Seattle School District No.

1

Profile
General
Code: 03Seattle-AC13-SA13
Name: Seattle School District No. 1
Group: Central King County
Type: 03-School District
Location: King
Scope: Accountability, Financial, SA
Lead: Heidi Wiley
Manager: Anastassia Efanova

Issues

ISS.18 - AC_ML: SeattleSD_AC13_Supplemental payments_Principals
Prepared By: AB1, 6/4/2014
Reviewed By: JWG, 6/13/2014
Type: Accountability
Category: Payroll/Personnel
Issue
DRAFT - As of 6/4//2014 (on SharePoint for further review and approval)
The District does not have sufficient procedures in place to make sure that only
authorized supplemental compensation is paid to School Principals and Assistant
Principals.
The District employees 191 employees who acted in the positions of Principal or Assistant
Seattle School District No. 1
Reporting Level(s): Management Letter
Unused
Dollars at Risk:
Questioned Costs:
Principal during school year 2013 and received $19.4 million in compensation. Of the
total 191 employees in these two job functions, 104 received supplemental pay for a total
of $183,095. This includes cell phone allowance of $46,000, certified administrative
compensation of $116,205, and national standard and K8 certification pay in the amount
of $20,390.
Certified administrative compensation may be determined by the employees hourly rate
and the number of additional hours worked, or based on a stipend amount under the
purview of a collective bargaining agreement. During our audit we reviewed certified
administration compensation and noted that $16,645 out of $116,205 was not earned. The
Human Resource department is responsible for processing supplemental compensation
pay and assuring that it is authorized, approved and supported by appropriate
documentation. We noted that the procedures that the department has currently in place
are not sufficient to make ensure that supplemental compensation is paid appropriately.

We recommend the District:
Implement procedures sufficient to assure that supplemental compensation paid
is for authorized activities and in proper amounts.
Provide training to Human Resource department employees on preparing and
processing documentation for supplemental compensation.



NOTES


ISS.6 - AC_V: Controls over HR systems
Prepared By: AB1, 6/4/2014 Issue
Seattle School District No. 1
Reviewed By: JWG, 6/13/2014
Type: Verbal Recommendation
Category: Payroll/Personnel
Reporting Level(s):
Unused
Dollars at Risk:
Questioned Costs:

Based on our review the approval of salary/grade level is not sufficiently supported by
budget records of how increases will be funded. We noted special compensation
arrangements for exempt employees are not documented in the Master Data file and do
not pass through the normal authorization and budget approval process.

NOTES


ISS.12 - AC_ML: Cost Allocation between Capital Projects fund and General fund
Prepared By: HCW, 5/30/2014
Reviewed By: JWG, 6/18/2014
Type: Accountability
Category: Payroll/Personnel
Reporting Level(s): Management Letter
Unused
Dollars at Risk:
Questioned Costs:
Issue
DRAFT - As of 5/30/2014 (on SharePoint for further review and approval)
The District does not have sufficient documentation to support allocating the
salaries of eligible employees between the General Fund and the Capital
Projects Fund.

The District charged approximately $8.3 million in salaries and
benefits to the Capital Projects Fund during the audit period. The
District can charge employee salaries and direct expenditures to
that fund if the employees are hired or assigned to planning or
construction management of capital projects and technology
projects to improve business including training and support to
students and teachers. The fund can also be charged to support
academics including opening new buildings to meet enrollment
growth, and improvements to science and computer classrooms,
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Special Education or other specialized classrooms and skill
centers. The District may split salaries of employees between the
General Fund and the Capital Projects Fund based on the
percentage of time worked in each category.

During the current year audit we followed up on prior year
recommendations for payroll charged to the Capital Projects Fund.

We found the District does not have sufficient documentation to
support splitting the salaries of eligible employees between the
General Fund and the Capital Projects Fund. Allocations are based
on estimates instead of actual charges. Individual departments
calculate an estimated workload of split-funded employees to be
charged to the Capital Project fund during the annual budget
process. The Departments communicate the percent allocated to
the budget office but do not keep documentation to justify the
workload on capital projects.

The District does not keep track of the actual payroll charges for
split-funded employees. During the year payroll costs are charged
to the Capital Projects fund. At year end the District reallocates
part of the costs to the General fund using an estimated workload
percentage.
We note that although the District went through a significant
amount of turnover in the last year that it remains committed to
improve accounting for capital expenditures in accordance with the
Schools Accounting Manual.

We recommend the District:
Allocate actual split salaries and benefits from the Capital
Projects fund to the General fund monthly rather than once
a year.
Keep track of the actual payroll costs of split-funded
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employees charged to the capital projects.
Maintain documentation for capital projects workload of
employees who split their salaries between funds.



NOTES
We recommend the District:
Allocate actual split salaries and benefits from the Capital Projects fund to the General fund monthly rather than once a
year.
Keep track of the actual payroll costs of split-funded employees charged to the capital projects.
Maintain documentation for capital projects workload of employees who split their salaries between funds.


ISS.13 - AC_E: Transportation Allocation Reporting
Prepared By: AB1, 6/4/2014
Reviewed By: JWG, 6/18/2014
Type: Accountability
Category: Miscellaneous
Reporting Level(s): Exit Item
Unused
Dollars at Risk:
Questioned Costs:
Issue
Transportation Allocation Reporting

Under new transportation reporting requirements the District submits ridership
count information to the state three times per year. We reviewed the data
reported for the three count periods to determine whether accurate information
was submitted. Based on our review we found that the District over/under
claimed ridership for two out of three periods. Cumulative Errors of over/under
reporting resulted in a net over reporting of 108 students in the Student
Transportation Allocation Reporting System (STARS).

We recommend the District
To strengthen internal controls to ensure information submitted to OSPI
is accurate and supported
To review student transportation allocation data for accuracy and
completeness prior to its submission to the state
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NOTES


ISS.15 - AC_E: Facility Rental Delinquent Acct Receivable
Prepared By: AB1, 6/4/2014
Reviewed By: JWG, 6/13/2014
Type: Accountability
Category: Billings/Receivables
Reporting Level(s): Exit Item
Unused
Dollars at Risk:
Questioned Costs:
Issue
Facility Rentals
The Facility Rentals office cannot demonstrate effective monitoring of delinquent
accounts receivable as required by District policy. Based on a review of billable
events dated September 2012 through August 2013, we noted delinquent invoices
dated from September 2012 were sent to collections in November 2013. We
identified a balance of approximately $114,020.32 in delinquent accounts as of
April 1, 2014. As of the date of our audit, April 2014, invoices totaling
approximately $20,000 of the $114,000 delinquent account balance were sent to
collections.

We recommend the District:
To ensure Facility Rentals Department and Central Accounting work in
partnership to monitor delinquent accounts and coordinate activities for
timely reporting of account receivable balances.
To adopt a policy for write off of accounts delinquent over one year
old
To ensure that organizations with delinquent account balances
eliminate delinquency before renting to them again.


NOTES
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ISS.16 - AC_E: Fleet Management. The District's does not adequately monitor vehicle assignment, usage, fuel cards,
purchases, and inventory procedures
Prepared By: TN, 4/29/2014
Reviewed By: JWG, 6/18/2014
Type: Accountability
Category: Safeguarding of Assets/Property
Reporting Level(s): Exit Item
Unused
Dollars at Risk:
Questioned Costs:
Issue
The District's does not have adequate procedures to ensure effective
and efficient management of its fleet.

The District has 298 vehicles in its fleet. These vehicles are used for deliveries,
maintenance, general transportation, environmental services, and by buildings
and grounds staff, among other uses. We reviewed the District's procedures for
vehicle assignment and use, fuel card use, vehicle purchases and fleet inventory.
Related to these areas, we found:

The department responsible for fleet management activities, Facility Operations,
does not adequately monitor vehicle assignment and usage. Required forms are
missing or not properly filled out all for vehicles and drivers. As a result, Fleet
Data isn't up-to-date or accurate enough to be relied on.

We found the District's vehicle inventory procedures aren't adequate to ensure
that the District can locate vehicles and equipment on the timely manner. We also
noted that the District does not keep adequate records to show as evidence that
a physical inventory of vehicles was completed.

We also examined fuel card purchases and noted the District does not provide
sufficient oversight to ensure employees are following fuel card policies and
procedures. We noted that not all departments are charged for their fuel
expenditures. Department managers don not approve and submit fuel card
invoices to Accounts Payable on the timely manner. We noted instances where
department managers do not monitor and do not reconcile fuel card expenditures
for reasonableness. I n addition Facilities Operations Department does not have
sufficient system in place to maintain records of use of fuel cards. We noted that
Fuel Mileage logs were not consistently submitted and those that were submitted
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were not kept in organized manner.

We recommend the district:
To develop and implement district-wide fleet management policies and
procedures
To improve current system of keeping track of vehicle assignments to
ensure timely collection of vehicle use information
To develop and follow adequate fuel card usage policies in procedures to
insure no misuse takes place and that all of the departments are charged
for their fuel expenditures
To improve its inventory procedures to allow for more timely detection of
missing vehicles and equipment and to require keeping physical inventory
records
To ensure that all leased vehicles are added to its assets tracking
database.


NOTES


ISS.19 - AC_V: Reconciliation of Athletic Facility Net Collections
Prepared By: AB1, 6/11/2014
Reviewed By: JWG, 6/13/2014
Type: Verbal Recommendation
Category:
Reporting Level(s):
Issue
Forty-seven (47) of Seattles public schools adjoin Parks land or facilities. The
Seattle School District (SSD) and the City of Seattle Dept of Parks and Recreation
(DPR) have cooperated in planning and jointly using these separately owned
facilities and grounds for the benefit of students and community members.
Revenue collected by DPR for use of the District's facilities is reported and paid to
SSD quarterly. The City DPR now provides an upload of transactions by complex
and by day for each quarter to support the fee collection. I n exchange the District
pays the Parks Dept a percentage of revenue deducted from the gross revenue
collected for scheduling services provided by Parks. Under the new agreement the
expense paid to the City for its scheduling service has increased from the prior
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Unused
Dollars at Risk:
Questioned Costs:
agreement of $2,500 per quarter or $10,000 per year to 9% of gross revenue.
We noted the total checks disbursed by DPR did not reconcile to accounting
support of all events scheduled by DPR by location and by quarter. The data was
uploaded from the City of Seattle database of bookings and utility fees. We also
noted the deduction of fees was not evident in the material supplied by Parks. We
verified the charges of $2,500 by quarter is still being used as the revised
contract has not been signed. We explained the importance of the reconciliation
to Kathy J ohnson and subsequent to our inquiries she obtained a revenue
summary (booking fees & utility fees totaled by quarter for 2014. The variance of
34,600 may be due to timing issues as we noted disbursements from DPR were
not provided quarterly per the contract terms.
We recommend the District request appropriate data from the City of Seattle and
perform a reconciliation of Athletic Facility net collections to cash deposits to
ensure fair and equitable use of District facilities per the terms of the J oint Use
Agreement.

NOTES


ISS.17 - ML_SeattleSD_ACC13_OvertimeExtraTimeFringeBenefits
Prepared By: AB1, 6/4/2014
Reviewed By: JWG, 6/13/2014
Type: Accountability
Category: Payroll/Personnel
Reporting Level(s): Management Letter
Unused
Issue
DRAFT - As of 6/4//2014 (on SharePoint for further review and approval)

The District does not have sufficient controls in place to ensure that
overtime and extra time is properly authorized and the fringe benefit for
personal use of vehicles is accurately imputed.

The District employs 10 payroll analysts to review and process payroll of $475
million a year for 10,000 employees. The payroll department is responsible for
processing overtime, pay under supplemental contracts or extra time, and
imputing fringe benefit compensation for personal use of the Districts vehicles.
The District anticipates that most errors in recording and authorizing overtime
and extra time pay will be detected at the departmental level by immediate
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Dollars at Risk:
Questioned Costs:
supervisors when approving timesheets. The District does not have policies or
procedures in place for paying overtime or extra time to exempt employees. In
addition, the District does not have sufficient controls to ensure that the fringe
benefit for personal use of District owned vehicles is imputed correctly in the
employees wages.


Overtime
The District does not have a policy or procedure in place for paying overtime to
exempt employees. The District does not seek guidance fromthe Compensation
Analyst when assigning a pay rate for additional duties performed outside of an
employees regular job function.

The District relies on the discretion of the employees immediate supervisor to
determine when overtime pay is due to exempt employees on a case by case
basis. During our audit we noted 14 exempt level employees who received
overtime pay of 1.5 times their regular rate for a total of 1,659 hours. In 11
instances we noted that overtime was paid for immediate duties and was not
properly authorized. In three instances we noted employees were paid overtime
for performing duties outside their immediate job function. These employees
were paid one and a half times their regular pay rate instead of the applicable rate
for the job function. Also, we noted no documentation showing that overtime was
appropriate or necessary.


Supplemental Contracts
The District does not require written pre-authorization and justification for extra
time fromsupervisors. We noted in-sufficient documentation of extra duties
and/or the duration of additional assignments.

Extra time or supplemental pay is awarded to non-represented employees on a
case by case basis when an employee works outside the pay cycle or calendar
days per the job function. We noted nine non represented employees were paid
extra time for a combined total of 509 hours for duties performed outside the
assigned work days. The payments were based on verbal agreements made at the
departmental level.

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Fringe Benefits
Personal use of a district vehicle includes any activity that is not business related,
including commuting. If the employee does not have a vehicle log and business
versus personal use cannot be substantiated, the IRS will assume the vehicle is
used entirely for personal use. Any use of a district vehicle that cannot be
substantiated as business use is included in income. During the audit period we
noted a total of 14 employees were required to report imputed wages based on a
commuter benefit on their FormW-2. The imputed wages on the commuter
benefit was undervalued in 11 of the 14 instances. In three instances the imputed
wages were undervalued by a total of $2,414 due to the use of an incorrect
valuation method. The imputed wages based on eight commuter benefit amounts
were incorrect due to insufficient records of vehicle usage. In these cases
Facility Operations did not keep records or respond to inquiries of total days
commuted by each of the eight employees. Based on the insufficient
documentation we were unable to determine the total of imputed wages under
reported to the IRS.


We recommend the District:

Establish a district wide policy for overtime payments to non-
represented exempt employees and a policy for special assignments
and/or dual assignments.
Require written pre-authorization and justification of extra time that
would include a reason for an additional assignment, pay scale and
duration of duties.
Require supervisors to consult with the Human Resource
Compensation Analyst for appropriate pay scales when allowing
employees to undertake additional job functions.
Provide training to Supervisors responsible for authorizing and
approving timesheets.
Performrandompayroll audits at the department level to bolster
oversight and monitoring of overtime payments.
Provide training to Payroll Analysts of IRS regulations (Publication
15B) and adopt a district wide policy for personal use of District
vehicles.
Establish a district wide policy for documentation and retention of
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commuter activity data for reporting purposes to the IRS.

NOTES