This is the second in a series of articles related to internal controls in the approximately 650 smaller enrollment school districts (less than 1,000 students). The first article covered supplemental payroll-related internal controls. No school district or charter school is exempt from the need for appropriate internal controls however limited the number of staff for segregation of duties. In many smaller enrollment districts, central administration is comprised of the superintendent, and a two- or three-person business office that includes the business manager, plus a payroll clerk and/or an accounts payable clerk. The trusted staff in the business office are sometimes allowed to run all accounts payable and expenditure cycle functions; however, the limited distribution of roles and responsibilities to only the staff in the business office introduces a higher degree of avoidable risk than may be reasonable.
Select accounts payable and expenditure cycle functions may be assigned to the superintendent or other staff that work outside of the business office to strengthen internal controls by expanding segregation of duties. Functions that may be assigned to staff outside of the business office include:
- Approval of purchase orders and requisitions
- Approval of additions and deletions to the vendor master file in the accounting system
- Review monthly list of all credit card charges and match charges with detailed vendor receipts
- Receive unopened monthly bank statements prior to distribution to the business office
- Review detailed bank reconciliations for bank accounts that are used for accounts payable and disbursement transactions (bank accounts in central administration and on campuses)
The internal control examples listed above are a start and may be supplemented with additional control processes in larger small enrollment districts.