Summary

This operational audit for the period July 1, 2004, through June 30, 2005, disclosed the following:

Finding No. 1:  Fingerprinting Requirements

The District should improve its procedures for timely obtaining fingerprints and background checks on personnel having direct contact with students.  Absent timely background screening checks, there is an increased risk that personnel may have backgrounds that are not suitable for direct contact with students.

Finding No. 2:  Controls Over Inventories

The District could enhance its internal controls over inventories by adequately separating asset custody and record keeping responsibilities, and providing for year-end physical inventory counts to be conducted by employees independent of the record keeping function.

Finding No. 3:  Controls Over Bids

Our review of controls over bids found that the District could not locate bid envelopes in one instance and the bid tabulation was not signed in another instance. 

Finding No. 4:  Insurance Commissions

Insurance companies paid a consultant for the District’s health and employee benefits, and a broker for the District’s property and casualty insurance, based on a percent of the premium costs paid by the District to the insurance companies.  Considering that the insurance consultant and broker’s fees were based on a percentage of the premium costs, the District may have limited the incentive to recommend insurance services at the lowest and best price consistent with desired quality by not separately establishing a fixed-price contract with the insurance consultant and broker.

Finding No. 5:  Annual Facility Safety Inspections

The District did not timely correct some safety and maintenance deficiencies disclosed by annual safety inspections.  

Finding No. 6:  Construction Management Agreement – Penalty Clauses

The agreements between the District and the general contractors for three contracts did not contain the required penalties to be paid by the contractors for failure to comply with the terms of the contracts. 

Finding No. 7:  Monitoring of Construction Managers

The District’s monitoring procedures did not ensure that subcontractors were appropriately licensed.  For one construction management contract, the District did not ensure the adequacy of the performance and payment bond obtained by the construction management entity.

Finding No. 8:  Architect Liability Insurance

The District did not have written policies and procedures to establish minimum and adequate insurance requirements for design professionals. 

Finding No. 9:  Charter School Monitoring

Improvements were needed in the District’s monitoring of its charter schools to ensure that the schools provide evidence of insurance coverages required by the contracts with the District.

The Superintendent's written response to the audit findings is included as part of this report on the Auditor General’s Web site.