School District Local Funds FY24

Performance Audits – Fiscal Year Ended June 30, 2024

June 30, 2026

Executive Summary

Background

The Delaware Office of Auditor of Accounts (AOA) presents performance audits of the local funds of Delaware School Districts for the fiscal year 2024.

Performance audits are used to evaluate the efficiency and effectiveness of an organization’s operations. The objective of these performance audits is to provide management, the Boards of Education, and the State of Delaware with information to improve performance, public accountability, and transparency.

The purpose of this performance audit is to determine whether the District’s operations over the collection and spending of local school district property tax funds complied with relevant laws and regulations. Our performance audit addressed the following areas:

The tax rate setting process
Payments for services and supplies
Employee compensation and payroll processing

The Auditor of Accounts is mandated by 29 Del. C., §2906(f) to perform annual audits of local school district tax funds. Under Delaware Code, school districts may levy and collect taxes for school purposes upon the assessed value of all taxable real estate in the district.

Key Information and Findings

School Districts allocate the local property tax funds received by their intended purpose (current expense, debt service, tuition, and match taxes).

Findings may involve deficiencies in internal control; noncompliance with provisions of laws, regulations, contracts, and grant agreements; or instances of fraud. Performance audit testing of the Districts’ expenditures did not uncover fraud, waste or abuse. The audits relied on various sources of information and methods to obtain an understanding of and assess Local Funds’ processes for the School Districts, including inquiry, document reviews, risk assessment, and identification and performance assessment of key controls.

Six of the nineteen School Districts audited had no findings (Delmar, Lake Forest, Laurel, Milford, New Castle County VoTech, and Polytech School Districts)

Common findings across the other thirteen School Districts include:

District purchases did not follow state procurement laws.
District did not maintain support for employee payroll changes
District payroll policies do not require appropriate review and approval of payroll changes.
District payroll policies do not properly segregate responsibilities of the payroll function.
District did not document the review and approval of payroll changes or payroll reconciliations as required by the District’s Internal Control Procedures.
District policies do not require appropriate review of purchases for compliance with contract terms.
District’s debt service reserve exceeds 110% of Total Debt Expenditures for the following year.

Other Findings in an individual School District include:

District payroll internal controls do not operate as designed resulting incomplete and unreviewed payroll transactions.
District reserves were not enough to cover payroll expenditures through October 15th with a surplus equal to one month’s local payroll of the following year as required by Delaware state code.
District did not document the review and approval of Local fund tax receipts as required by the District’s Internal Control Procedures
District changes to administrator pay rates were not memorialized in accordance with District policy.
District did not comply with its own policy requiring a purchase order for all vendor purchases greater than $5,000.
District did not comply with its policy requiring a purchase order for all vendor purchases.
District could not provide supporting documentation for pay change approvals.