Office of Shared Accountability MONTGOMERY COUNTY PUBLIC SCHOOLS Rockville, Maryland June 30, 2009 MEMORANDUM To: Mr. Daniel J. Vogelman, Principal Westland Middle School From: Roger W. Pisha, Supervisor, Internal Audit pale Subject: Report on Audit of Independent Activity Funds for the Period November 1, 2006, through April 30, 2009 This audit report presents the results of our examination of the financial records, reports, and internal accounting controls relating to the Independent Activity Funds (IAF) for Westland Middle School for the period November 1, 2006, through April 30, 2009. The examination was made to determine the adequacy of accountability over these funds, compliance with applicable Montgomery County Public Schools (MCPS) policies and procedures, and effectiveness of IAF management. Findings and Recommendations During our meeting with you and Mrs. Gretchen Blankenship, financial assistant, on June 18, 2009, we noted the improvements in conditions described in our previous report dated December 1, 2006. Purchase card records were in order and controls over ticketed events have been strengthened. We also noted that some previously identified conditions continue to need improvement and additional weaknesses not previously described were found, These conditions are described below. Review of field trip activities again revealed that not all field trip sponsors are providing completed financial information to the financial assistant at the completion of a trip. Sponsors should record cost and fee information for each field trip on MCPS Form 280-41, Field Trip Accounting, or equivalent, and submit the data to the financial assistant when a trip is completed (see IAF manual, p. 13), The record of the names of participants and sums collected strengthens internal controls by enabling the reconciliation of receipts to sums recorded in the field trip account. We recommend all sponsors be required to use Form 280-41, or equivalent, and follow the procedures outlined above. Disbursement of IAF must be controlled in a number of ways. Purchases must be approved in advance and in writing using MCPS Form 280-54, Request for a Purchase. After a purchase is completed, the recipient of the goods or services should submit the invoice or evidence of purchase, noted to indicate the satisfactory receipt of the goods or services, to the financial assistant. A check may then be drawn, recorded in the appropriate activity account, and signed. We again found that, for purchases requiring advanced approval, MCPS Form 280-54 was not signed by the principal in advance of the invoice for 68 percent of our current sample. In addition to this previously identified weakness, the following additional conditions in the disbursement process must be addressed:Mr. Daniel J. Vogelman -3- Tune 30, 2009 Contributions to a charitable organization are prohibited, unless:funds have been contributed by students for a specific charity (see IAF manual, p. 3). We noted disbursements from the Student Government Association account to the Leukemia and Lymphoma Society that lacked evidence the contributions made were solely from funds raised for this purpose. We also noted disbursements in an account established for a specific charity that exceeded the amount raised, and disbursements for an unrelated purpose. We recommend that a separate account be established to record the collection of such funds, and that the donation made to the charitable organization be limited to the amount collected for the intended purpose. The yearbook sponsor is required to keep detailed records of the number of books sold, the price charged as well as the number of books distributed free of charge (see IAF manual, p. 16). The records kept by the yearbook sponsor did not enable us to reconcile the number of books purchased with the number sold in the school, online and given free. We were therefore unable to determine that all funds generated from this activity had been remitted. We recommend the yearbook sponsor be counseled and assisted with the record-keeping required for this activity. In accordance with the August 4, 2008, memorandum from the chief operating officer (COO), the expenditure of general funds to provide refreshments for staff meetings (AF account 11) and appreciation (IAF account 20) is $45 per staff full time equivalent per fiscal year. You had exceeded this allowable amount for fiscal year 2009 by about $920, as of May 6, 2009. We also found several instances in which expenditures for these items were incorrectly classified and recorded in various accounts, Such commingling increases the time spent to determine whether or not guidelines have been followed and decreases the value of your financial reports for decision making. We recommend you correctly classify and record these transactions for more accurate accountability. We also recommend you adhere to the guidelines in the August 4, 2008, memorandum from the COO pertaining to the amount of general funds that may be spent for both meeting refreshments and staff appreciation, Other matters were discussed and satisfactorily resolved. We, appreciated the cooperation and assistance of your staff, especially Mrs. Blankenship. In accordance with MCPS Regulation DIA-RA, Accounting for Financial Operations / Independent Activity Funds, please provide a response to the Internal Audit office within 30 days of this report, with a copy to Dr. Frank Stetson, community superintendent. RWP:VADisd Copy to: Mr. Bowers Dr. Lacey Mr. Bedford Dr. Scott Dr. Stetson Ms. DeGraba Ms, Diamond ‘Mr. Doody