School districts are constantly looking for ways to minimize central administrative costs. Decentralization of select administrative functions is one method to reduce costs. Administrators may be able to decentralize select decision-making activities, processes, and procedures; however, there are practical limits to the degree of decentralization that can be achieved without compromising economies of scale that are inherent advantages of larger-enrollment school districts or inadvertently introducing new internal control risks.
After the decentralization of select administrative functions, central administration may consider the implementation of various supplemental internal controls including:
- Require local supervisors and managers to sign a certification form that they have received or have access to the school district’s documentation of standards for procedures, policies and process workflows.
- Include in annual personnel evaluations an assessment of local managers’ and supervisors’ adherence to the school district’s documentation of standards for procedures, policies and process workflows. Address the need for additional training in professional development plan, as needed.
- Conduct unannounced visits in campuses and departments to review record-keeping processes and supporting documentation, especially records that support the payroll for hourly employees.
- Visit campuses and departments periodically to sample select transactions to review adherence to the school district’s documentation of standards for procedures, policies and process workflows, in addition to adequate segregation of duties.
- Request and review copies of the completed and signed monthly reconciliations for all activity funds across all campuses.
- Visit campuses and departments periodically during the year to review support for the inventory of equipment and supplies.
- Implement transactional alert reports for higher risk areas on campuses and departments.
- Review local supervisors’ and managers’ approval of and monitoring of all credit card and p-card transactions.
- Consider moving certain functions back to central administration if internal control risks or issues cannot be reduced to reasonable levels.
- Implement a fraud reporting hotline.
As the degree of decentralization grows, school districts need an increasingly more robust internal control system.