WDE Audit Response to DOA Audit

WDE Audit Response to DOA Audit

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November 5, 2003 Richard Q. Cummings Department of Audit Public Funds Division Herschler Building Cheyenne, WY 82002 Dear Mr. Cummings: The Wyoming Department of Education (WDE) has reviewed the report of the Department of Audit (DOA) of its examination of the Wyoming Funding Model in relation with the Wyoming Department of Education for the period 7/1/01-6/30/02. I am in agreement with the following responses to your report prepared by my staff. • Chapter 1: Average Daily Membership (ADM) o To determine if WDE ensures that the information submitted by the districts concerning foundation reimbursement is accurate. § Because the WDE relies on the districts’ information, there appears to be minimal controls in place to ensure that the average daily membership numbers submitted by the district are correct. § Recommendation: Review policies and procedures to determine if anything can be done to improve controls. § Response: The department believes that in situations such as this, it must rely on the information initially submitted by the district. In the case of ADM numbers submitted by the districts, a “reasonable” check for each district is performed. This check compares the ADM to the beginning enrollment. In most cases, the ADM should not be higher than the enrollment. Districts are contacted in those situations where any items seem out of the ordinary, including those where the ADM seems too low compared to ...

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November 5, 2003 Richard Q. Cummings Department of Audit Public Funds Division Herschler Building Cheyenne, WY 82002 Dear Mr. Cummings: The Wyoming Department of Education (WDE) has reviewed the report of the Department of Audit (DOA) of its exa mination of the Wyoming Funding Model in relation with the Wyoming Department of Education for the period 7/1/016/30/02. I am in agreement with the following responses to your report prepared by my staff. ·Chapter 1: Average Daily Membership (ADM) To determine if WDE ensures that the information submitted by the districts o concerning foundation reimbursement is accurate. §Because the WDE relies on the districts’ information, there appears to be minimal controls in place to ensure that the average daily membership numbers submitted by the district are correct. §Recommendation: Review policies and procedures to determine if anything can be done to improve controls. §Response: The department believes that in situations such as this, it must rely on the information initially submitted by the district. In the case of ADM numbers submitted by the districts, a “reasonable” check for each district is performed. This check compares the ADM to the beginning enrollment. In most cases, the ADM should not be higher than the enrollment. Districts are contacted in those situations where any items seem out of the ordinary, including those where the ADM seems too low compared to enrollment. One means of improving control in this area would be to require the districts to submit supporting attendance records with the ADM report. This would be an onerous burden on both the districts and the department. Another method to improve control in this area would be for the department to go to the district office and review supporting documentation to verify that the ADM figures submitted were correct. The department does not have the necessary audit staff to perform such a function. It has been confirmed with the DOA that their audit program for the school district audits calls for verification of all
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/02 supporting documentation regarding numbers submitted to the department as part of required school foundation reports. The WDE believes with this DOA audit procedure and the “reasonableness” check performed, controls are adequate to assure accurate reporting by the districts of foundation information. ·Chapter 2: Transportation To determine if WDE ensures that the revenues from replaced buses, which were o originally reimbursed by the State of Wyoming, are used to offset the costs of new buses. §There are no controls in place to prevent an overpayment of reimbursement for replaced buses. §Recommendation: Review policies and procedures to obtain additional information from school districts concerning the purchase of reimbursed buses. §the point when a district is planning on replacing a bus, aResponse: At partially completed WDE621 is sent to the WDE. The WDE621 is reviewed and, if all criteria are met for vehicle replacement, the WDE621 is approved and sent back to the district. The district reviews a price sheet, containing prices of applicable replacement buses, and the bus is ordered. Once the bus has been delivered to the district, the district completes the WDE621 and sends it back to the WDE. The completed WDE621 contains information on both the new vehicle and the vehicle being replaced. A vehicle invoice and a production order from a certified dealer are required to be sent along with the WDE621. Listed on the invoice are the trade in value of the vehicle that was replaced and the price of the new vehicle, which is adjusted to reflect the trade in value. The adjusted price of the new vehicle is the amount listed for reimbursement on the WDE103. The WDE621, invoice, and production order are reviewed by WDE staff and not approved and accepted unless all information is complete and included. In addition, a process has been developed to crosscheck information reported on the WDE621 with information reported on the WDE103. Based on the above procedures, we feel the WDE does have policies and procedures in place to ensure revenue from replaced buses is used to offset the cost of new buses. To determine if WDE ensures that buses are being replaced based on the o Replacement Schedule.
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/02 §The WDE is ensuring that buses are replaced based on the replacement schedule set forth in the WDE Rules and Regulations Chapter 20, Section 9(f). However, some of the WDE 621’s,Vehicle Form—Report of Disposal or Delivery of a School Bus, were not signed which could lead to misunderstandings as to if the disposal was approved by WDE or not. §Recommendation: Ensure that the WDE 621 forms that meet disposal requirements are signed when approved by WDE. §having documentation on which forms were unsigned forResponse: Not approval, we cannot verify that the DOA finding is correct. The WDE will continue to ensure that approval documents are correctly signed and maintained in the future. To determine if WDE ensures that the districts are only being reimbursed for o percentage of student use. §There are no controls in place to ensure that school districts are accurately reporting percentage of student use and thus being reimbursed correctly. §Recommendation: Due to the difficulty expressed by personnel at WDE tracking this particular requirement, the Department might want to consider modifying the rules and regulations. §to WDE Rules and Regulations, Chapter 20,Response: According Section 7(b)(i), (ii), and (iii), a district shall declare at the time of purchase whether the vehicle is intended to be used as a dual purpose vehicle and the percentage of anticipated student use. The vehicle purchase price is then reimbursed based on that percentage. The district is then required to record mileage on the vehicle for each year, until the end of the purchase price reimbursement period, when the district is to submit the recorded yearly mileage report, showing the percentage use for student travel and for staff travel. At that time, the WDE shall adjust the payment to reflect the actual use of the vehicle over that time period. The Condition section of the DOA finding suggests that the WDE does not track the percentage of student use and relies strictly on district business managers for information – however, according to WDE Rules and Regulations, each district must maintain their own mileage and then must submit this amount at the end of the reimbursement period to the WDE. In addition, based on the time of adoption of the set of rules and regulations governing this area, no vehicles have yet reached the end of their respective purchase price reimbursement period, and therefore reconciliation has not been necessary at this point. This is true also for findings based on the audit period of 7/1/01 – 6/30/02.
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/02As the nearest reimbursement period approaches, the WDE will evaluate whether the rules and regulations need to be modified to better account for correct student mileage reimbursement on multi purpose vehicles. To determine if WDE ensures a district’s fleet size does not increase above the o existing fleet size as of February 10, 1999, except as necessary to provide safe and efficient transportation in accordance with Wyoming Department of Education Rules and Regulations. §The WDE has procedures in place to ensure that a district’s fleet size does not increase above the set freeze point as of February 10, 1999, except as necessary to provide safe and efficient transportation. However, increases are based on judgmental decisions. §Recommendation: Create a standard set of requirements that need to be met for a district to receive WDE approval to increase fleet size in order to eliminate an opinionated decision. §Recommendation: Create policies and procedures to prevent an increase in fleet size without the proper documentation submitted. §Response: Because of the special conditions that surround most of the requests for increases in fleet size, we feel it would be impractical to rely on a standard set of requirements dictating when increases in fleet size can occur. Due to the nature and the number of variations in why districts request increases to fleet size, it is unrealistic that a standard set of requirements be developed. WDE Rules and Regulations, Chapter 20, Section 9(e) states that a district may request to add a vehicle and inc rease their fleet size by addressing a letter to the WDE stating the rationale behind their request. Multiple routing standards must be addressed in the letter and the WDE may conduct an onsite review if necessary. Once the letter is received by the WDE, a qualified individual reviews the request, obtains additional information, if necessary, by communicating with the district or by an onsite review, and approves or disapproves the request and the district is then notified of the decision. The WDE believes there are policies and procedures in place to prevent an increase in fleet size without proper documentation being submitted. The DOA suggests in the ‘Effect Section’ of subobjective #4 that there were increases in district fleet size that were not approved. We disagree with this statement. All increases in fleet size are documented by approval letters and a completed WDE621.
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/03 To determine if WDE ensures reimbursements on vehicles exceeding state o minimum standards for vehicle specifications and equipment are approved. §WDE is ensuring that new vehicles meet minimum standards. However, there is a lack of controls to prevent a payment on a disapproved option. §a standard set of requirements that would needRecommendation: Create to be met for a district to receive WDE approval for options that exceed state minimum standards in order to eliminate an opinionated decision. §disagree that a standard set of requirements be developedResponse: We that would need to be met in order for a district to receive WDE approval for options exceeding state minimum standards. Because of the special conditions that surround most of the request for options that exceed state minimum standards, we feel it would be impractical to develop a standard set of requirements covering all reasons why a certain option may be requested. Due to the unique nature and the number of variations in why districts request options exceeding state minimum standards, it is unrealistic that standard requirements be developed. On the WDE621, the district is required to list all options that exceed minimum standards and state the reason why it is being requested. A qualified individual reviews the request, obtains additional information, if necessary, by communicating with the district, and determines whether the option will add to the safe and efficient transportation of students. The request for the additional option is then approved or disapproved and the district is then notified of the decision. §Recommendation: Policies and Procedures need to be developed to ensure communication between the approval component and the reimbursement component at WDE. §WDE is in the process of implementing a procedure toResponse: The ensure improved communication between the approval and the reimbursement components. A crosscheck between the reimbursement component and the approval component is currently being put in place as well, providing better controls to make the payment of options more consistent. To determine if WDE ensures that the information submitted by the districts o concerning foundation reimbursement is accurate. §When WDE reconciles all forms, any changes made, based on business managers’ directions, are not verified by WDE. The lack of verification leads to potential misstatements on WDE forms. §procedures to ensure that the fuel taxRecommendation: Develop reimbursement can be traced to the WDE 601.
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/02§Response: After considering the recommendation that procedures be developed to ensure the fuel tax reimbursement can be traced to the WDE 601, we feel the only way to accomplish this would be to add an unnecessary accounting code to the WDE601. Because transportation requirements require a reduction, which accounts for the fuel tax reimbursement – a revenue, on the WDE103, there is no significant benefit to adding an accounting code to the WDE601. We fe el this would be contrary to the goal set by the WDE and the School Finance Data Advisory Committee to reduce redundancy. It is the opinion of the WDE that the benefits of this action would not substantially improve the process and therefore is not warranted. §procedures leading to better tracking of formsRecommendation: Develop submitted by districts. The forms should be accurately dated so that when reconciliation is performed, the correct form is used. §Response: We feel the tracking of forms process used by the WDE allows for accurate dating and does ensure that the correct form is used. As forms are submitted to the data collection mailbox, they are stored in a ‘read only’ directory as submitted, by district number and school number. They are also entered in the database, via a data tracking system. In addition, a duplicate email notification containing the as submitted district form, notifies the specific processor of the form, providing another safeguard that forms are numbered and dated in order of their arrival in the ‘read only’ directory. Notes are made regarding the arrival of a revision in the tracking system. Records are maintained and archived by the Data Unit of the WDE. §Recommendation: Create policies and procedures that will ensure consistency in how districts complete WDE 601 and WDE 103. §Response: We feel the WDE does have policies and procedures in place that work to ensure how districts complete WDE 601 and WDE103. The WDE maintains and uses policies, procedures, rules, regulations, instructions, training, and continuous communication with the district business managers, all with the goal of achieving consistency in how districts complete the WDE 601 and WDE 103, which, we feel, effectively achieves this objective. Obtaining consistency and understanding is continually evaluated and any changes to forms, instructions, rules and regulations, and training are performed with this in mind. §Recommendation: Develop procedures to verify that changes to forms, based on business manage rs’ directions, are justified with documentation.
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/02 §address the recommendation that procedures be developedResponse: To to verify changes to forms, the WDE will begin requiring that any changes to the original foundation report submitted must be documented by way of a revised report sent to the business manager, which will include a certification letter to be sent back to the WDE stating his/her agreement with the changes reflected in the revised form. Supporting documentation can then be verified to the revised report at the district level when the DOA performs their district audit. ·Chapter 3: Special Education To determine if WDE ensures that the information sub mitted by the districts o concerning foundation reimbursement is accurate. §When WDE reconciles all forms, any changes that are made, based on business managers’ direction, are not verified by WDE. This leads to potential misstatements on WDE forms. §Recommendation: Develop procedures leading to better tracking of forms submitted by districts. The forms should be accurately dated so that when reconciliation is performed, the correct form is used. §Response: The tracking of forms process used by the WDE allows for accurate dating and does ensure that the correct form is used. As forms are submitted to the data collection mailbox, they are stored in a ‘read only’ directory as submitted, by district number and school number. They are also entered in the database, via a data tracking system. In addition, a duplicate e mail notification containing the ‘as submitted’ district form, notifies the specific processor of the form, providing another safeguard that forms are numbered and dated in order of their arrival in the ‘read only’ directory. Notes are made regarding the arrival of a revision in the tracking system. Records are maintained and archived by the Data Unit of the WDE. §Recommendation: Develop procedures to verify that changes to forms, based on business managers’ directions, are justified with documentation. §address the recommendation that procedures be developedResponse: To to verify changes to forms, the WDE will begin requiring that any changes to the original foundation report submitted must be documented by way of a revised report sent to the business manager, which will include a certification letter to be sent back to the WDE stating his/her agreement with the changes reflected in the revised form. Supporting documentation can then be verified to the revised report at the district level when the DOA performs their district audit.
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/02 To determine if WDE maintains records concerning special education o expenditures other than WDE form 401. §WDE does not maintain records concerning special education expenditures other than comparing the WDE 401 and the WDE 100 for the school districts. §Recommendation: Create policies and procedures for the WDE601, in order for reconciliation to be conducted, to verify the WDE410, WDE 100, and WDE601 match and are correct. §considering the above recommendation, we feel the onlyResponse: After way to accomplish this would be to add additional accounting codes to the WDE school district accounting manual that would be of no significant benefit to the WDE or to the school districts. We feel this would be contrary to the goal set by the WDE and the School Finance Data Advisory Committee to reduce redundancy in the accounting manua l. It is the opinion of the WDE that the benefits of this action would not substantially improve the process and thus is not warranted. To determine if WDE verifies that only those individuals qualified to be in special o education are being classified in the special education funding. §The WDE does verify that individuals are classified correctly. However, there is a lack of communication between the classification section and the funding section. This leads to the possibility of districts being reimbursed incorrectly when there is a change in special education classification. §procedures for the special education andRecommendation: Develop foundation units of the WDE to communicate when changes in special education counts occur. §Response: The WDE will investigate methods to develop communication and ascertain whether a benefit to the foundation program can be attained through enhanced communication. §Recommendation: Develop procedures to verify that when special education students are incorrectly classified, school districts take necessary actions to remove the students from services that are 100% reimbursable for special education. §Response: We do not agree with the DOA recommendation. In theEffectsection of the finding, the DOA states that if a student is incorrectly classified as a special education student, the fulltime equivalent (FTE) of the instructor, teaching that student, would be reduced, and should therefore not be 100% reimbursed. The WDE
Wyoming Department of Education Response to Fin al Report Audit Period: 7/1/01 – 6/30/02 disagrees with this statement and finding in that reimbursement for special education staff is based on instructor certification, not on the composition of the students in a special education program. W.S. 2113321 (b)(ii) asserts that the adjustment for special education shall be equal to 100% of the amount actually expended by the district during the previous school year for special education programs and services. Additionally, the certification of special education instructors can be verified at the WDE, providing a crosscheck of instructor certification, if needed for reimbursement purposes. ·Chapter 4: AtRisk To identify the process the Wyoming Department of Education uses to determine o what students are atrisk? §WDE determines what students are atrisk from district submitted information. §policies and procedures to determine ifRecommendation: Review anything can be done to improve controls. §response is similar to earlier responses regarding theResponse: This department’s reliance upon data submitted by the districts. The supporting documentation is located at the districtlevel. To verify this data prior to acceptance and entry into the system would require that either the district submit supporting documentation with the reports or that the department require staff to visit district offices to verify the supporting documentation onsite. Both alternatives are unacceptable as explained earlier. The DOA plans to verify supporting documentation for the amounts reported by the districts on school foundation required reports when they conduct their school district audits. The department believes that this is sufficient internal control to verify data submitted by the districts. ·Chapter 5: Teacher Seniority To determine if WDE ensures that a teacher reported by the districts is a certified o professional. §For the time period reviewed, WDE did not ensure that the teachers reported on the WDE 602 by the districts were certified teachers. However, WDE has taken steps to correct this problem. §Recommendation: Continue to collect and to check for teacher certification. §WDE will continue to collect and check for teacherResponse: The certification as recommended.
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/02 To determine if WDE ensures that teacher’s seniority reported by the district is o accurate. §Because the WDE relies on the districts information, there appears to be minimal controls in place to ensure teachers’ years of experience submitted by the districts are correct. §Recommendation: Review policies and procedures to determine if anything can be done to improve controls. §Response: The WDE believes adequate controls are in place already as the experience for a teacher for a given year is the sum of the experience reported in the prior year, and the assignments reported for the prior year. Thus, there must be consistency between that sum and the experience reported for the current year. Only the first year of teacher experience reporting lacked a mechanism for verifying the reported data. To determine if WDE accurately calculates the teacher seniority adjustment. o §WDE calculates the teacher seniority adjustment to the level of accuracy found in the data provided. However, there is a lack of procedural documentation. The state statutes fail to describe the intent of the legislature, which leaves some procedures in question. Without any documentation to support procedures it would be possible to lose the legislative intent related to the teacher seniority adjustment. §Create and implement department rules andRecommendations : regulations that can be viewed by the public so that legislative intent is clear. §WDE’s Data Technology Unit will create and implementResponse: The departmental rules and regulations governing the teacher seniority adjustment as recommended. ·Chapter 7: Local Portion of Revenues To determine if WDE ensures that the information submitted by the districts o concerning general fund revenues is accurate. §There is a weakness in the WDE controls to ensure the information submitted by the districts concerning general fund revenues is accurate. Our tests identified an overpayment in one district and an underpayment in another district. §Try whenever possible ton error can occur. Recommendation: Huma avoid these types of errors. §Response: The WDE employs several systematic procedures in reviewing local resources. The most notable example is explained below;
Wyoming Department of Education Response to Final Report Audit Period: 7/1/01 – 6/30/02Approximately 86.5% of all local resources considered by the School Foundation Program are in the form of anticipated 25 and 6 mil levy receipts. These revenues are assigned to each district based strictly upon certified assessed valuation. The WDE does not simply accept the amounts reported by the districts, but rather verifies each of these amounts reported. If a district reports any amount other that that which is calculated, based upon the formula in statute, the WDE, under authority of W.S. 2113307, changes the amount reported by the district to the correct amount. In FY03, the combination of these revenues alone accounted for $346.2 million of $400.4 total local revenue. Additional processes are used to review less significant local resource items: The WDE determines, through independent means, the excess cash reserve and operating balance of each school district. The primary basis used for this calculation is district general fund balance or net assets. The amounts used are taken directly from the school district audited financial statements. The WDE routinely uses the county treasurers’ reports as corroborating evidence of actual revenue receipts for the tax shortfall or excess computation. In general, revenues reported by school districts agree with the county treasurer’s reports. However, the county treasurer’s reports are not always error free. When a discrepancy does appear, the school district report may, in fact, be correct. When these cases present themselves, the WDE does not automatically accept the county treasurer’s report over that of the school district, but provides the school district an opportunity to explain the difference. After researching the DOA findings for Subobjective #1, the WDE has determined that the specific effect cited was the result of two (2) isolated errors, nonpervasive in nature. We agree that in any system human error will occur and the WDE will continue to seek procedural improvements that reduce the opportunity for error. §procedures to maintain consistency inRecommendation: Establish collecting foundation overpayments or remitting foundation underpayments. §Response: The explanation below is offered to clarify the example presented by the Department of Audit in its second recommendation: