Equipment: Instruction $2,880,925 $53,340 $33,653 $2,900,612 Administration $290,757 $58,823 - $349,580 Transportation $6,178,658 $509,963 $281,477 $6,407,144 Maintenance $1,141,727 $254,868 $8,686 $1,387,909 Total Equipment $10,492,067 $876,994 $323,816 $11,045,245 Less: Accumulated Depreciation $6,549,719 $589,189 $320,379 $6,818,529 Asset Balance: $3,942,348 $287,805 $3,437 $4,226,716
Source: RCPS Comprehensive Annual Financial Report year ended June 30, 2006.
Although the division does not have a policy that establishes responsibility for safeguarding division assets or procedures for identifying how its assets will be tracked,
an informal procedure is published by the fiscal services division. The procedure states that the director of fiscal services is responsible for managing the inventory of capital assets with a per unit price of more than $5,000 through a fixed asset inventory system. The procedure further states that department directors and supervisors are responsible for managing the inventory of equipment items assigned to their departments using a per unit cost of more than $500 for specific types of equipment.
Formal polices are essential to the protective custody of school property. Appropriate systems assign responsibility for custody and proper use of assets. These policies generally include a definition of fixed assets and locally defined assets. Locally defined assets are those that cost less than $5,000, which the division tracks for accountability. The policies also include requirements for annual inventories of fixed assets and designate responsibility for the safekeeping of fixed assets, and designed to meet the needs of individual school divisions.
RECOMMENDATION 4-10:
Adopt a Board policy and procedures that formally define the value of fixed assets that should be capitalized and assign staff responsibility for safeguarding fixed assets.
By adopting policies that identify employee roles and responsibilities, and listing the procedures for recording, tracking, disposing and reporting fixed assets will increase the division’s management of its investment in fixed assets. The policies will also help increase the accuracy of the fixed asset information contained in the comprehensive annual financial report.
FISCAL IMPACT
It is estimated that it will take between two and three weeks to implement this recommendation.
FINDING
The division has not performed a physical inventory since implementing a new inventory system. At the time the new inventory system was implemented, a consulting firm, Resource Cost Inc., conducted a thorough inventory of the division's fixed assets. The consulting firm inventoried all division fixed asset items, placed a bar code on the items and assigned a value for each item. The previous inventory system was used by the consulting firm when conducting the inventory.
Since the implementation of the new system, the division’s inventory clerk continues to add items to the inventory that were missed when they come to her attention, normally this happens when transfer requests are received to move items between locations and the item is not on the inventory. In addition, items are also routinely found that are on the inventory that should not be.
Since RCPS does not have a policy that requires an annual fixed asset inventory to be conducted, no one is formally assigned the task of managing an annual physical inventory of the division’s fixed assets. Although a comprehensive annual physical
inventory is not conducted, periodic spot inventories are performed. To help ensure that the division’s investment in fixed assets is accounted for in an inventory system and that items are being properly cared for, an annual physical inventory is essential.
RECOMMENDATION 4-11:
Conduct an annual physical inventory of the division’s fixed assets.
By ensuring an annual physical inventory is conducted, the division will better manage its investment in fixed assets. Items that have been lost, stolen, or misplaced will be identified so that corrective action can be taken. Items not added when acquired will be identified and added to the inventory so that they can be properly accounted for and the accuracy of the annual comprehensive financial report will be increased.
FISCAL IMPACT
It appears that this recommendation can be accomplished with existing resources.
FINDING
The division does not have a process to ensure that all fixed assets acquired are added to the fixed asset inventory in a timely manner. Although an informal procedure titled “equipment purchase form” provides guidance to departments and schools on when to complete an inventory form when purchasing items costing more than $500, there is little assurance that forms are always completed when items are purchased.
When departments or schools prepare purchase orders for fixed asset items an equipment purchase form is to be completed that identifies the items being purchased. A copy of the equipment purchase form is to be sent to the warehouse to inform the warehouse staff that items will be delivered to the warehouse that need to be added to the inventory. Once the items are received at the warehouse the items are bar coded, information is entered into the fixed assets system and the items delivered to the department or school that ordered the item. The procedure also provides guidance as to when donated items are to be added to the inventory and how to record the transfer of items between locations.
Formal procedures are not in place that ensures that the warehouse staff is provided information so that all fixed asset items acquired by the division are bar coded and added to the fixed asset inventory in a timely manner. A process is not in place that requires a routine review of purchase orders that include fixed asset purchases to ensure an equipment purchase form has been completed. There is no process to ensure that fixed asset items acquired using one of the division’s P-Cards or from student activity funds are added to the fixed asset inventory. In addition, the informal procedure providing guidance for adding donated items to the inventory is not emphasized and items donated by PTAs and other organizations are not added to the inventory timely. It was also noted that many times items such as computers are delivered directly to schools and departments and not added to the inventory timely.
To ensure that all items are properly accounted for and controlled they must be added to a division’s fixed asset inventory in a timely manner. When processes are not in place
that ensures items are added to an inventory system timely, there is no assurance that the items are ever accounted for. Items acquired and not timely added to an inventory are susceptible to be misused and lost.
RECOMMENDATION 4-12:
Develop processes to ensure that fixed asset items are added to the fixed asset system.
Developing processes that ensure fixed assets are added to the division’s inventory system in a timely manner will provide better control of items acquired. When items are not added to the inventory, there is no tracking of the items and no one is formally made responsible for the items.
FISCAL IMPACT
It is estimated that it will take 20 to 30 hours to develop procedures to implement this recommendation.
4.6 Purchasing
An effective purchasing program provides divisions with quality materials, supplies, services, and equipment in a timely manner at the lowest price. Purchasing includes those activities associated with the acquisition of supplies, materials, services and equipment. The purchasing process also includes activities involved in the procurement and evaluation of services.
Purchasing policies and operating procedures help ensure a division complies with state laws and local Board requirements while performing purchasing functions in an efficient and timely manner. Polices should clearly establish purchasing authority, what methods are required for each type of purchase, provisions for conflicts of interest, and penalties for violating purchasing laws and policies. Purchasing procedures implement policies by documenting the steps to be taken by user divisions and purchasing staff when goods or services are procured. Staff in purchasing functions should be well trained in their duties and thoroughly understand their responsibilities. The purchasing department issues both purchase orders and bids for the procurement of materials, supplies, and services. Exhibit 4-12 summarizes the provisions of the RCPS purchasing policy.
EXHIBIT 4-12
RCPS PURCHASING PROCEDURES