This is the third in a series of articles related to internal controls in the approximately 650 smaller enrollment school districts (less than 1,000 students). This article follows articles that covered supplemental payroll-related and expenditure cycle 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 provided access to all or nearly all of the accounting processes related to revenue-related 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 revenue-related functions may be assigned to 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:
- Stamp each check immediately “For Deposit Only”
- Record cash and checks received in a receipt log
- Account for numerical sequence of pre-numbered receipt acknowledgement books
- Secure unused and used pre-numbered receipt books
- Provide a copy of the pre-numbered receipts for cash and checks received in person from payors, and when cash and checks are transferred between district personnel and/or offices
- Prepare deposit from receipt logs, cash register tapes, or listing of receipts from receipt books in addition to reconciling all cash and checks received
- Periodically reconcile general ledger to subsidiary account receivable ledgers, and investigate and resolve all differences
School districts should also consider these controls on campuses to improve segregation of duties for staff that are responsible for campus and student activity fund record keeping responsibilities. The internal control examples listed above are a start and may be supplemented with additional control processes in larger small enrollment districts.