District from September 1, 2012 through August 31, 2013. We believe our recommendations will assist you in improving the District’s internal controls and compliance in these areas. We will review the status of these matters during our next audit. We have already discussed our comments with and made suggestions for improvements to the District officials and personnel. If you have any further questions, please contact me at (206) 615-0555. This letter is intended for the information and use of management and the governing body. However, this letter is a matter of public record and its distribution is not limited. We would also like to take this opportunity to extend our appreciation to your staff for the cooperation and assistance given during the course of the audit. Sincerely, [
 Insert Electronic Signature
] James Griggs, Audit Manager Attachment
Washington State Auditor Troy Kelley
 
 
Insurance Building, P.O. Box 40021
 Olympia, Washington 98504-0021
 (360) 902-0370
 TDD Relay (800) 833-6388
 
 Management Letter Seattle School District September 1, 2012 through August 31, 2013
The District does not have sufficient procedures in place to make sure that only authorized supplemental compensation is paid to School Principals and Assistant Principals.
The District employees 191 employees who acted in the positions of Principal or Assistant Principal during school year 2013 and received $19.4 million in compensation. Of the total 191 employees in these two job functions, 104 received supplemental pay for a total of $183,095. This includes cell phone allowance of $46,000, certified administrative compensation of $116,205, and national standard and K8 certification pay in the amount of $20,390. Certified administrative compensation may be determined by the employee’s hourly rate and the number of additional hours worked, or based on a stipend amount under the purview of a collective bargaining agreement. During our audit we reviewed certified administration compensation and noted that $16,645 out of $116,205 was not earned. The Human Resource department is responsible for processing supplemental compensation pay and assuring that it is authorized, approved and supported by appropriate documentation. We noted that the procedures the department has currently in place are not sufficient to ensure supplemental compensation is  paid appropriately. We recommend the District:
 
Implement procedures sufficient to assure that supplemental compensation paid is for authorized activities and in proper amounts.
 
Provide training to Human Resource department employees on preparing and processing documentation for supplemental compensation.
The District does not have sufficient controls in place to ensure that overtime and extra time is properly authorized and the fringe benefit for personal use of vehicles is accurately imputed.
The District employs 10 payroll analysts to review and process payroll of $475 million a year for 10,000 employees. The payroll department is responsible for processing overtime, pay under supplemental contracts or extra time, and imputing fringe benefit compensation for personal use of the District’s vehicles. The District anticipates that most errors in recording and authorizing overtime and extra time pay will be detected at the departmental level by immediate supervisors when approving timesheets. The District does not have policies or procedures in place for  paying overtime or extra time to exempt employees. In addition, the District does not have sufficient controls to ensure that the fringe benefit for personal use of District owned vehicles is imputed correctly in the employees’ wages.
 
Overtime The District does not have a policy or procedure in place for paying overtime to exempt employees. The District does not seek guidance from the Compensation Analyst when assigning a pay rate for additional duties performed outside of an employee’s regular job function.
 
 The District relies on the discretion of the employee’s immediate supervisor to determine when overtime pay is due to exempt employees on a case by case basis. During our audit we noted 14 exempt level employees who received overtime pay of 1.5 times their regular rate for a total of 1,659 hours. In 11 instances we noted that overtime was paid for immediate duties and was not  properly authorized. In three instances we noted employees were paid overtime for performing duties outside their immediate job function. These employees were paid one and a half times their regular pay rate instead of the applicable rate for the job function. Also, we noted no documentation showing that overtime was appropriate or necessary. Supplemental Contracts The District does not require written pre-authorization and justification for extra time from supervisors. We noted insufficient documentation of extra duties and/or the duration of additional assignments. Extra time or supplemental pay is awarded to nonrepresented employees on a case by case basis when an employee works outside the pay cycle or calendar days per the job function. We noted nine non represented employees were paid extra time for a combined total of 509 hours for duties  performed outside the assigned work days. The payments were based on verbal agreements made at the departmental level. Fringe Benefits Personal use of a district vehicle includes any activity that is not business related, including commuting. If the employee does not have a vehicle log, and business versus personal use cannot  be substantiated, the IRS will assume the vehicle is used entirely for personal use. Any use of a district vehicle that cannot be substantiated as business use is included in income. During the audit period we noted a total of 14 employees were required to report imputed wages based on a commuter benefit on their Form W-2. The imputed wages on the commuter benefit was undervalued in 11 of the 14 instances. In three instances the imputed wages were undervalued  by a total of $2,414 due to the use of an incorrect valuation method. The imputed wages based on eight commuter benefit amounts were incorrect due to insufficient records of vehicle usage. In these cases Facility Operations did not keep records or respond to inquiries of total days commuted by each of the eight employees. Based on the insufficient documentation we were unable to determine the total of imputed wages under reported to the IRS. We recommend the District:
 
Establish a district wide policy for overtime payments to non-represented exempt employees and a policy for special assignments and/or dual assignments.
 
Require written pre-authorization and justification of extra time that would include a reason for an additional assignment, pay scale and duration of duties.
 
Require supervisors to consult with the Human Resource Compensation Analyst for appropriate pay scales when allowing employees to undertake additional job functions.
 
Provide training to Supervisors responsible for authorizing and approving timesheets.

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