Internal auditors report no high risks but flag controls gaps in banking, payroll, food service and Medicaid claiming

Mark, the internal auditor from QuestArthur, presented the district's 2025 risk assessment and told the Audit Committee he did not see "anything that was particularly alarming," but outlined a set of targeted control weaknesses for remediation.

The report uses a standard cover letter and a risk matrix; Mark said the matrix and three introductory risk statements will be consistent year to year and that the ratings are judgmental. He recommended the committee consider cost versus benefit when evaluating some suggested best-practice controls.

Key findings the auditors highlighted included: limited use of the district's dedicated online-banking workstation across business-office staff; insufficient capture of the treasurer's signature-authority in current check-printing and signing processes; frequent cases where the staff member who creates a requisition also receives goods at building sites (a segregation-of-duties risk); and absence of a formally named faculty auditor for extra-classroom activities, despite a de facto auditor performing the function.

On payroll, Mark said the district no longer conducts an annual "live payroll" test (a method to detect fictitious employees) and raised a common compliance concern: prepayment of teacher salaries under a biweekly pay schedule can conflict with general municipal law. He described alternatives — including semimonthly payroll or calendar adjustments — but noted such changes can be difficult where collective-bargaining agreements are involved.

The food-service operation ran a $182,000 deficit in the year under review (with an internal transfer of about $71,000), and auditors recommended evaluating centralized ordering and inventory practices to reduce structural imbalance, while recognizing implementation cost and feasibility are relevant to the board's decision.

On fixed assets, auditors said a complete fiscal inventory had not been recently documented and that districtwide documentation of asset movement between locations is incomplete; IT tracks IT assets but not all categories of assets.

The audit also found the district does not perform a formal reconciliation between Medicaid claims submitted and payments received. Mark gave an illustrative example (claims of roughly $32,000 with payment of about $29,000) and recommended establishing a reconciliation process to ensure that claims, payments and allocations are tracked and explained.

Committee members asked follow-up questions about the materiality of the food-service deficit and the likely amount of cash on hand; Mark emphasized the importance of weighing the cost of controls (for example physical safes or system changes) against the potential benefit.

The auditors noted some items flagged in the report had already been corrected (for example, financial statements previously posted were brought up to date) and said corrective-action plans were being implemented for fixed-asset issues. The committee thanked QuestArthur for the report and agreed to follow up on prioritized items.

The article ends with the committee's next procedural step: staff will bring follow-up information and a schedule of actions, and the internal-audit firm planned field work for early June to support the special-area audit selection adopted that day.