Internal Controls

  •  triangle

    Risk

    Risk is anything that could negatively impact the school district's ability to meet its operational objectives.

    Risk Questions You Should Ask

    For each school/departmental objective, ask the following:

    • What could go wrong?
    • How could we fail?
    • What must go right for us to succeed?
    • Where are we most vulnerable?
    • Where is our greatest exposure?
    • Do we have "liquid assets or assets which have alternative uses?
    • How could someone steal from the department/school?
    • How can someone disrupt our operations?
    • What types of transactions in our area provide the most risk? 

     What Are Some High Risk Areas?

    • Petty Cash (gifts, bookstore, athletic fundraising, )
    • Cash Receipts
    • Payments for Services
    • Travel Expenditures
    • Payroll (rates, termination, changes)
    • Scholarships
    • Confidential Information
    • Grants (meeting terms)
    • Equipment on location and delivered but not properly received
    • Software Licensing

    Fraud

    Fraud is a common risk that must not be ignored. Some examples of fraudulent behavior are:

    • Stealing money or merchandise
    • Taking kickback or bribes from suppliers
    • Falsifying internal reports
    • Claiming overtime when it is not due
    • Not recording vacation and sick leave
    • Cheating on travel expenses
    • Paying fictitious vendors
    • Calming workers compensation for an injury that did not occur
    • Giving friends or relatives unauthorized use of equipment or services

    What is internal Control?

    Internal control is a process designed to provide reasonable assurance regarding the achievement of objectives in the following areas:

    • Effective and efficient operations
    • Safeguard assets
    • Compliance with applicable laws, rules and regulations
    • Reliable financial reporting

    Think of internal control as a map that helps you get to your destination. It is the foundation for assuring that RPS goals and objective are met with the minimum of pitfalls and surprises. Poor internal control creates opportunity for fraud.

    Examples of Poor Internal Controls

    • Lack of proper authorization
    • Inadequate documentation
    • No separation of duties for authorization, custody, record keeping
    • No independent checks on performance
    • Lack of clear lines of authority
    • No written policies and procedures
    • Inadequate training program for employees