1570  INTERNAL CONTROLS

As a condition of receiving State aid, the school district shall establish specific policies and procedures on internal controls designed to provide management with reasonable assurance that the district’s goals and objectives will be met and that meet the requirements of N.J.A.C.   6A:23A-6.5 through N.J.A.C. 6A:23A-6.13.  Internal controls shall promote operational efficiency and effectiveness, provide reliable financial information, safeguard assets and records, encourage adherence to prescribed policies, and comply with law and regulation.

The specific internal controls contained in N.J.A.C. 6A:23A-6 shall be established together with other internal controls contained in N.J.A.C. 6A and other law and regulations, required by professional standards and as deemed necessary and appropriate by district management.  The district may submit a written request to the Commissioner to approve an alternative system, approach, or process for implementing the internal controls required in N.J.C.A. 6A:23A-6.  The application must include documented evidence that includes, but is not limited to, an independent, third-party written assessment that the alternative system, approach or process will achieve the same safeguards, efficiency, and other purposes as the specified internal control requirement(s).

The school district shall evaluate business processes annually and allocate available resources appropriately in an effort to establish a strong control environment pursuant to the requirements of N.J.A.C. 6A:23A-6.5.  In accordance with the provisions of N.J.A.C. 6A:23A-6.5(b), the School Business Administrator/Board Secretary shall identify processes that, when performed by the same individuals, are a violation of sound segregation of duties and shall segregate the duties of all such processes among Business office staff based on available district resources, assessed vulnerability, and associated cost-benefit.  The district shall include in the Comprehensive Annual Financial Report (CAFR) a detailed organizational chart for the Central office that tie to the district’s position control logs, including but not limited to, the business, human resources, and information management functions.

The school district shall establish Standard Operating Procedures (SOPs) for each task or function of the business operations of the district by December 31, 2009.  The SOP Manual shall include sections on each routine task or function as outlined in N.J.A.C. 6A:23A-6.6(b) and 6A:23A-6.6(c).  A standard operating procedure shall be established that ensures office supplies are ordered in appropriate quantities, maintained in appropriate storage facilities, and monitored to keep track of inventory.

School districts with budgets in excess of $25,000,000 or with more than three hundred employees shall maintain an Enterprise Resource Planning (ERP) System which integrates all data and processes of the school district into a unified system.  The ERP system shall use multiple components of computer software and hardware and a unified database to store data for the various system modules to achieve the integration.  Districts required to maintain an ERP System that do not have an ERP System in place on July 1, 2008 shall fully implement an ERP System by the 2010-2011 school year and maintain both the existing system(s) and run a beta test ERP System during the 2009-2010 school year.  Whenever considering financial systems or the automation of other services or functions, the Superintendent of Schools or School Business Administrator/Board Secretary shall notify the Executive County Superintendent in writing to see if opportunities for a shared service system exist.  Access controls shall be established for key elements of financial systems to ensure that a single person does not have the ability to make system edits that would violate segregation of duties controls.

The school district shall maintain an accurate, complete, and up-to-date automated position control roster to track the actual number and category of employees and the detailed information for each.  Districts are required to maintain a position control roster by December 31, 2009.  The position control roster shall share a common database and be integrated with the district's payroll system, agree to the account codes in the budget software, and ensure that the data within the position control roster system includes, at a minimum, the required information as required in N.J.A.C. 6A:23A-6.8(a)3.

N.J.A.C. 6A:23A-6.4; 6A:23A-6.5; 6A:23A-6.6;
   6A:23A-6.7; 6A:23A-6.8

Date Adopted:  October 20, 2008
Date Revised:  March 22, 2010