For Immediate Release:
Dec. 9, 2010
Contact: Harvey Rice
Butkovitz Releases Audit of School District’s
Intermediate Unit No. 26
City Controller finds insufficient documentation for special education
transportation costs & unnecessary open encumbrances
PHILADELPHIA – City Controller Alan Butkovitz today released the FY09 School District of Philadelphia’s Intermediate Unit No. 26 audit that found insufficient documentation for special education transportation costs, putting the School District at risk for inaccuracies with this $50 million expenditure.
When the Controller’s auditors requested documentation to determine how bus attendants’ payroll costs were determined, District personnel stated that this calculation was based on a study performed several years ago. Though, the District could not provide a copy of this study.
“Keeping timely studies that help determine accurate costs and properly retaining these records are essential to effectively maintaining the School District’s finances,” said Butkovitz.
Other instances of insufficient documentation for special education transportation costs included no support for vehicle maintenance costs for non-student vehicles, such as vehicles used to transport mail between District locations, and inadequate support for the calculation of social security and Medicare tax contributions reimbursed by the state.
“All expenditures and reimbursements need to be properly accounted for on the required annual fiscal reporting document,” said Butkovitz. “The School District needs to ensure that all state reimbursements are received and for the correct amount.”
The Controller’s audit also found that $1.3 million of the $2.1 million in open encumbrances tested were determined to be unnecessary and therefore invalid. Encumbrances represent valid commitments related to contracts not yet performed and orders not yet filled. Prior to the completion of the audit, District management prepared adjustments to correct $631,638 of the invalid amounts identified.
“The 61 percent of the unnecessary encumbrances occurred because the District’s cancellation policy was neither clear nor adequately communicated to the responsible managers,” said Butkovitz. “Unnecessary open encumbrances needlessly reserve budgetary funds and distort the School District’s financial statements.”