Spring Independent School District
Internal Audit Work Program
AUDIT NAME: TransportationAUDIT PERIOD:
Program Based on Presumed or Anticipated Conditions
WP Ref / Date
GENERAL:
Transportation is a vital support service that requires sound management. Capital investments in bus fleets and annual expenditures required for maintenance and operation are substantial.
However, the goal of any school transportation operation is to safely transport students to and from school and other school related activities in a timely manner. Although numerous state regulations govern transportation services, districts have the flexibility of establishing procedures that can enhance operations such as setting bell schedules, designing efficient routes and establishing sound maintenance procedures.
Additionally, many factors affect the service provided to students, including bus replacement and maintenance programs, driver recruitment and training, driver and passenger safety, service evaluation, and purchasing procedures.
OBJECTIVES:
1. Comprehensive policies and procedures, practices, and internal controls have been established for transportation services and are adequate;
2. Ensure that all district vehicles are properly tracked, obtaining proper maintenance, insurance, etc;
3. Ensure that district vehicles taken home by employees have adequate justification and approval;
4. Ensure the process by which vehicles are disposed is adequate;
5. Ensure that driving records are properly obtained and evaluated on all drivers;
6. The District is in compliance with all applicable regulations;
7. Transportation staff have the proper credentials required to perform their duties;
8. District vehicles are accounted for and safeguarded;
9. District vehicles are adequately maintained and replaced according to District guidelines;
10. Equipment and supply inventory is monitored and accurately recorded;
11. Gasoline usage is effectively controlled and only authorized users access the facility;
12. Bus routes and extracurricular trips are scheduled to achieve efficiency;
13. Transportation measures are accurately reported to the state so the District can receive all revenue due;
14. The department is operating within budgetary constraints;
15. The parts operation for efficiency and effectiveness;
16. Test fuel inventory and control program;
17. The District is operating efficiently and effectively for actual time versus standard time for repairs.
18. The District is operating efficiently and controls are in place for work orders.
PLANNING (Planning Section):
1. Prepare an engagement memo to announce the audit.
2. Obtain an understanding of the auditee’s operations through research and interviews. Document the system of the area being audited, this includes all significant day-to-day operations and processes as it relates to contract administration; verify the accuracy of your understanding with auditee.
3. Perform a general overview of the internal control environment and establish the scope of the audit, document in the Transportation Walkthrough.
4. Ensure that management has considered potential fraudulent activities by inquiring with management about their knowledge of fraud opportunities within the department and the steps they have taken to minimize these opportunities.
5. Develop appropriate audit tests to provide assurance that management’s objectives are being met, and that fraudulent activities have not occurred. Document in audit work program.
INITIAL AUDIT PROCEDURES (Section A):
1. General
a. Obtain the following, where applicable:
i) Policies and Procedures (P&P)
ii) Organizational Charts
iii) Prior Audit Reports
iv) External Auditor Management Reports
v) Regulatory Examination Reports
vi) Related Information Regarding Laws and Regulations
vii) List of district vehicles – including year, make, model, VIN, vehicle tag number, purchase date and current mileage. Obtain one from Transportation and one from Fixed Assets
viii) List of personnel assigned or associated district vehicles
ix) List of district vehicles that are taken home – name and address
x) List of district vehicles purchased within the last two years
xi) List of district vehicles disposed of within the last two years
xii) List of district vehicles from each department (i.e. child nutrition, warehouse, police, etc..)
xiii) All accident reports for the past three years
xiv) List of all work orders for the testing period
b. Review all information above to ensure:
§ Compliance with all relevant policies and procedures;
§ Ensure that all relevant policies and procedures have been communicated to the appropriate personnel;
§ Proper segregation of duties exists (org chart + system doc);
§ Corrective action plans to address noted deficiencies in prior examination reports or by external auditors have been implemented;
§ Compliance with all relevant regulatory laws and guidelines.
INFORMATION UTILIZED (Section B):
1. Obtain a copy and list all forms utilized [where applicable]
a. Obtain copies of all forms used by the department/within the area of the audit.
b. Evaluate for adequacy and effectiveness.
c. Review forms used and practices to ensure that redundancies or inefficiencies do not exist.
2. Generated Reports [where applicable]
a. Obtain copies or samples of all reports generated for the vehicle usage, etc. and determine their use and distribution. Include system reports and manual reports if necessary. Ensure that the information presented in these reports is tested or analyzed at some point in the audit program.
AUDIT TESTING (Section C):
1. Vehicle Listing
a. Review current list of vehicles from Transportation and Fixed Assets Department.
b. Import all information into IDEA and compare list from Transportation Department to the Fixed Asset Department vehicle list.
c. Import all information into IDEA and compare the list from Transportation Department and Fixed Assets Department to information obtained from departments.
d. From the results listed in b and c, research the discrepancies and document.
2. Vehicle Test
a. Select a sample of vehicles from Transportation Department, and Dept lists, and testing the following:
i) Vehicle is recorded in Fixed Assets?
ii) Verify that the district has the title to this vehicle.
iii) Document this vehicle was located in the district.
iv) The vehicle is clearly marked as an SISD vehicle.
v) The license plate matches what is on file.
vi) Maintenance and inspections are performed timely.
vii) The numbers tagged on vehicles.
viii) The Vin # was recorded correctly.
ix)
b. Categorize the age of the buses as 1 to 5 years, 6 to 10 years, and over 10 years. Conclude on the percentage of the fleet over 10 years.
c. Physically inspect a sample of vehicles and document the condition to ensure they match to the fleet records.
d. Determine whether vehicles are adequately secured after business hours
i) Stored in a locked area
ii) Keys stored in a secured area within the building
iii) All vehicles accounted for prior to closing
e. Examine insurance records to ensure that all buses are covered. Note any discrepancies
f. All vehicles have the proper updated insurance card.
g. All vehicles have a fire extinguisher and first aid kit.
h. All vehicles have the required forms (i.e. accident report form, district map, fuel card, etc…)
3. Auction Vehicles
a. Document the process for auctioning vehicles.
b. Obtain a list of vehicles recently sent to auction. Randomly select a sample and ensure the titles have been transferred and the vehicles have been removed from Fixed Assets.
4. Approved Drivers Testing
a. Document the process for the Driver Training course (i.e. who pays for this?)
b. Randomly select a sample to ensure drivers on the approved drivers list have in fact passed this course and verify that proper checks of their driving record have been obtained and evaluated.
c. Ensure drivers passed and have the proper drug testing records.
5. Take Home Vehicles
a. From the information obtained in Step 1. Select a sample of drivers that take home their assigned vehicles and verify that this was properly charged to their W2.
b. Document how bus driver certifications and licenses are monitored.
c. Determine whether other employees in the transportation department or district (coaches, teachers, etc..) drive buses. If so, make sure they meet the same licensing requirements.
d. Randomly select a sample to ensure drivers on the approved drivers list have passed the course(s) and verify that proper checks of their driving record have been obtained and evaluated.
e. Ensure the following documents are available and current in their respective file:
iv) Criminal background
v) Valid commercials drivers license
vi) Texas Education Agency (TEA) school bus driver certification
vii) Annual physical
viii) Alcohol and drug test clearance
6. Vehicle Maintenance and Replacement
A. Document what type of bus retirement and replacement plan exists.
B. Physically inspect a sample of vehicles and document the criteria used to retire or replace vehicles. Compare the results to the replacement/retirement plan
C. Document what steps are taken when a vehicle is retired and how vehicles are disposed.
D. Inquire and document if there is a policy in place for preventive, routine, and emergency maintenance.
E. Inquire and document the system in place to document repairs.
F. Obtain and review schedules developed for vehicle maintenance.
G. Obtain and review logs maintained for vehicle maintenance and determine if work was performed as scheduled, maintenance was completed and evidenced by a signature, and supervisor inspection/approval was obtained.
H. Select a random sample of buses and ensure that routine maintenance was performed in accordance with the schedule.
I. Obtain a list of vehicles that are under warranty. Review to see if any of those warranty vehicles had maintenance work.
J. Determine if mechanics document on the work order opinions of operator abuse of the vehicles.
K. Prepare a report to identify vehicles which have had problems with repairs being done right the first time. The report should identify vehicles with repair dates within 3 months of each other at a minimum.
L. Prepare a table showing the department’s maintenance hours, vehicle mileage and fleet mix to assess whether mechanic staffing levels are adequate.
7. Equipment, Tools, and Supplies
A. Document the procedures for maintaining equipment and tools
B. Obtain a list of equipment, tools, and supplies
C. Ascertain whether periodic inventories are performed to confirm items on hand.
D. Review inventory documentation and determine reasonableness.
E. Document how supply levels are determined to ensure major parts are available when needed.
F. Document the system used to monitor stock levels.
G. Conduct a walk-through and inspect the parts storage facilities, and the transportation bays. Assess the following:
i) Security measures implemented to protect supplies and equipment.
ii) Liquids and other consumable items are properly labeled.
iii) Hazardous materials are properly labeled and stored.
iv) Tools and equipment are in safe working condition (no frayed cords, damaged shields, etc..)
H. From the list of supplies select a sample and verify the contents on the floor
I. Select a sample from the floor and trace them to the list.
J. Obtain a list of equipment replaced during 2011 to date. Review documentation and support to replace the asset.
K. From the equipment list, select the most frequently replaced model and reason for replacement.
L. Obtain a list of all parts carried by the Parts operation and determine how often the items on the list are physically verified.
M. Obtain listing of parts that have been unusable for any reason and document what was done with them.
N. Obtain a listing of regular parts needed but not on hand that had to be emergency ordered.
O. Obtain a listing or summary of parts returns that were made for parts orders.
P. Summarize total parts expense for fiscal 2011 to date and determine if all expenses were charged back to the users department.
Q. Determine if mechanics document on the work order opinions of operator abuse of equipment.
R. Prepare a report, sorted by operator name, number of repairs by user to identify possible equipment abusers.
S. Calculate the inventory turnover ratio for fiscal year 2011-2012 and 2012 through present.
8. Fuel Usage
A. Document how fuel is obtained. If an onsite storage facility is used, inquiry whether specific environmental regulations must be followed. If so, is the district in compliance?
B. Obtain a transaction listing from the fuel system.
C. Document how fuel usage is controlled.
D. Document “override” procedures.
E. From the fuel listing determine is any of the transactions were “override” transactions
F. Document the physical controls used at the pumps and ensure that only authorized users access the facility. Physically examine and document the fuel area.
G. Ascertain whether other entities are allowed to use the fuel. If so, document how cost-sharing is structured.
H. Measure and document the amount of gas in the storage tanks and compare to the inventory system.
I. Document how often tanks are measured and refilled. Review the fuel reports, note any illogical trends.
J. Select a sample of district vehicles and fuel receipts.
K. Review the receipts for gallons, dates, mileage and if the gallons to refill are reasonable.
L. Document who reconciles the fuel receipts to the statements.
9. Routing and Scheduling
A. Document how bus routes are scheduled
B. Compile a list of all routes showing the average ridership, ride times, and the number of miles driven per route.
C. Prepare a chart showing overtime worked by each position typed in hours and dollars. Analyze trends for the past 3 years and determine whether overtime is reasonably controlled.
D. Document the procedures for overtime.
10. Supplemental Transaction
A. Document procedures for scheduling and pricing extracurricular trips.
B. Document the process for scheduling, routing, and pricing the trips (especially for Medicaid reimbursements for special instruction students and reimbursements for career and technology trips).
C. Document procedures for assigning extra trips to bus drivers.
D. Document how these trips impact bus availability and bus driver availability for normal routes.
E. Select a sample of extracurricular trips taken within the current year and recalculate pricing according to the guidelines.
F. Compile the extracurricular mileage, ridership, costs and reimbursements for the last three years. Analyze any trends.
11. State Reporting and Funding
The transportation Department of TEA requires each school district to submit certain transportation reports annually. From these reports, TEA determines the district’s funding.