City’s Controller’s School District audit includes findings of potential theft and abuse of student TransPass program.
Butkovitz uncovers School District potentially losing millions on Student TransPassesCity’s Controller’s School District audit includes findings of potential theft and abuse of student TransPass program.
City Controller Alan Butkovitz today released the FY2011 School District of Philadelphia Report on Internal Control and Compliance that found the student TransPass program was at risk for theft and abuse, resulting in the potential loss of millions annually.
The School District’s $33 million TransPass program provides free transportation to Philadelphia public and non-public students by issuing weekly TransPasses to eligible students. School personnel are required to account for every pass distributed and provide a summary with the number of TransPasses received, distributed, and returned for the month.
As part of the Controller’s audit, a testing of TransPass activity for one selected week at four high schools revealed 575 of the 4,944, or 12 percent, distributed TransPasses could not be accounted for. The unaccounted TransPasses for that one week were estimated at $9,545. If a loss of $9,545 for one week is indicative of the unaccounted TransPass amount for the rest of the school year, for all schools, then this could result in a loss of millions.
“The District needs to account for every dollar spent on student TransPasses and eliminate any risk of theft and abuse,” said Butkovitz. “It must enforce all policies and procedures and properly account for all TransPasses when they are distributed every week.”
At all four schools, the vast majority of TransPass distribution listings were not signed by the employees responsible for giving out the passes and checking the students’ names off the list. Personnel at two of the four schools stated they didn’t count the actual number of TransPasses distributed but rather calculated it based on the difference between the number of passes received and the number on hand to be returned.
“The School District cannot afford to guess how many passes were actually distributed by counting only what’s left at the end of the week,” said Butkovitz. “They’re leaving the door wide open for theft and abuse, at the expense of Philadelphia’s taxpayers.”
“As we first discovered in our 2008 School District special audit of TransPasses, failing to provide adequate accountability is an ongoing matter that needs to be corrected immediately,” said Butkovitz.
“It would be inconceivable if the School District continued to ignore our finding and recommendation and not implement and monitor on a weekly basis the Student TransPass Program.”
In addition to reviewing TransPasses, the Controller’s audit found a number of deficiencies relating to student activity funds at selected schools. While the District had developed a School Fund Manual to provide specific responsibilities and detailed procedures of student activity funds, non-compliance with the Manual was a common occurrence at the selected schools. Some of these findings included the following:
- School personnel for one school’s store were unable to provide the financial records required by the Manual to safeguard against misappropriation of cash: the store manager stated he left cash overnight in the register drawer instead of remitting daily as required by the District’s Manual.
- 12 of 20 schools reported negative balances for at least one activity ranging from ($18) to ($16,549), meaning expenditures were made even though there were insufficient funds.
- At 12 schools, there were 205 checks totaling $18,756 which had been outstanding for over one year. Some checks were more than 12 years old.
“Principals and school operations officers need to take steps to comply with guidance in the District’s Manual to strengthen controls and prevent misuse of funds,” said Butkovitz.
Other findings from the Controller’s School District audit included:
- Inadequate artwork inventory records and procedures,
- Unclaimed termination compensation should be escheated,
- Integrity of payroll passwords compromised, and
- Deficient controls over student dental care expenditures.
To view a copy of the Controller’s audit, please visit the Controller’s website.