Columbus City Schools

Office of Internal Audit

Accounts Payable Department Audit Report

Report Date: October 27, 2016

Columbus City Schools Office of Internal Audit

Table of Contents Title

Page

Executive Summary

3

Audit Objectives

5

Audit Scope

5

Methodologies

5

Background

6

Accounts Payable Department Financial & Compliance Observations

7

Management Responses and Action Plans

13

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Columbus City Schools Office of Internal Audit Executive Summary The Columbus City Schools (District) Office of Internal Audit (OIA) has recently completed a general audit of the District’s Accounts Payable Department. Our audit focused on evaluating predetermined objectives selected by OIA. This general audit consisted of the review and testing of both financial and compliance objectives relevant to the Accounts Payable Department. The District’s Accounts Payable Department, located in the Treasurer’s Office, is primarily responsible for ensuring the complete, accurate and timely payment of District expenditures, once the necessary approvals have been obtained by District staff. Based on the results of our work during this audit, we found areas where improvements could be made to strengthen the internal control environment and enhancements could be made to current processes to conform to industry best practices and comply with existing governance. It was evident that the Accounts Payable and Adult & Community Education staff we worked with while completing this audit take a great deal of pride in the excellence of their work product and displayed extreme dedication in completing their work. Their patience, professionalism and attention to detail was greatly appreciated. During the course of our review we made the Accounts Payable and Adult & Community Education personnel and management aware of our observations, comments and recommendations for improvement. Good discussion took place regarding the recommendations. The Treasurer and the Adult & Community Education staff have already begun to make efforts towards improvement. OIA would also like to acknowledge the cooperation extended to us and the assistance of all staff we came into contact with as we performed our audit. The following are OIA observations noted during the review:

Risk Ratings, defined: 1 – High/unacceptable risk requiring immediate corrective action; 2 – Moderate/undesirable risk requiring future corrective action; 3 – Low/minor risk that management should assess for potential corrective action. Observations

Risk Rating 1

Objective 1: Written business objectives

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2

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Columbus City Schools Office of Internal Audit

Observations

Risk Rating 1

Observation No. 1 – The Treasurer’s Office does not have written business objectives to guide the accounts payable function and enhance its efficiency and effectiveness.

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3

X

Objective 2: Sufficient policies and procedures Observation No. 2 – The Treasurer’s Office does not have sufficient procedures in place for the accounts payable process.

X

Observation No. 3 – The District’s Department of Adult & Community Education Program does not have sufficient procedures in place for the financial aid refund process.

X

Objective 3: Sufficient internal controls are in place and operating as management intends Observation No. 4 – Inadequate segregation of duties exist for a District credit card.

X

Observation No. 5 – Approval of invoices in MUNIS workflow are not always approved in a timely manner. Observation No. 6 – Inaccurate information was used to complete Form 1098-T, Tuition Statement, that is sent to the student and filed with the IRS.

X

X

Objective 4: District payments are supported by appropriate documentation Observation No. 7 – Appropriate support documentation is not available for various sampled transactions.

X

Observation No. 8 - Proper approval of purchases were nonexistent or insufficient.

X

Objective 5: Access permissions are only assigned to appropriate personnel Observation No. 9 – Accounts Payable Manager and staff have system access permissions that are incompatible with the duties they perform.

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X

Columbus City Schools Office of Internal Audit

Observations

Risk Rating 1

2

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Objective 6: Accounts Payable process is as efficient as possible Observation No. 10 – The Accounts Payable Department issues paper checks to most of their vendors, including reimbursements to District employees.

X

Audit Objectives The objectives of the audit were to determine: 

Written business objectives exist to guide the accounts payable function;



Sufficient policies and procedures exist to govern the accounts payable process;



Sufficient internal controls are in place and operating as management intends;



All payments are supported by appropriate documentation and available discounts have been taken, rebates and credits have been accounted for appropriately;



Electronic access permissions to the MUNIS system are available to appropriate personnel;



The accounts payable process is efficient as possible.

Audit Scope OIA established the scope of the audit to include a review of basic operational aspects of the processes, verification of compliance requirements, and evaluation of internal control environments as they relate to the noted objectives. The period of time for the audit included all activity commencing July 1, 2015 and ending December 31, 2015.

Methodologies To accomplish our stated objectives, OIA performed the following tasks as they related to those objectives: 

Review of various authoritative literature governing work reviewed (i.e. Relevant Ohio Revised Code & Ohio Administrative Code sections, various federal grant guidance, etc…);

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Columbus City Schools Office of Internal Audit 

Review of relevant policies and procedures;



Interview the District’s Accounts Payable Department and Adult & Community Education staff;



Observation and documentation of key processes;



Review of management reports, support documentation, and other relevant information;



Review of Columbus City Schools’ (CCS) Board of Education policies;



Review of best practices used by other entities performing similar functions.

Background Accounts Payable, a section within the Office of the Treasurer, is responsible for ensuring timely payments for goods and services received by the School District. Accounts Payable ensures that payments are properly authorized, approved, accurate, and adequately monitored to prevent duplicate payments. Accounts Payable utilizes the Payables Module of the district’s MUNIS enterprise software system to process transactions. Several control features are incorporated in the systems to assist in ensuring the accounts payable function achieves its objectives. For example, the MUNIS financial system contains tools to assist the efficient, accurate, and effective delivery of services by Accounts Payable: (1) Budget administrator approval is required for the purchase of supplies, equipment and services where workflow has been established. (2) Invoices are scanned by Accounts Payable to provide a permanent electronic record of the transaction. This record is readily available for all interested parties. (3) MUNIS initiates a check prior to processing a payment which compares the vendor information with the related Purchase Order, as well as ensuring an available fund balance. Since the adoption by the district of the MUNIS financial system in July 2012, Accounts Payable has processed nearly 338,000 invoices.

The Department of Adult and Community Education (ACE) of Columbus City Schools provides the quality academic and occupational education that adult students need for successful living in the 21st century. We accomplish our vision by providing:   

High quality instruction that focuses on issues specific to adult students; Contemporary workforce education that produces job-ready graduates; and Quality training that is accessible and affordable.

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Columbus City Schools Office of Internal Audit Career Certificated Training Programs are offered at a cost to the student. Some have specific entrance requirements. Financial assistance is available for qualifying students. Over 1,000 courses are available online. All training, education and assessment services can be customized for business, industry and government. Adult Basic and Literacy Education (ABLE) which includes Adult Basic Education (ABE), Adult Secondary Education (ASE), and English Speakers of Other Languages (ESOL) services are provided to central Ohio residents. Project Connect provides support services and after-school academic services for children experiencing homelessness.

Results of the Financial and Compliance Audit of the Accounts Payable Department – Observations and Recommendations: Observation No. 1 – The Treasurer’s Office does not have written business objectives to guide the accounts payable function and enhance its efficiency and effectiveness. The District’s accounts payable function does not have any business objectives guiding the payment function. Recommendations 1. Written business objectives should be established for the District’s accounts payable function that corresponds to the District’s goals1. These objectives should address: accuracy, completeness, consistency, cost-effectiveness, compliance and timeliness. 2. Additionally, metrics (i.e. invoice problems, untimely approvals, invoices processed by FTE, etc...) should be established to measure the work performed that relates to each business objective. These metrics should be compared to defined benchmarks on a periodic basis (i.e. monthly, quarterly, etc…). This comparison will enable Management to identify those business objectives that are meeting the benchmarks and those that need additional work.

1

Columbus City Schools 2015-2016 Goals:

Goal 1: Each student reaches the student’s full potential; to continue education, serve in the military, go to college, start a business, and enter the workforce as a life-ling learner. Goal 2: The District creates safe, student-centered, innovative learning environments and recruits, develops, and retains world-class talent. Goal 3: The District is accountable to our communities and customers; confidence in the District is maintained through strategic, responsible and transparent leadership.

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Columbus City Schools Office of Internal Audit These procedures will help to ensure Management is aware of the successes of the District’s accounts payable function, as well as those areas where successes have yet to be achieved. Observation No. 2 – The Treasurer’s Office does not have sufficient procedures in place for the accounts payable process. The Accounts Payable Department can benefit from an updated procedure manual. There is no procedure manual documenting the procedures performed by the accounts payable and other District staff as their work relates to the accounts payable process. Recommendation 3.

The District should document the procedures concerning the accounts payable process in a written procedure manual. This should include duties completed to benefit the accounts payable process performed by employees outside of the Accounts Payable Department like the Approvers, Controller and/or Systems Administrator. This will help to inform all employees who handle a piece of the accounts payable process of their job duties and can be used as a training tool in the event an employee is off the job for a significant amount of time.

Observation No. 3 – The District’s Department of Adult and Community Education Program does not have sufficient procedures in place for the financial aid refund process. Students who enroll in the Department of Adult & Community Education Program have access to financial assistance (i.e. Pell Grants, Subsidized and Unsubsidized Loans). When the financial assistance exceeds the student’s tuition, the student is due a refund. The Department of Adult & Community Education Program does not have documented procedures that explain how the refund process operates. For instance, what documents are to be completed, who is to complete what tasks, and what approvals are needed to process a refund. Recommendation 4. The Department of Adult & Community Education management should develop documented procedures that will address the who, what, when, and how aspects of the refund process. This will help to strengthen the internal control environment and ensure all refunds are handled consistently and properly. Observation No. 4 – Inadequate segregation of duties exist for a District credit card. The District has a credit card with an $8,000,000 credit limit. It is used to pay expenses (Workers Compensation, District-wide Time Warner Cable Internet, District-wide AT&T

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Columbus City Schools Office of Internal Audit phone system) incurred by the District throughout the year. The largest expense paid with this credit card is the District’s Workers Compensation bill, which normally is in the $4,000,000-$5,000,000 range. The credit card payment process does not have proper segregation of duties established. The employee who makes the payment with the credit card also receives the monthly credit card statements. There is no authorization of the credit card payment or review of the monthly credit card statement by supervisory personnel. Recommendations 5. All District credit card purchases over a threshold established by the Treasurer should be specifically reviewed and approved by the Treasurer prior to the expenditure being made. The Treasurer should review and sign off on each monthly credit card statement, so the Treasurer is aware of all purchases with the credit card. Observation No. 5 – Approval of invoices in MUNIS workflow are not always approved in a timely manner. Most invoices are entered into MUNIS when received in the Accounts Payable Department. These invoices are electronically forwarded by MUNIS to the approver’s dashboard. Each time the approver logs into MUNIS, their dashboard indicates the number of items awaiting approval. During our testing, we found 54% (58 out of 108) of MUNIS approvals exceeded five (5) business days, causing 22% (24 out of 108) of the payments tested to not be paid within 30 days. There is no guidance or procedures that require invoices in workflow to be acted upon within a certain timeframe. Recommendation 6. Invoices should be reviewed and acted upon by the assigned employee in workflow within a timeframe established by the Treasurer. This will help to ensure invoices are being reviewed timely and these invoices can be paid within 30 days. Observation No. 6 – Inaccurate information was used to complete Form 1098-T, Tuition Statement that is sent to the student and filed with the IRS. The Department of Adult & Community Education staff submits financial information to the Treasurer’s Office for completion of Form 1098-T. Once the Treasurer’s Office completes Form 1098-T, the document is sent to the student and the IRS. 14% (3 out of 21) of the sampled refund payments had the incorrect tuition amount (Box 2) or the incorrect scholarship/grant amount (Box 5) recorded on Form 1098-T (Tuition Statement). The incorrect amount was deemed to have been entered by Department of Adult & Community Education staff prior to being sent to the Treasurer’s Office.

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Columbus City Schools Office of Internal Audit Recommendation 7. Once the information for Form 1098-T completion is prepared by Department of Adult & Community Education staff for submission to the Treasurer’s Office, management should agree the information to appropriate source documents. This will help to ensure the completeness and accuracy of the 1098-T forms. Observation No. 7 – Appropriate support documentation is not available for various sampled transactions. The maintaining of support documentation is the responsibility of the invoice approver. If the approver feels this documentation is appropriate then they approve the invoice in MUNIS. Since this support documentation does not reside in a central location or repository and is not reviewed by a single group (Accounts Payable Specialists), the standards used to measure the support documentation is different. This results in some payments not having invoices properly analyzed and invoices having insufficient support documentation. During our testing, we found the following: 



 

Utility bills are not reviewed and analyzed by appropriate personnel for reasonableness; o Sprint Direct Connect bills (Departments don’t verify items were used properly and needed to complete the employee’s job duties); o Gas bills (location and usage reviews); o Water bills (location and usage reviews). Five instances, where services were rendered by consultants or other vendors, did not have a contract in place to formalize the arrangement. Therefore, nothing was documented in regards to each party’s responsibilities, the description of the deliverables that will drive the payment and confirmation the necessary compliance requirements are communicated (ORC 3319.392 background checks); Invoices submitted to the District from juvenile detention centers for the instruction of District students in these facilities are not certified by the teacher providing the services or approved by the teacher’s supervisor; Timesheets are not certified by athletic officials, game workers and special duty Columbus Police Officers.

Other instances of inappropriate support documentation were found during our testing, but were not individually significant. Recommendations 8. A sound business practice is to ensure all payments made by District staff are supported by sufficient documentation. This documentation should be reviewed and approved by knowledgeable individuals who are using consistent standards to evaluate the invoices. These procedures will help to ensure all District payments are proper and supported by sufficient documentation.

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Columbus City Schools Office of Internal Audit 9. Additionally, a training tool should be developed that will help to inform employees assigned as “approvers” of the District’s purchasing requirements and items to obtain to properly support invoices they are approving. This will help to ensure the District is utilizing consistent standards as invoices are approved for payment. Observation No. 8 – Proper approval of purchases were non-existent or insufficient. Invoices are sent directly to the Accounts Payable Department. They are then entered into MUNIS workflow and are electronically routed by MUNIS workflow to the identified approver. Approvers then review these invoices and once they determine the invoice is proper and valid, it is approved in MUNIS workflow. During our testing, we found the following:   

4% (5 out of 115) of the sampled transactions did not have any approvals in MUNIS or on the face of the invoice (Water bill, Electric bill, COTA bus passes, Pupil transportation, Parent transportation reimbursement); Parent transportation payments are not approved by the Transportation Department prior to payment; Utility payments are processed without approval.

Recommendation 10. All District invoices should be approved prior to payment. The approval of the invoice should include an employee who would know if the goods were received and are in proper working condition or would know if the services were sufficiently provided. This procedure will help to ensure all payments are properly approved and segregated. Observation No. 9 – The Accounts Payable Manager and staff have system access permissions that are incompatible with the duties they perform. The Accounts Payable Manager has access within MUNIS to add/delete/merge vendors and modify vendor information. Recommendation 11. Management should perform a comprehensive audit of all access permissions within MUNIS, and specifically the Accounts Payable Manager and staff. Changes should be made to reflect the proper access. This will create a baseline of employees with the proper access. Management should limit access to only a few individuals within select departments. After the baseline review is confirmed and approved, the District should implement a periodic management review of access permissions within MUNIS. This will help to ensure proper segregation of duties exist.

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Columbus City Schools Office of Internal Audit Observation No. 10 – The Accounts Payable Department issues paper checks to most of their vendors, including reimbursements to District employees. The District prints and mails checks to pay vendors that are owed money for goods purchased and/or services utilized from these vendors. This is not the most efficient way vendors can be paid by the District. Paying vendors with paper checks has led to the identification of several internal control weaknesses. These weaknesses increase the risk that checks could be misdirected, misappropriated or subject to theft. Recommendations According to a Performance Measurement Case Study prepared by the Council of the Great City Schools in 2012, 60% of the top-performing school districts use electronic funds transfer and wire transfers to make vendor payments. The United States Treasury issued a final rule in December of 2010, in which the Treasurer at that time stated: “It costs 92 cents more to issue a payment by paper check than by direct deposit”. 12. The CCS Accounts Payable Department should explore ways to make electronic payments to their employees and vendors. This will increase the efficiency of the Accounts Payable process. Paper, postage, labor (handling and transporting) are costs that can be saved by paying vendors electronically. Furthermore, paper checks are issued to employees for travel and miscellaneous reimbursements, yet we have direct deposit information on file for all employees. The District issued 3,933 payments to vendors who were employees in FY16. Based on postage rates in effect at that time, this would have saved the District approximately $1,800 in postage.

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Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

Planned Corrective Action/ Implementation Date

Stan Bahorek

Management intends to prepare written procedures for the accounts payable function In conjunction with a similar effort for the payroll function. An outside firm will be selected via an RFQ process to assist management in this effort. Development of the RFQ document is underway. Identification of business objectives will be a part of this process.

Observation No. 1 – The Treasurer’s Office does not have written business objectives to guide the accounts payable function and enhance its efficiency and effectiveness. The District’s accounts payable function does not have any business objectives guiding the payment function. Recommendations 1.

Written business objectives should be established for the District’s accounts payable function that corresponds to the District’s goals1. These objectives should address: accuracy, completeness, consistency, cost-effectiveness, compliance and timeliness.

Implementation Date: June 2017

2.

Additionally, metrics (i.e. invoice problems, untimely approvals, invoices processed by FTE, etc...) should be established to measure the work performed that relates to each business objective. These metrics should be compared to defined

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Stan Bahorek

Management will work with an outside consultant to research industry benchmarks and will evaluate the district’s current capabilities to capture and tabulate data related to said metrics.

Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

benchmarks on a periodic basis (i.e. monthly, quarterly, etc…). This comparison will enable Management to identify those business objectives that are meeting the benchmarks and those that need additional work. These procedures will help to ensure Management is aware of the successes of the District’s accounts payable function, as well as those areas where successes have yet to be achieved.

Planned Corrective Action/ Implementation Date An assessment will be made as to what additional resources are necessary in order to effectively capture and report related data. It is anticipated that metrics for account payable (along with similar metrics for payroll) will also be identified by the outside firm during the process of developing the procedures manual(s).

Implementation Date: June 2017

Observation No. 2 – The Treasurer’s Office does not have sufficient procedures in place for the accounts payable process. The Accounts Payable Department can benefit from an updated procedure manual. There is no procedure manual documenting the procedures performed by the accounts payable and other District staff as their work relates to the accounts payable process.

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Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

Planned Corrective Action/ Implementation Date

Stan Bahorek

As noted in Recommendation 1, written procedures will be developed in consultation with an outside consultant.

Recommendation 3.

The District should document the procedures concerning the accounts payable process in a written procedure manual. This should include duties completed to benefit the accounts payable process performed by employees outside of the Accounts Payable Department like the Approvers, Controller and/or Systems Administrator. This will help to inform all employees who handle a piece of the accounts payable process of their job duties and can be used as a training tool in the event an employee is off the job for a significant amount of time.

Observation No. 3 – The District’s Department of Adult and Community Education Program does not have sufficient procedures in place for the financial aid refund process. Students who enroll in the Department of Adult & Community Education Program have access to financial assistance (i.e. Pell Grants, Subsidized and Unsubsidized Loans). When the financial assistance exceeds the student’s tuition, the student is due a refund. The Department of Adult & Community Education Program does not have documented procedures that explain how the refund process operates.

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Implementation Date: June 2017

Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

Planned Corrective Action/ Implementation Date

Pegeen Cleary-Potts

The following action steps will be taken:  Evaluate adult refund process with ACE staff;  Develop Adult Refund Process procedure document;  Release procedure document to applicable staff;  Implement Adult Refund Process;  Monitor the Adult Refund Process.

For instance, what documents are to be completed, who is to complete what tasks, and what approvals are needed to process a refund. Recommendation 4.

The Department of Adult & Community Education management should develop documented procedures that will address the who, what, when, and how aspects of the refund process. This will help to strengthen the internal control environment and ensure all refunds are handled consistently and properly.

Implementation Date: December 2016

Observation No. 4 – Inadequate segregation of duties exist for a District credit card. The District has a credit card with an $8,000,000 credit limit. It is used to pay expenses (Workers Compensation, District-wide Time Warner internet, District-wide AT&T phone system) incurred by the District throughout the year. The largest expense paid with this credit card is the

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Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

Planned Corrective Action/ Implementation Date

Stan Bahorek

Controller will forward copies of district credit card statement to Treasurer prior to payments being made to be reviewed for reasonableness.

District’s Workers Compensation bill, which normally is in the $4,000,000$5,000,000 range. The credit card payment process does not have proper segregation of duties established. The employee who makes the payment with the credit card also receives the monthly credit card statements. There is no authorization of the credit card payment or review of the monthly credit card statement by supervisory personnel.

Recommendations 5.

All District credit card purchases over a threshold established by the Treasurer should be specifically reviewed and approved by the Treasurer prior to the expenditure being made. The Treasurer should review and sign off on each monthly credit card statement, so the Treasurer is aware of all purchases with the credit card.

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Implementation Date: September 11, 2016

Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

Planned Corrective Action/ Implementation Date

Observation No. 5 – Approval of invoices in MUNIS workflow are not always approved in a timely manner. Most invoices are entered into MUNIS when received in the Accounts Payable Department. These invoices are electronically forwarded by MUNIS to the approver’s dashboard. Each time the approver logs into MUNIS, their dashboard indicates the number of items awaiting approval.

-

During our testing, we found 54% (58 out of 108) of MUNIS approvals exceeded five (5) business days, causing 22% (24 out of 108) of the payments tested to not be paid within 30 days. There is no guidance or procedures that require invoices in workflow to be acted upon within a certain timeframe. Recommendation 6.

Invoices should be reviewed and acted upon by the assigned employee in workflow within a timeframe established by the Treasurer. This will help to ensure invoices are being reviewed timely and these invoices can be paid within 30 days.

Stan Bahorek

For fiscal year 2017 we have introduced a mobile MUNIS application that allows staff to process approvals on their mobile devices. This should provide supervisors easy access to their invoice approvals which should ultimately improve timeliness. Implementation Date: July 1, 2016

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Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

Planned Corrective Action/ Implementation Date

Pegeen Cleary-Potts

The following actions steps will be taken:  Evaluate the IRS Tuition Statement Form;  Develop the process to review the 1098T;  Release the process to review the IRS Tuition Statement Form;  Implement the process to review the 1098-T;

Observation No. 6 – Inaccurate information was used to complete Form 1098-T, Tuition Statement that is sent to the student and filed with the IRS. The Department of Adult & Community Education staff submits financial information to the Treasurer’s Office for completion of Form 1098-T. Once the Treasurer’s Office completes Form 1098-T, the document is sent to the student and the IRS. 14% (3 out of 21) of the sampled refund payments had the incorrect tuition amount (Box 2) or the incorrect scholarship/grant amount (Box 5) recorded on Form 1098-T (Tuition Statement). The incorrect amount was deemed to have been entered by Department of Adult & Community Education staff prior to being sent to the Treasurer’s Office. Recommendation 7.

Once the information for Form 1098-T completion is prepared by Department of Adult & Community Education staff for submission to the Treasurer’s Office, management should agree the information to appropriate source documents. This will help to ensure the completeness and accuracy of the 1098-T forms.

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Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

Planned Corrective Action/ Implementation Date 

Monitor the process to review the 1098T.

Implementation Date: December 2016 Observation No. 7 – Appropriate support documentation is not available for various sampled transactions. The maintaining of support documentation is the responsibility of the invoice approver. If the approver feels this documentation is appropriate then they approve the invoice in MUNIS. Since this support documentation does not reside in a central location or repository and is not reviewed by a single group (Accounts Payable Specialists), the standards used to measure the support documentation is different. This results in some payments not having invoices properly analyzed and invoices having insufficient support documentation. During our testing, we found the following: 



Utility bills are not reviewed and analyzed by appropriate personnel for reasonableness; o Sprint Direct Connect bills (Departments don’t verify items were used properly and needed to complete the employee’s job duties); o Gas bills (location and usage reviews); o Water bills (location and usage reviews). Five instances, where services were rendered by consultants or other vendors, did not have a contract in place to formalize the arrangement. Therefore, nothing was documented in regards to each party’s responsibilities, the description of the deliverables that

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Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations





Process Owner

Planned Corrective Action/ Implementation Date

Stan Bahorek

The Accounts Payable Department reviews support documentation and requests additional support when needed. Management will review specific areas of concern with IA and address those concerns to ensure all documentation meets the "sufficient" standard.

will drive the payment and confirmation the necessary compliance requirements are communicated (ORC 3319.392 background checks); Invoices submitted to the District from juvenile detention centers for the instruction of District students in these facilities are not certified by the teacher providing the services or approved by the teacher’s supervisor; Timesheets are not certified by athletic officials, game workers and special duty Columbus Police Officers.

Other instances of inappropriate support documentation were found during our testing, but were not individually significant. Recommendations 8.

9.

A sound business practice is to ensure all payments made by District staff are supported by sufficient documentation. This documentation should be reviewed and approved by knowledgeable individuals who are using consistent standards to evaluate the invoices. These procedures will help to ensure all District payments are proper and supported by sufficient documentation.

Additionally, a training tool should be developed that will help to inform employees assigned as “approvers” of the District’s purchasing requirements and items to obtain to properly support

Page 9 of 13

Implementation Date: Ongoing

Stan Bahorek

Once the standard of "sufficient documentation" is established and defined, A/P will collaborate

Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

invoices they are approving. This will help to ensure the District is utilizing consistent standards as invoices are approved for payment.

Planned Corrective Action/ Implementation Date with Purchasing to ensure adequate training is available.

Implementation Date: Subsequent to and in conjunction with the CAP for #8. Observation No. 8 – Proper approval of purchases were non-existent or insufficient. Invoices are sent directly to the Accounts Payable Department. They are then entered into MUNIS workflow and are electronically routed by MUNIS workflow to the identified approver. Approvers then review these invoices and once they determine the invoice is proper and valid, it is approved in MUNIS workflow. During our testing, we found the following: 

 

4% (5 out of 115) of the sampled transactions did not have any approvals in MUNIS or on the face of the invoice (Water bill, Electric bill, COTA bus passes, Pupil transportation, Parent transportation reimbursement); Parent transportation payments are not approved by the Transportation Department prior to payment; Utility payments are processed without approval.

Recommendation 10.

All District invoices should be approved prior to payment. The approval of the invoice should include an employee who would know if the goods were received and are in proper working condition or would know if the services were sufficiently provided.

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Stan Bahorek

We agree that invoices should be approved before payment. While utility invoices are not approved prior to payment we believe that they should be monitored by energy management staff to ensure energy usage is not above normal

Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

This procedure will help to ensure all payments are properly approved and segregated.

Planned Corrective Action/ Implementation Date operating levels. The process for monitoring utility usage and invoices will be reviewed. Principals have the authority to approve their own general fund requisitions and invoices. In addition, the Purchasing Director is the purchasing agent for the School District. His signature on each purchase order is what authorizes a purchase. Implementation Date: NA

Observation No. 9 – The Accounts Payable Manager and staff have system access permissions that are incompatible with the duties they perform. The Accounts Payable Manager has access within MUNIS to add/delete/merge vendors and modify vendor information. Recommendation 11.

Management should perform a comprehensive audit of all access permissions within MUNIS, and specifically the Accounts Payable Manager and staff. Changes should be made to reflect the proper access. This will create a baseline of employees with the proper access. Management should limit access to only a few individuals

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Stan Bahorek

Ongoing evaluation of the Accounts Payable staff access is occurring. Access will be removed that is not necessary and monitoring reports will be periodically be ran to keep track of changes made where certain system access is essential to their duties.

Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

Process Owner

within select departments. After the baseline review is confirmed and approved, the District should implement a periodic management review of access permissions within MUNIS. This will help to ensure proper segregation of duties exist.

Planned Corrective Action/ Implementation Date

Implementation Date: September 1, 2016

Observation No. 10 – The Accounts Payable Department issues paper checks to most of their vendors, including reimbursements to District employees. The District prints and mails checks to pay vendors that are owed money for goods purchased and/or services utilized from these vendors. This is not the most efficient way vendors can be paid by the District. Paying vendors with paper checks has led to the identification of several internal control weaknesses. These weaknesses increase the risk that checks could be misdirected, misappropriated or subject to theft. Recommendation According to a Performance Measurement Case Study prepared by the Council of the Great City Schools in 2012, 60% of the top-performing school districts use electronic funds transfer and wire transfers to make vendor payments. The United States Treasury issued a final rule in December of 2010, in which the Treasurer at that time stated: “It costs 92 cents more to issue a payment by paper check than by direct deposit”.

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Stan Bahorek

A/P is aware of the benefits and costs of electronic payments. Options for electronic payments have been and will continue to be considered periodically. Currently, this is not a high priority project for the department and there are no specific plans to address this near term. Implementation Date: NA

Columbus City Schools Office of Internal Audit Accounts Payable Audit Corrective Action Plans Observations / Recommendations

12.

Process Owner

The CCS Accounts Payable Department should explore ways to make electronic payments to their employees and vendors. This will increase the efficiency of the Accounts Payable process.

Paper, postage, labor (handling and transporting) are costs that can be saved by paying vendors electronically. Furthermore, paper checks are issued to employees for travel and miscellaneous reimbursements, yet we have direct deposit information on file for all employees. The District issued 3,933 payments to vendors who were employees in FY16. Based on postage rates in effect at that time, this would have saved the District approximately $1,800 in postage.

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Planned Corrective Action/ Implementation Date