Fixed Assets Review Lake County School District. Director of Internal Audit Thomas A. Mock, CIA

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1 Fixed Assets Review Lake County School District Director of Internal Audit Thomas A. Mock, CIA

2 Fixed Asset Concerns Reported 1. Missing Fixed Assets 2. Abandon/Unused Fixed Assets 3. Cannibalized/Repurposed Fixed Assets 4. Stolen/Unaccounted Fixed Assets Additional Step(s) Performed 1. Fixed Asset Policies Evaluation

3 Missing Fixed Asset(s) Alto Clarinet Wood (Tag #132869) Purchased June 2011 per Fixed Asset listing (5 years depreciation) Original Cost $11,072 and Current Asset Value $6,459 (as of 9/30/13) Located at Lake Minneola HS Alto Saxophone Gold Plated (Tag #??????) No Purchase order in 2011 found for Alto Saxophone. Reviewed Tag Log and Tested Random Sample of Tags checked out to Lake Minneola High School for time period item was supposedly tagged. No Tags sampled from timeframe and traced were found to be for an Alto Saxophone. Reviewed March 9 th, 2012 Fixed Asset Physical Inventory, no Alto Saxophone s were counted in physical inventory (pages 1 through 85). Reviewed March 6 th, 2013 Fixed Asset Physical Inventory, no Alto Saxophone s were counted in physical inventory (pages 1 through 89).

4 Abandon/Unused Fixed Assets Combination Soccer & Football Goal Purchased December 2007 on PO # (7 years deprecation) Asset Tag # Original Cost $1, Current Value $ (as of 9/30/13) Currently located in Maintenance & Grounds Yard (off Route 19) Schools Have Assets No longer in Use This is not unusual as FF&E age, newer better products are purchased and older functional FF&E are stored and not thrown away. If the schools/lscd want to implement a policy that requires item(s) not in service for a year to be repurposed or sold for Current Market Value this would either save the district from new purchases or bring money in from idle assets.

5 Cannibalized/Repurposed Fixed Assets Generally this means 1. Taking parts from one Fixed Asset to keep another Fixed Asset functional (normally parts from the robbed Fixed Asset will be ordered and replaced at a later date). 2. Recondition or rebuild a Fixed Asset from another Fixed Asset to keep one in service. From a business perspective this make sense, however we must have policies and procedures to ensure proper documentation about the action(s) taken with LCS Fixed Assets are properly documented and sent to appropriate LCS personnel for record updates.

6 Stolen/Unaccounted Fixed Assets Fixed Asset shrinkage based on Fixed Asset Inventories: Year to date 2013 Total Items Missing = 38 Totaling = $14, Year to date 2013 Total Items Stolen = 13 Totaling = $ 6, Total Written off as Missing or Stolen 51 $20, LCS Fixed Asset shrinkage for missing & stolen items for LCSD is.33% (based on 16,148 items on 9/30/13) and.092% (based on $22.6 million current value Fixed Assets as of 9/30/13). Personnel use of LCSD Fixed Asset: Policy 7.72 directs that no LCSD Fixed Asset can be used for personal use and/or gain. Fixed Assets must have approval for removal from LCSD property.

7 Policies & Procedures Evaluation A review of Fixed Asset Policies 7.72, 7.75 & 7.77 was completed and the following recommendations submitted: Be consistent with terminology throughout the Fixed Asset policies. Rewrite policies for better flow from the policy through procedures in an orderly format. Make sure references within or to State Statues provide useful information. Include all Forms referenced in policy as attachments. Fixed Asset Tag s policies and procedures should be incorporated into above policies. Tag Log numbers should be prelisted in Red and in numerical order. Tags should be signed out: location, staff & date. Tag Sheets should be prenumbered and accounted for. Incorporate into policies the procedures for Fixed Assets that are repurposed to extend their useful life or to extend the life of another asset. The proper forms must be completed. Fixed Assets removed from LCSD property should be appropriately logged and signed out, to account for who has the Fixed Asset when not on LCSD property and signed back in when returned. Fixed Assets in the possession of LCSD staff should be accounted for annually by a signed forms attesting they have the asset(s) and they re responsible for their safety and are responsible to report if lost or stolen.

8 Fixed Asset Listing (as of 9/30/2013) LCS has the following Fixed Assets: Fixed Assets Fully Depreciated: Active Fixed Assets 15,943 Surplus Fixed Assets 205 Total Fixed Assets 16,148 Active Fixed Assets 9,142 (57%) Surplus Fixed Assets 186 (91%) Total Fully Depreciated 9,328 (58%) Question: Can we place a bright colored LCSD Property sticker over full depreciated items (9,328 Asset Tags), and de activated these items so we don t expend resources tracking and accounting for them? If an item has a current market value (resale) above $1,000 (even though full depreciated) we would continue to track the asset until its value is below the $1,000 Fix Asset limit.