1. Presented by: Carol Oman Director of Internal Audit 12/06/20131

2. What is Internal Audit? Internal Audit reviews or audits procedures and processes to determine if a school or department handles areas properly and to make suggestions on improving these areas. If concerns are noted, Internal Audit works with pertinent personnel to resolve the concerns and prevent them in the future. 12/06/20132

3. Responsibilities  Determine if internal controls (checks & balances) are in place to safeguard assets.  Determine if procedures are being followed.  Provide an independent / objective perspective.  Conduct investigations of fraud.  Uncover problems and concerns before they become material. 12/06/20133

4. Reporting Structure Reports functionally to the Board of Trustees. Reports administratively to the Superintendent. Follows the Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing. 12/06/20134

5. Annual Audit Plan Projects performed annually High Risk Areas based on a risk assessment Requests from Board / Superintendent / Associate Superintendents / Principals Special Projects & Questions 12/06/20135

6. Annual Project Areas  Annual Financial Audit  Conflict of Interest ◦ Employees with Primary Purchasing Responsibilities ◦ Vendors ◦ Officers (Superintendent) & Board Members  Financial Audits – Schools & Departments  Human Resources / Payroll ◦ Salaries  Parent Organizations ◦ PTOs ◦ Booster Clubs  Travel Expenditures 12/06/20136

7. Audit Process Contact Principal about the audit (unless a surprise audit). Petty cash is always a surprise audit. Document procedures and processes. Perform testing. Discuss results of the work. 12/06/20137

8. Audit Process Draft Report Provided to the Principal for review Includes: Details and results of testing performed. Commendations for areas being handled well. Recommendations & Responses if concerns are noted. Final Report 12/06/20138

9. CFISD Compliance Course Financial Section (New) Money Handling Procedures Purchasing Procedures Fund-Raisers Conflict of Interest 12/06/20139

10. Financial Audit - Schools Money Received All money received should be: receipted or documented on a Cash Receipt Sheet, counted in front of the person turning in the money (face-to-face count), and delivered to the Financial Secretary daily for deposit. 12/06/201310

11. Financial Audit - Schools Money Handling  Money should not be kept in a desk, filing cabinet, or other location. All money should be kept in the school’s safe.  Activity funds are centralized; therefore, no bank accounts, except those set up by the Finance Office, should be used. 12/06/201311

12. Financial Audit - Schools Money Handling  All money received must be submitted to the Financial Secretary daily. Money cannot be held to make change and cannot be used to make purchases.  Money received cannot be used to cash personal checks.  All petty cash funds or change funds must be approved by the Principal and the Finance Office. 12/06/201312

13. Financial Audit - Schools Face-to-Face Count When money is to be placed in the safe and a face-to- face count (verification) cannot be done at that time: Money should be put in a sealed courier bag with the name of the person turning in the money, the date, the club or reason money was collected. Financial Secretary should also sign and date the sealed courier bag and then secure the bag in the safe. The sealed courier bag should not be opened unless the person turning in the money and the Financial Secretary are present. 12/06/201313

14. Financial Audit - Schools Purchases Money expended should be: Approved prior to order being placed, paid to appropriate vendors, for school-related expenses, and paid through the District’s Accounts Payable Department or reimbursed through Petty Cash. 12/06/201314

15. Financial Audit - Schools Purchases  Are funds available for the purchase?  Are the items being purchased appropriate for the school?  How was the vendor selected? Has this vendor been used before? 12/06/201315

16. Financial Audit - Schools How to select a Vendor for a Purchase 1) Available from the Distribution Center? 2) Included in a Bid or Contract? 3) If not in bid or contract, then estimate annual district purchases of type of item. a) Less than $5,000 – No Quotes b) $5,000 to less than $25,000 – Written Quotes c) $25,000 or more – Competitive Bids / Proposals by Purchasing Dept. 12/06/201316

17. Financial Audit - Schools Purchases Bid or Contract Use the bid or contract price. Document bid or contract # on PO. Quotes - $5,000 or more and less than $25,000 Receive written quotes. Complete quotation form. Indicate quote # on the PO. Submit the quotation form and written quotes to the Finance Office. 12/06/201317

18. Financial Audit - Schools Petty Cash Money on hand plus receipts must equal the petty cash amount allocated for your school. No cash advances should be made. No personal checks should be cashed. 12/06/201318

19. Financial Audit - Schools Fund-Raisers Fund-Raising Activity Report Permission to hold fund-raiser Account for the fund-raiser School / School Group Fund-Raisers Financial Secretary - Verify the deposits and expenditures reported on the Operating Report. PTO / Booster Club Fund-Raisers Treasurer – Verify Operating Report information. 12/06/201319

20. Financial Audit - Schools Fund-Raisers – IRS Prohibitions Cannot require anyone to participate in a fund-raiser. Cannot require that a certain amount be sold or that a certain amount be donated in lieu of fund-raising. Cannot penalize anyone for not participating in a fund- raiser. Cannot use individual accounts.  Cannot credit an individual based on revenues raised to offset that individual’s expenses.  Amount raised must benefit a campus / organization as a whole. 12/06/201320

21. Financial Audit - Schools Collections for Specific Individuals & Families Service projects or fund-raisers cannot be held at the school or in the name of the school for individuals or families for death or injuries in tragic accidents, major illnesses, fires, or similar situations. Family can establish a special account at a bank or credit union. Donations can be sent by individuals or businesses to the bank or credit union. Donations are not tax deductible. 12/06/201321

22. Financial Audit - Schools Reconciliations Financial secretary must reconcile the school’s accounting records with the general ledger balances monthly. Document the reconciliations. Principal should review and approve the monthly reconciliations. 12/06/201322

23. Financial Audit - Schools Spot Checks by Principal Suggest that the Principal check the contents of the school safe periodically to ensure that money is being deposited timely. Suggest that the Principal do surprise counts of petty cash periodically. Have the financial secretary and another person present when these counts / checks are done. Maintain a log of when these counts / checks are conducted and have pertinent people initial the log. 12/06/201323

24. Websites Finance – http://inside.cfisd.net/depts/finance/default.htm http://inside.cfisd.net/depts/finance/default.htm Financial Procedures Manual Sales Tax Tips Purchasing – http://inside.cfisd.net/depts/purchasing/purchasing.htm http://inside.cfisd.net/depts/purchasing/purchasing.htm Requirements for Competitive Quotes and Bids Bid and Contract Awards 12/06/201324

25. Websites Fund-Raisers – http://inside.cfisd.net/policies/fundraiser.htm http://inside.cfisd.net/policies/fundraiser.htm Fund-Raiser Guidelines Word Version of Fund-Raising Activity Report Approved Fund-Raiser Vendors List Booster Clubs – http://www.cfisd.net/campuses/booster/booster.htm http://www.cfisd.net/campuses/booster/booster.htm PTOs – http://www.cfisd.net/campuses/pto/pto.htm http://www.cfisd.net/campuses/pto/pto.htm 12/06/201325

26. Internal Audit Staff  Carol Oman, CPA, CIA Director of Internal Audit 281-897-4111 carol.oman@cfisd.net carol.oman@cfisd.net  Pat Stefan Internal Auditor III 281-517-6537 patricia.stefan@cfisd.net patricia.stefan@cfisd.net  Janett Tapia-Gonzalez Internal Auditor II 281-517-2941 janett.tapia-gonzalez@cfisd.net janett.tapia-gonzalez@cfisd.net 12/06/201326

27. Contacts  Audit, Fraud, PTO & Booster Club Questions Internal Audit  Financial Questions Karen Smith Assistant Supt. / Business & Financial Services 281-897-4020 karen.smith1@cfisd.net Mable Isles Director of Financial Services 281-897-4067 mable.isles@cfisd.net karen.smith1@cfisd.net mable.isles@cfisd.net 12/06/201327

28. Contacts  Accounts Receivable and Sales Tax Sharla Sheffield Accounts Receivable Specialist 281-897-4106 sharla.sheffield@cfisd.net sharla.sheffield@cfisd.net  Fund-Raisers Marty Edwards (Retiring 12/2013) Director of General Administration 281-517-6367 terry.edwards@cfisd.net terry.edwards@cfisd.net 12/06/201328

29. Handouts Budget Reconciliation and Detail Finance Webpage Purchasing Webpage Requirements for Competitive Quotes and Bids Fund-Raiser Information Webpage Fund-Raising Activity Report Example Excerpt from Financial Procedures Manual Fund-Raisers Community Service Projects Collections for Needy Families Collections for Specific Individuals and Families PTO and Booster Club Webpages 12/06/201329

30. Questions??? 12/06/201330