​On the Frontlines: What a Long, Strange Trip It’s Been

For instance, I once received a call from a principal at an elementary school inquiring why she was receiving late notice invoices from a candy company from which she was certain she had not approved any fundraising activities. The principal requested a brief audit of the process.

Of course I did my due diligence tracing the invoices to discover that the school bookkeeper had initiated the fundraising on her own, selling chocolate bars she had ordered from the candy company, with a box of the candy sitting on her desk in plain view. The bookkeeper had not bothered to pay the candy company's invoices as all the money she made was going into her personal coffers to assist with the household expenses of raising five children. She did confess to the misdeed and was dismissed from employment with the school district.

How about an elementary school engaging its students in collecting a million pennies to illustrate what a million of anything looks like. The focus of the project was to provide educational activities such as writing essays about the pennies in English classes, learning about the metal alloy composition of pennies in science classes, and even having penny toss games in physical education. School management had not given much thought to the fact that there would be $10,000 in pennies to contend with at the project's end. How should the money be spent?

The pennies were collected over a two-year period and put on display in the school's media center in clear five-gallon water jugs. During the summer, construction crews were routinely working around the penny display. What about insurance coverage to safeguard against theft while the collection was in progress? From an audit standpoint, the money controls were, at best, less than what the school district's standard procedures required.

You would think that those kinds of things should/would not happen. Management provides the structural framework of policies, procedures, organizational charts, directives, etc. So why does this happen? Well, it's complicated.

Consider that a school district's main mission is teaching and learning. In the U.S., that process entails a host of regulations and requirements from various sources starting at the federal level, then down to the state level, and even at the local level from within the school district. Some of these regulations may conflict, which requires seeking legal and other authoritative assistance to interpret how to carry out the directives.

Now also consider that the process of teaching involves a focus on sparking the learning process and the accompanying knowledge transfer. However, there are money activities that also occur that take a back seat to the learning. We "shoehorn" into the picture business processes of fundraising at the school level with a tendency to overlook appropriate controls to make it convenient for the teachers to collect funds on top of their regular duties. Controls and convenience do not belong in the same sentence together.

But wait, there's more! Because a school district operates in the public limelight, there are many views on the best practices to deliver education, the best practices to manage school district activities, and best practices regarding accounting for funds. Add to that some subtle political influences applied from management to suit the management style and maybe focus attention on selective projects. You can quickly see how muddy it gets. Taking all of this in stride, applying internal audit principles to a labyrinth of business issues and the public limelight environment is quite a dance.

So what is the recommended way to navigate all this? Go back to basics. The IIA's International Professional Practices Framework (IPPF) is the foundation to provide guidance on how to go about the business of auditing. Every auditor has a part in maintaining his or her own skills and applying appropriate professional judgment in conducting audits, no matter what industry he or she represents. Conducting audits and applying that judgment in a school system can be particularly challenging.

The IPPF provides an umbrella under which audits should take place. The guidance is general enough to apply to various industries and scenarios without getting too far in the weeds. This guidance helps to establish the basis for audit department operations and how to conduct the audits, even in a complex environment like a school district.

Glenda Ostrander, CIA, CGAP, CRMA, is director of internal audit, Gwinnett County Public Schools in Suwanee, Ga.