CVCS Transportation Audit - The Observer

Agreed Upon Procedures
System Test of
Transportation
December 2010
BAHGAT & LAURITO-BAHGAT, CPAs, P.C.
Providing The Tools For Financial Success!
16 West Main Street, Suite One, Fredonia, NY 14063 Tel: 716-673-1891 Fax: 716-672-3426 www: blbcpas.com

INTERNAL AUDIT
Phase II: System Test - Transportation
Agreed Upon Procedures
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Table of Contents
INTERNAL AUDIT
Phase II: System Test of Transportation
Independent Accountant’s Report on Applying
Agreed-upon Procedures 3
Agreed Upon Procedures and Results 4-13
Summary Recommendations 14-17
District Response 18-21
This report provides management with information about the condition of risks and internal controls at a specific point in time. Future changes
in environmental factors and actions by personnel will impact these risks and internal controls in ways that this report cannot anticipate.
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Independent Accountant’s Report on Applying Agreed-upon Procedures
To the Audit Committee of
Cassadaga Valley Central School District:
We have performed the procedures contained in the enclosure to this letter, which were agreed to
by the audit committee and management of the Cassadaga Valley Central School District, solely to assist you
with performing certain internal audit procedures of the Cassadaga Valley Central School District as of
December 31, 2010. We conducted our work in accordance with the U. S. generally accepted government
auditing standards, which incorporate financial audit and attestation standards established by the American
Institute of Certified Public Accountants. These standards also provide guidance when performing and
reporting the results of agreed-upon procedures.
You are responsible for the adequacy of these procedures to meet your objectives and we make no
representation in that respect. The procedures we agreed to perform consist of various tests of cash
disbursements. The enclosure contains the agreed-upon procedures and our results.
All procedures were performed as of December 31, 2010, unless otherwise noted. The procedures
and findings are described on pages 4-17:
We were not engaged to, and did not, conduct an audit, the objective of which would be the
expression of an opinion on the specified elements, accounts, or items. Accordingly, we do not express such
an opinion. Had we performed additional procedures, other matters might have come to our attention that
would have been reported to you.
This report is intended solely for the information and use of the management of the District, the
Board of Education and the Audit Committee of the Cassadaga Valley Central School District and is not
intended to be and should not be used by anyone other than these specified parties. However, this report is a
matter of public record and its distribution is not limited.
January 12, 2011
Bahgat & Laurito-Bahgat,
Certified Public Accountants, P.C.
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Agreed Upon Procedures
Procedure # 1
All checks paid to Jamestown Unit Parts (NAPA) for the fiscal year July 1, 2009 through June 30,
2010 and for the period of July 1, 2010 through November 30, 2010 were tested to determine whether only
materials and supplies appropriate to the District’s vehicles were purchased. Additionally, all checks paid to
Brookline Machine Co. were tested for the same time periods. We also inquired as to the procedures for
purchasing materials and supplies at the transportation department. The part numbers listed on the invoices were
checked to the corresponding part number on the vendor’s website, to determine what type of vehicle the part is
used for, then checked to the work orders to determine if the part was used in the maintenance of a District
vehicle and additionally checked to the inventory listings to determine if the part was still in inventory if not found
on a work order. The District bid various material and supplies for the fiscal year 2010-2011. Checks paid during
the 2010-2011 fiscal year were also tested to ensure that District was purchasing the materials and supplies that
were bid from the approved vendors at the accepted bid prices. A total of 35 checks were tested.
Summary of Results
Purchasing procedures: One mechanic is responsible for ordering most of the materials and supplies for the
transportation department. All mechanics and the Supervisor sign for the receipt of materials and supplies
purchased. All invoices are then approved by the Supervisor and forwarded to the business office for payment.
The same mechanic who performs the ordering of the materials and supplies enters all the materials and supplies
into Transfinder, the software program that tracks parts inventory, and prepares all of the work orders. All parts
are to be entered into Transfinder as inventory, then removed from inventory, when the part is used in the
maintenance of a District vehicle or piece of equipment, through the creation of a work order. The part numbers
in Transfinder correspond to the vendor part numbers.
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Agreed Upon Procedures
Procedure # 1 (continued)
Summary of Results (continued)
o
o
The District paid invoice number 50950 with check number 17238 in the amount of
$29.40 for part number MS94324 from Jamestown Unit Parts (NAPA Auto Parts) with
check number 17238 dated 8/20/09. The vendor on the invoice was an employee with
their home address. Next to the vendor name was written ”/C.V.C.S.” Per the NAPA online
website, the item purchased was a manifold gasket set, used in the repair of
exhaust systems, for a Geo, Pontiac or Suzuki. The District does not own any of these
vehicles. This part was not found in the Transfinder inventory system as a part and no
work order was found using this part in the maintenance of a District vehicle.
The District paid invoice #52528 from Jamestown Unit Parts (NAPA Auto Parts) dated
8/25/09 with check number 17391. The District purchased brake pads in the amount of
$18.99, part number TS7596. This part was not found in the Transfinder inventory
system as a part and no work order was found using this part in the maintenance of a
District vehicle.
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Agreed Upon Procedures
Procedure # 1 (continued)
Summary of Results (continued)
o Invoice number 89440 from Jamestown Unit Parts (NAPA Auto Parts) dated 5/18/2010 paid
with check number 18834 indicated the District purchased a timing belt, part number
420L100 in the amount of $28.39. Additionally, the District paid $8.95 in UPS shipping costs.
Typically no amount is paid for shipping and the parts are delivered to the bus garage by
NAPA. This part was included in the May month end inventory listing dated 6/1/10. This part
is still listed on the inventory listing dated 1/31/11. No work order was found for this part and
no other purchases were made for this part number. Additionally, we requested the District
check the store room to determine if this part was physically at the District. The District could
not locate this part.
o Invoice number 96846 from Jamestown Unit Parts (NAPA Auto Parts) dated 7/7/2010 paid
with check number 19144 indicated the District purchased 5 filter kits, part number 17590 in
the amount of $14.49 each for a total amount of $72.45. There were none of these filter kits
included on the opening inventory listing for July. Four work orders were found using this part
number. Therefore there should have been 1 filter kit on the Transfinder inventory listing for
the month ended July 31, 2010. None were found on the listing.
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Agreed Upon Procedures
Procedure # 1 (continued)
Summary of Results (continued)
oCheck number 20031 dated 12/8/10, indicates the District reduced its payment to Jamestown
Unit Parts (NAPA) for credit memo number 112121 in the amount of $85.95 for a battery, part
number 7578. according to the NAPA on-line catalog, this battery is used for an “Express Van” or
“Savana Van”. The vendor name on the invoice was an employee, with their home address as the
vendor address. Jamestown Unit Parts contacted the District and informed the District that this
credit was not for the District and should be repaid with the next payment to Jamestown Unit Parts.
Jamestown Unit Parts also faxed the District the original invoice showing that it was originally billed
to the employee. The District reviewed their records as well and determined that the District had
not paid for this battery.
oThe District purchases mufflers, tailpipes, overaxle pipes, and hardware to install these parts
from Brookline Machine Co. These parts are not inventoried or shown on work orders as they are
bought in lengths that can be cut to fit the size of the bus as needed.
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Agreed Upon Procedures
Procedure # 1 (continued)
Summary of Results (continued)
oNo work orders were prepared for the month of August 2010. In July 2010, 36 work orders
were prepared. In July of 2009, 31 work orders were prepared and in August 2009, 17 work
orders were prepared.
oIt was also found that the transportation department employees receive parts that are used for
personal purposes at the bus garage. On December 21, 2010, during the course of our
fieldwork, it was observed that tires intended for an employee’s personal use, were delivered to
the bus garage and received by that employee. These tires were paid for in cash by the
employee. The type of tire purchased was P235/75/R15. It was confirmed through inquiry of
another employee present at the time of the delivery that these tires were for personal use.
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Agreed Upon Procedures
Procedure # 2
Effective 9/25/10 the Supervisor increased various bus run times. One bus run was
increased in duration for the day by 40 minutes (bus #151). We selected 2 runs to determine if the
actual bus run times agreed to this change. Bus #151 was selected, whose drive time was
increased and one bus run (#162) where the drive time was not increased. We compared the green
log sheets, where the bus driver notes the starting and ending bus run times, to the driver/attendant
time listing prepared by the Supervisor. The listing prepared by the Supervisor is used to determine
pay for the bus drivers and the attendants. The comparison was made for the time period of
October 4, 2010 through December 17, 2010.
Summary of Results
Bus #151’s time for the route was increased by 40 minutes (this increase increased the hours paid
for both a driver and an attendant). We found that over the 46 full days tested, on average, the
days runs were completed in 45 minutes less than the scheduled time. Our findings do not support
the additional 40 minutes added by the Supervisor.
Bus #162’s time for the route was not increased. We found that over the 46 full days tested, on
average, the days runs were completed in 2 minutes less than the scheduled time.
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Agreed Upon Procedures
Procedure # 3
We rode a full day run on a surprise basis on two of the District school buses (Bus #151
and Bus #162). We noted starting and ending bus run times. We observed the pre and post check
of the bus. We observed the fueling of the buses.
Summary of Results
oBus drivers receive pay for a 15 minute pre-trip inspection of the bus prior to their AM run. Bus
drivers also receive pay for a 15 minutes post-trip inspection after the PM run, and an additional 15
minutes for cleaning. Per NYS Department of Transportation guidelines, a pre and post check is
only required once daily if the same driver is using the same bus for the entire course of a day.
oIt was observed that for the AM run, the bus driver for Bus #151 arrived 8 minutes before the bus
run was to begin the AM run; the AM run was completed 8 minutes after the scheduled completion
time, this included fueling the bus after the run was completed. The driver arrived 3 minutes prior
to the PM run and the run was completed 1 hour and 7 minutes prior to the scheduled run
completion time, due to one of the students not riding the bus home. A pre-trip inspection was
made of the bus. The driver left immediately upon completing the PM run, no cleaning of the bus
was performed. Therefore the total hour worked for the day were 2 hours and 36 minutes shorter
than the actual amount paid for wages for the driver and 1 hour and 29 minutes shorter for the
attendant.
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Agreed Upon Procedures
Procedure # 3 (continued)
Summary of Results (continued)
oBus #151 transports 5 children. One to the high school, 2 two the GA Home and 2 to Ashville
BOCES. The child that was dropped off at the high school does not ride this bus home. A separate
trip, just for this student, is made in a separate bus.
oBus #162’s driver arrived 10 minutes prior to the AM run. A pre-trip inspection was made of the
bus. The AM run was completed 10 minutes prior to the scheduled run completion time and
included a rinsing off of the outside of the bus. The driver for bus #162 also drives the pre-K run in
the late morning. In addition to the 15 minutes for pre-trip, post trip and cleaning for the AM & PM
runs, an additional 15 minutes is paid for the pre-K post-trip and another 15 minutes is paid for
cleaning. The driver arrived 6 minutes prior to the pre-K run and the pre-K run was completed 16
minutes after the scheduled run completion time. No cleaning of the bus was performed. The driver
arrived when the PM run was to begin and was completed 8 minutes after the scheduled run
completion time, including fueling and rinsing of the outside of the bus. Therefore the total hour
worked for the day was 1 hour and 9 minutes shorter than the actual amount paid for wages for the
driver and 14 minutes shorter for the attendant. There is no attendant for the pre-K run.
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Agreed Upon Procedures
Procedure # 3 (continued)
Summary of Results (continued)
oBus #162 was driven on 12/22/10 with a known exhaust leak. A few minutes into the run, the
smell of fumes was so powerful that the run was made with the windows open (approximately 2
hours) in below freezing temperatures.
oIn listening to conversation prior to riding the bus, it was noted that an attendant sometimes moves
a bus on behalf of a driver in the morning. Upon inquiry it was found that this attendant does not
possess the certification required to drive a bus.
oAs the bus drivers and attendants arrived for their runs it was observed that not all were wearing
their safety vests. While this is not a requirement as per employees’ contract, this was noted as a
safety matter.
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Agreed Upon Procedures
Procedure # 4
We analyzed fuel usage for gas vehicles by vehicle number for the period of June 2009
through November 2010 by comparing monthly average miles per gallon to determine if there were
inconsistencies in usage.
Summary of Results
oVehicle 99 is used to fuel equipment with no odometer. The key for this vehicle number will
dispense gas or diesel and is used by both transportation and buildings and grounds.
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Recommendations
The following are recommendations that will enhance the existing internal control system of the
transportation department:
Payment of invoice where Cassadaga Valley Central School is not the vendor
The District should ensure that the vendor on all invoices paid is the Cassadaga Valley Central
School District before a cash disbursement is made. Any invoices where there is a handwritten
change to the vendor should be scrutinized to ensure that the purchase is a valid purchase of the
District. Additionally the vendor should be contacted to request a change in the vendor name if it is
determined that the purchase is valid.
Entry of parts into the Transfinder software program
The District should ensure that all parts purchased are entered into Transfinder as inventory as
they are received. Additionally, as parts are used in the repair and maintenance of a vehicle, a
work order should be created showing all parts that are used. This will ensure that parts listed on
the inventory report are accurate. Parts and work orders should also be entered into Transfinder
for equipment that is maintained and repaired by the transportation department. It is further
recommended that the transportation department write on every invoice what vehicle or piece of
equipment the purchase has been made for, or noted that that the purchase was made to replenish
inventory.
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Recommendations
Part numbers
When the District purchases a part, the part number entered into Transfinder is the same part
number the vendor uses. The District switched vendors in the 09-10 for some of its parts. When
purchasing parts in 09-10 the District changed the part numbers already in Transfinder to
correspond with the new vendor’s part numbers. This changed the part number on completed
work orders for the 08-09 year to the new part number. We recommend that the District add new
part numbers instead of changing the existing part number to ensure the proper tracking of its.
Inventory
The District should verify its perpetual inventory report with regular spot-checks of the actual
inventory as well as with full physical counts of inventory performed at least annually.
Purchase and receipt of personal items during working hours
The transportation department staff purchase and receive personal items from District vendors
during their working hours. We recommend that the District prohibit this practice as it could lead
to the District paying for non-District purchases.
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Recommendations
Time added to bus runs
Time allotted to complete the bus run for Bus #151 was increased after 9/24/10. We recommend
that the District reduce the amount of time allotted to complete the run back to the original time
allotted as it was found that the additional time was not necessary to complete the run. Additionally
we recommend that the District investigate why the change was made as no changes were found
to be made to the run to justify the increased time.
Buses sent on runs with maintenance problems
On December 22, 2010 a Bus #162 was used for its normal run when the mechanics were aware
that there was an exhaust leak. We recommend that the District use a sub bus when a
maintenance problem exists.
Driving of buses
To ensure the safety of all transportation employees and anyone else at the bus garage, we
recommend that the District ensure that only properly licensed individuals start, back out of the bus
garage or drive the school buses.
Safety vests
To ensure the safety of all transportation employees, we recommend that the District ensure that all
employees are required to wear their safety vests in and around the bus garage.
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Recommendations
Monitoring of fuel usage
The District uses GasBoy software to track the usage of fuel. We recommend that the an individual
other than the Supervisor review this report on a monthly basis and investigate any discrepancies.
We also recommend that all equipment be given a vehicle number to assist in the analysis of the
report as numerous pieces of equipment shared the same vehicle number “99”.
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District Response
Management Response to System Test of Transportation
The District would first like to express its appreciation for the professional and courteous manner in which
your staff conducted its audit responsibilities.
The District’s Board of Education and Administration are committed to ensuring that the District’s
operations are conducted with the highest level of integrity and that the interests of the District’s taxpayers
are properly protected. The District notes that it either has addressed or will in the near future address each
of the recommendations included in your report. This underscores the commitment of the Board and the
Administration to safeguard taxpayer dollars and to ensure cost-effective District programs and operations.
Payment of invoice where Cassadaga Valley Central School is not the vendor
The Business Administrator is meeting with the Claims Auditor, A/P Clerk and Inventory Clerk
to review the results of the audit. It will be stressed that all invoices must be double checked to
assure that no employee is listed as a vendor. In addition, no handwritten changes will be
allowed when changes are made to the original vendor on an invoice. The only time an invoice is
reimbursed by the District when an employee is listed as a vendor should be through a claim
form for reimbursement. We will also make sure that if there is a difference in a vendor name,
the vendor will be contacted, the purchase will be questioned and the billing company will be
contacted.
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District Response
Entry of parts into the Transfinder software program
Effective immediately, all parts will be entered into the Transfinder system as inventory by the
inventory clerk. Any parts used in the repair of Transportation Department vehicles and
Maintenance Department vehicles must have a work order entered into the Transfinder system by
the mechanic that completed the repair. All mechanics now have access to the work order system
and should be entering their own work orders. All packing slips received by the Transportation
Department must have the vehicle number or description written on the receipt before it is given to
the Business Office for payment. The A/P Clerk and Claims Auditor will make sure this
documentation is in place.
Part Numbers
The District will make sure that vendor part numbers remain consistent and the inventory clerk
that enters this data into the Transfinder system will be made aware of the importance of keeping
the numbers consistent.
Inventory
The District is arranging to have quarterly spot checks of inventory along with a full inventory
performed over the summer months. This inventory will be checked by the inventory clerk.
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District Response
Purchase and receipt of personal items during working hours
The practice of purchasing and receiving personal items from District vendors during working
hours will be prohibited and employees will be informed that this is not an allowable practice.
Time added to bus runs
The District has already adjusted the time for Bus #151. An investigation has been completed and
as a result, we are in the process of having all bus runs timed and verified in order to ensure that
there is an accurate basis for payment to the bus drivers.
Buses sent on runs with maintenance problems
The issue of bus #162 being sent out on December 22, 2010, when there is a known maintenance
problem will be discussed with Transportation staff. We will ensure that this circumstance does
not recur and that replacement buses be used as appropriate any time that there is a maintenance
issue with the regular bus assigned to the run.
Driving of buses
All transportation department staff will receive a written directive that only those drivers with
CDL licenses are allowed to move any District bus at any time, including on District property.
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District Response
Safety vests
The District will remind Transportation staff of the importance of wearing safety vests while
moving around the bus garage at any time of the day. This is for the safety of our drivers and
staff members and it is of utmost importance to the District.
Monitoring of fuel usage
The claims auditor will be assigned the duty of reviewing the fuel usage report on a monthly
basis and investigating any discrepancies. The assignment of specific numbers for all vehicles
including maintenance department vehicles will be completed for those vehicles currently using
the “99” key in order to allow the District to track the actual fuel use by each vehicle and
department. In addition, video surveillance cameras will be installed in various locations in and
around the bus garage area to allow the District to monitor gasoline usage, in a further effort to
ensure that fuel is used for District purposes only, and that its use can be properly tracked.
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