Union School District

R1

Trustees should review and be knowledgeable of Education Code §35168 for K-12 and Education Code §81600 for community colleges to ensure complete implementation. The recommendation has been implemented with Union School District staff reporting at the December 8, 2008 meeting on asset inventory practices which included discussion on the findings and recommendations of the grand jury.

R2

All Santa Clara county school board trustees and superintendents/chancellors should be required to review and understand Education Code §35168 and §81600 and BAM requirements for inventory control. For K-12 districts, the COE should take the lead in providing comprehensive training on inventory control, in conjunction with the release of the new inventory tracing module within Quintessential Software Systems spearheaded by the COE. The recommendation has been implemented. The Union School District Board of Trustees discussed and approved the updated inventory policies at their December 8, 2008 and January 12, 2009 meetings. The updated policies are Board Policy 3270, Sale and Disposal of Books, Equipment and Supplies, and Board Policy 3440, Inventories, which are based on Education Code §35168. Beginning with the 2002-2003 school year Union School District has used the firm of California Property Records System to perform physical inventories every other year. The inventory records have been available on hard copy and disk. A year ago the fixed asset inventory was migrated to a dedicated web-based asset management system which has additional features for tracking and report writing. of 5 Inventory Practices

R3

All Boards of Trustees should require a presentation on the results of their districts' biennial inventory, including total value, variances resulting from reconciliation between past and current inventories and a proposed plan to resolve discrepancies. The recommendation will be completely implemented when the 2008-09 audit is finished and presented to the Board in January 2010. Under the Management's Discussion and Analysis section, staff will include in the fixed assets section under Financial Highlights the information as noted above.

R4

All K-12 school districts should reconcile the most current, full inventory with prior inventories, to identify missing items and potentiallosses/thefts. The results will enable the districts to implement safeguards to prevent future losses. Union School District has reconciled the most current inventory with prior inventories.

R5

A) The Boards of Trustees for the districts listed in Finding A should conduct a full inventory or improve their existing inventory listing. Not App/icable B) Board Policies/Administrative Regulations should be implemented by the Boards of Trustees in all districts listed in Finding 5B, assigning inventory control responsibilities and training to the superintendent, business manager, or appropriate designee. All districts should ensure that their policies remain current and in compliance. CSBA provides a good template for Board Policies in the area Inventory Practices of Inventory control conforming to Education Code §35168. These districts should provide training for staff responsible for inventory. Not Applicable C) The Boards of Trustees for districts listed in Finding 5C should fully implement the tracking requirements for equipment with current market value above $500 for K 12. These districts should provide training for staff responsible for inventory. Not Applicable D) The Boards of Trustees for districts listed in Finding 5D should conduct inventory at least biennially and track all parameters as specified in Education Code §35168. These districts should provide training for staff responsible for inventory. Not Applicable

R7

To strengthen internal controls and ensure fiscal accountability, purchases made by the K-8 and K-12 Superintendents should be approved by the Board of Trustees prior to purchase. Inthe event an immediate purchase is required, post-approval by the Board would ensure no conflicts of interest or abuses occur. Expenditures should be presented separately from the Board's consent calendar to ensure proper scrutiny. Credit card statements and a listing of disbursements should be provided to the Board for approval. This recommendation regarding pre-approval for purchases made by the superintendent will not be implemented since it is not warranted. Union School District has excellent internal controls in place. The business department is charged with ensuring that all expenditures including payroll, benefits, supplies, travel, services, equipment and construction, etc. follow stringent internal controls. The CFO has a separate contract with the Board. On ayearly basis, the external auditors test all areas of controls, examine in detail selected expenditures and review the credit card expenditures. The auditors report directly to the Board on the financial condition ofthe District and on any concerns they have with business procedures. The results ofthe annual audits indicate that the District's internal control processes are sufficiently rigorous to ensure against internal and external abuses. The recommendation regarding credit card statements will be partially implemented. Union School District has sufficient internal controls on the use ofits 1credit card which has an account limit of $5,900. One District office administrative assistant is custodian of the card and it is used judiciously for purchases that are difficult to make by purchase order. The credit card is used by all the departments; it is not the Superintendent's credit card. All charges must have an itemized bill/invoice with a required form which details information on the charge and 2 authorizing signatures. The CFO reviews all purchases and back-up documents for compliance and appropriateness. Beginning in September 2009, the Superintendent will review credit card purchases with the Board president on a monthly basis. Additionally, the Board of Trustees approves the credit card payments and individual purchase order payments on the warrant list each month.