Office of Shared Accountability MONTGOMERY COUNTY PUBLIC SCHOOLS Rogkville, Maryland March 18, 2009 MEMORANDI To: Mr. John D. Ewald, Principal Westbrook Elementary School From: Roger W. Pisha, Supervisor, Internal Audit pibrhe Subject: Report on Audit of Independent Activity Funds for the Period September 1, 2005, through December 31, 2008 ‘This audit report presents the results of our examination of the financial records, reports, and internal accounting controls relating to the Independent Activity Funds (LAF) for Westbrook Elementary School for the period September 1, 2005, through December 31, 2008. 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 meetings on January 12 and February 2, 2009, with you and Mrs. Joan Black, administrative secretary, we reviewed conditions noted in our audit and advised you as to actions that would help to meet MCPS accountability requirements for IAF activities. We used the occasion to discuss the critical role of the principal in meeting MCPS intemal control requirements, particularly the importance of your receipt and review of the monthly checking account statements, financial reports, and checking account reconciliations. Your initials and date of review of these documents provides evidence that required controls are in place. Another critical control is the monthly review by sponsors of account reconciliation reports and the prompt resolution of discrepancies. This helps assure that transactions affecting accounts have been properly recorded. We found this essential control has not been effectively utilized. Mrs. Black with your stated support is committed to instituting this essential internal control step by regularly providing sponsors with reports and following up to assure their return and prompt resolution of any differences. You advised that on February 4, 2009, in your staff meeting, sponsors were informed of the importance of this step in assuring the integrity of the schools accounts. We kept Ms. Black informed on all matters raised during our audit and have provided written notes to assist her in improving the LAF records. Since assuming the position, her attendance at financial training courses has been helpful. We recognize her prompt follow through on our recommendation with respect preparation of deposits which would provide early assurance thatMr. John D. Ewald -2- March 18, 2009 all items receipted are included in the deposit. With your support, action is progressing or planned on matters discussed below. Reinforcing to staff the need to prepare MCPS Form 280-54, Request for a Purchase, at the time oral approval for a purchase is sought so that purchase orders and invoices bear a date subsequent to the approval date will provide evidence that pre-approval was obtained. Payments will be made upon presentation of invoices certified by the recipient that all goods or services have been satisfactorily received. Invoices will be stamped “paid” to reduce possibility of duplicate payment Note that Form 280-54 or canceled check alone is not sufficient to support a disbursement. Field trip records should include MCPS Form 280-41, Field Trip Accounting, or its equivalent, for each sponsor and class taking a trip. Files for completed field trips kept by the administrative secretary will include the approval and planning documents together with complete information identifying those who participated and the amount each paid. Sums recorded on Form 280-41 should equal receipts recorded in the field trip account, ‘The regular affirmation by sponsors of the recorded receipts and expenditures in the field trip accounts provides the required assurance that transactions have been correctly recorded. Checking balances in excess of current needs should be transferred to the Centralized Investment Fund (CIF) to increase income. We estimated that as much as $10,000 could be transferred to the CIF. Funds can be retumed promptly when needed. Maintenance of a running balance in the checkbook provides protection against issuance of checks without adequate funds in the schools checking account (see IAF manual, p. 5). Other matters were discussed and satisfactorily resolved. We appreciated the cooperation and assistance of your staff, especially Mrs. Black. 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. We recommend you use the action plan template that was provided to you with the memo from Mr. Stephen L. Bedford dated November 7, 2008, when you frame your response so that responsibilities and timelines for actions are clearly established. RWP:HK:sd Copy to: Mr. Bowers Dr. Lacey Dr. Scott Mr. Bedford Dr. Stetson Ms, DeGraba Ms. Diamond Mr. Doody