FILE:  DIF

Cf:  DIA, DIC

 

INTERNAL CONTROL

 

 

POLICY

 

The Orleans Parish School Board will maintain a system of internal control to safeguard its assets against loss, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to all applicable federal and state laws and regulations and School Board policies.

 

The Superintendent shall be responsible for establishing and maintaining an adequate system of internal control and to furnish to the School Board, federal and state governmental agencies, grantors, taxpayers and other constituencies reliable financial information on a timely basis.

 

The School Board, Superintendent, and all administrators shall demonstrate the importance of integrity and ethical values through their directives, attitudes, and behavior, reinforcing the commitment to doing what is right, not just maintaining a minimum level of performance, so that these priorities are understood by all stakeholders.

 

RESPONSIBILITY

 

  1. The School Board shall be responsible for setting the district-wide expectations for internal control, ensuring the Superintendent is aware of those expectations, requiring that upward communications channels are open through all levels of management, and evaluating the Superintendent’s effectiveness toward monitoring the control environment and implementing sound control policies and procedures.

  2. The Superintendent shall establish and maintain a system of internal controls that satisfies the School Board’s objectives in the following categories:

 

  1. Risks are identified, analyzed and managed;

  2. School Board assets are adequately safeguarded;

  3. Financial information is accurate, reliable, and timely;

  4. All applicable federal and state laws and regulations and School Board policies are complied with;

  5. School Board resources are used economically and efficiently; and

  6. School Board operations and programs meet established goals and objectives.

 

  1. Individuals with delegated approval authority, e.g. administrators, directors and supervisors (“management”), shall be responsible for establishing, maintaining, and supporting a system of internal controls within their areas of responsibility and for creating a control environment that encourages compliance with all applicable federal and state laws and regulations and School Board policies and procedures.

 

  1. Adequate supervision is necessary to monitor that internal controls are operating as intended and to help ensure the reliability of accounting and operational controls by pointing out errors, omissions, exceptions, and inconsistencies in procedures.

  2. Administrators shall be responsible for the application of this policy and the design, development, implementation, and maintenance of systems of internal controls focusing on the effectiveness of operations and the safeguarding of assets within their respective areas of responsibility.

  3. All levels of management shall be responsible for strengthening internal controls when weaknesses are detected.  Administrators should periodically review departmental procedures to ensure that the general principles of internal control are being followed.

 

  1. The chief financial officer shall be primarily responsible for internal control over financial reporting and compliance with applicable federal and state laws and regulations.  The chief financial officer shall be the source for information and assistance to management and others on this topic and will make resources available to any administrator to assist in administering this policy.

  2. The chief personnel or human resources officer shall be responsible for internal controls over employee recruitment, hiring, promotion, separation, job classification, employee rights, and salary administration.

  3. The chief financial officer shall be responsible for reviewing the adequacy of departmental and institutional internal controls and for reporting any weaknesses to the appropriate administrator and the School Board.

  4. All levels of internal control shall be subject to examination by external auditors who are required to report on the adequacy of internal controls over finance and compliance.

  5. Administrators shall be responsible for prompt corrective action on all internal control findings and recommendations made by internal and external auditors.  The audit process is completed only after administrators receive the audit results and take action to correct internal control weaknesses, improve systems, or demonstrate that management action is not warranted.

  6. Management has the responsibility to ensure that those who report to them have adequate knowledge, skills, and abilities to function within, and contribute to, an effective internal control environment.  This includes providing access to appropriate training on topics relevant to their job responsibilities.

 

GENERAL INTERNAL CONTROL PRINCIPLES

 

General internal control principles for each school and department are:

 

  1. Separation of incompatible duties

     

    1. Duties are separated so that one person's work routinely serves as a check on another's work.

       

    2. No one person has complete control over more than one key function or activity (e.g., authorizing, approving, certifying, disbursing, receiving, or reconciling).

     

  2. Authorization and approval

 

  1. Proposed transactions are authorized when proper and consistent with School Board policy.

  2. Transactions are approved by the person who has delegated approval authority.

 

  1. Custodial and security arrangements

 

  1. Responsibility for physical security or custody of School Board assets is separated from record keeping or accounting for those assets.

  2. Unauthorized access to School Board assets and restricted or confidential data is prevented.

 

  1. Timely and accurate review and reconciliation

 

  1. The accounting records and documents are examined by employees who have sufficient understanding of the School Board’s accounting and financial systems to verify that recorded transactions actually took place and were made in accordance with School Board policies and procedures.

  2. Accounting records and documentation are compared with accounting system reports and financial statements to verify their reasonableness, accuracy, and completeness.

 

These general internal control principles should be applied to all school and departmental operations, especially accounting records and reports; payroll; purchasing, receiving, and disbursement approval; equipment and supply inventories; cash receipts, disbursements, transfers, and investments; billing and accounts receivable; debt management; and access to buildings, equipment, software, and data.

 

All Orleans Parish School Board systems, processes, operations, functions, and activities shall be subject to evaluations of internal control systems.  The results of these evaluations provide information regarding the School Board’s overall system of control.

 

INFORMATION AND COMMUNICATION

 

Information shall be timely and communicated in a manner that enables people to carry out their responsibilities.

 

All employees shall receive a clear message from management that control responsibilities are to be taken seriously.  Failure to comply with established practices will subject individuals to disciplinary action or dismissal.

 

Employees should understand their own roles in the internal control system, as well as how individual activities relate to the work of others.  To this end, whenever a new program, grant, financial activity, department, etc. is set up, the chief financial officer shall provide notification to the appropriate parties of the responsibilities incumbent on them for good business practices and sound financial management, including reference to the principles within this policy.

 

Employees shall have a means of communicating significant information to management.

 

The School Board shall communicate effectively with external parties, such as federal and state governmental agencies, grantors, taxpayers and other constituencies.

 

INTERNAL CONTROL SYSTEM LIMITATIONS

 

Internal control is meant to keep the School Board focused on achieving its mission while avoiding surprises.  There is a balance between effective controls and mission accomplishment.  Costs associated with internal controls should not exceed their benefit, nor should controls be allowed to stifle mission effectiveness and timely action.  All levels of management shall assess the costs, benefits, and risks when designing controls to develop a positive control environment and compensate for the risks of non-compliance, loss of assets, or unreliable reporting while accomplishing the School Board’s mission.

 

Internal control can provide reasonable assurance, but no system of control can provide absolute assurance to the School Board and other users of financial information.

 

New policy:  September 17, 2020

 

 

Ref:    La. Rev. Stat. Ann. §§24:515, 24:523

Board minutes, 9-17-20

 

Orleans Parish School Board