Report On Internal Control and On Compliance and Other Matters School District of Philadelphia Fiscal Year 14

Audit Date: July 8, 2015
Audit Categories
  • Financial
Controller: Alan Butkovitz
Audit Tags
  • Children and Families,
  • Education,
  • Grants,
  • Internal Controls,
  • School District

Executive Summary

For Immediate Release
July 8, 2015

Contact: Brian Dries

Butkovitz Says Poor Oversight at School District
Placed Millions at Risk for Theft & Misuse

City Controller raises concerns with student Transpasses, activity funds
& petty cash accounts

School District of Philadelphia Report on Internal Control & Compliance FY14

PHILADELPHIA – City Controller Alan Butkovitz today released the FY2014 Financial Audit of the School District of Philadelphia that found inadequate oversight for several funds, including the ability to properly monitor the $37 million student TransPass Program.

This vital program provides free transportation to eligible Philadelphia students to get to and from school through the issuance of weekly Transpasses. During a one-week sampling of TransPass activity at five different schools, school personnel could not account for 230 of the passes valued at $4,200. This was an increase from only 13 Transpasses that could not be accounted for last year.

“This one-week testing at a few schools demonstrates that poor supervision can add up to significant money,” said Butkovitz. “It could be a potential loss of almost $2.6 million across the School District.”

The considerable increase was a result of poor accounting by personnel at individual schools. At four high schools, M.L. King, Frankford, Swenson and Penn Treaty, the eligibility lists were not signed by the school employees who gave out the TransPasses to attest that all students whose names were checked off actually received the passes. At Girls High School, the last recorded summary of TransPasses was from September 2013.

“The School District needs to improve oversight and eliminate the risk for theft and misuse,” said Butkovitz. “Designated school personnel need to follow the appropriate steps every week and review who has received the passes and properly accounted for the unused ones.”

The Controller also found the School District’s $5 million in student activity funds at risk for fraud or misuse. These are funds collected from students and monitored by school personnel to be used for after-school events, trips and other activities. The deficiencies included activity funds with negative account balances, non-compliance with bidding requirements and improper retention of school-related funds.

“This lack of oversight and accountability invites fraud and the misuse of students’ and parents’ money,” said Butkovitz. “School employees in charge of these funds need to be properly trained and held accountable for complying with the School District’s policies.”

In addition, the Controller’s audit indicated that $53,000 in petty cash funds were written-off at 60 schools as a result of fund shortages. School principals again failed to adequately prioritize accountability over their equipment, as 30 percent selected from the School District’s accounting records could not be found.

According to Controller Butkovitz, School District management needs to work with personnel of the affected schools to investigate the causes of the shortages and resolve the discrepancies appropriately. If adequate documentation cannot be found to account for the shortages, the School District should request that responsible school personnel reimburse the School District for the shortages.

“We will continue to monitor the School District’s ability to adequately account for funds,” said Butkovitz. “It is critical that our recommendations are implemented to ensure that every dollar goes toward improving education and benefiting all students.”