Audit of L.B. schools calls for cash-handling upgrades

The Office of the New York State Comptroller released the findings of an audit of the Long Beach City School District last week, which found that the schools’ handling of receipts — including cash, checks and money orders — needs improvement.

According to the report, which covered the period from July 2014 to December of 2015, the district did not establish formal, written cash receipt policies and procedures, had left cash receipts unlocked or unattended in a cabinet at times, and were sometimes late in logging the receipts after they were received. Such funds could include those collected from cafeteria sales, school trip fees and retiree healthcare payments, among other sources, the report said.

The audit stated that 12 cash receipts totaling $7,975 were deposited before a district clerk recorded receiving the cash in the cash receipts log. Two checks totaling $376 were stored in the unlocked cabinet and were not logged, and two cash receipt items totaling $340 were not deposited until 33 days after they were received, the report said.

“District officials should develop written policies and procedures for handling cash receipts,” the report recommended. “Such procedures should include, but not be limited to, requiring that cash collected is secured when not being accessed, ensuring that cash is immediately logged into the cash receipts log when it is received and ensuring deposits are made in a timely manner.”

Schools Superintendent David Weiss told the Herald that the district was happy with the audit, which originally came back clean, and that the issues addressed are simple to mend. He added that the cabinet contained checks, but did not include any cash.

“We’re addressing that with our own internal procedures to ensure that each and every single thing noted by the comptroller is addressed,” said Weiss. “None of these issues were picked up by our internal auditors because they really are very minor issues and routines that are easily fixable.”

Michael DeVito, the district’s chief operating officer, responded to the audit as part of the State Comptroller’s report, writing that the district plans to make its existing policies more explicit and formal and will conduct staff training on proper procedures regarding logging, safeguarding and depositing currency, money orders and checks.

“It is reassuring to know that the audit team feels that the district has strong controls in place and did not find any fraud, theft, loss or misappropriation of funds,” DeVito wrote. “It is noteworthy that the audit team did not find anything of concern when they conducted the initial risk assessment so they selected the area of [“cash receipts”] because it is typically a high risk area for school districts.”

In regards specifically to the district’s safeguarding of the receipts, DeVito wrote that because the district’s administration building was severely damaged during Hurricane Sandy, temporary offices for the district treasurer and payroll were located in administrative space above Lindell Elementary School’s gymnasium. The isolated location made the risk of a visitor walking into the area in order to access the storage cabinet holding the funds extremely low, he said.

“Although I agree that the storage cabinet in which checks, money orders and cash are stored until a bank deposit is made should be locked at all times, the cabinet was indeed locked during the evening hours or when all three staff members were out of the office during the day,” DeVito wrote. “The storage cabinet was only left unlocked when a staff member was in the office.”

Prior to Sandy, DeVito said in the report that such receipts were stored in a locked drawer within a safe in the old administration building, and that the district would revert to that method with the new facility officially open.

“If you look at other audits…they’re talking about major financial issues,” Weiss said. “This is a routine that needed cleaning up that was already different from our normal routine when we were in normal business quarters.”