LOS AN GELES UNIFIED SCHOOL DISTRICT CHARTER SCHOOLS DIVISION Ramon c. conrmes 333 South Beaudry Avenue. 20'h Floor, Los Angeies, CA 90017 Of?ce: (213) 241-0399 0 Prop. 39: (213) 241-5130 6 Fax: (213) 241 -2054 THELMA DE SANTA ANA Chief Executive Of?cer Of?ce of Educational Services Jose COLE-GUTIERREZ Directon Charter Schools Division NOTICE TO CURE October 28, 2015 Sen: Via Email only TO EL CAMINO REAL CHARTER HIGH SCHOOL BOARD RE: REQUEST FOR BOARD ACTION Dear Mr. Jonathan Wasser: The Charter School Division (CSD) has conducted our annual oversight visit. During our preliminary review, we have come across certain transactions, speci?cally in the areas of credit card use and check disbursement, which require the attention and timely implementation of CSD requests for board action as referenced below. CREDIT CARD USE: El Camino Real Charter High School currently has two types of credit cards issued under the name of the school namely; American Express and Visa Card. For the school?s Fiscal Policies and Procedures, the authorized credit card holders are School Director, Chief Business Of?cer and Assistant Principal for American Express and the Assistant Principal and Human Resource Manager for Visa Card. Results of Review: 1. There is no policy for Credit Card use. 2. There is a $50 per diem rate speci?ed in the Travel Expense Form for meals, however, there were numerous charges for restaurants ranging from $29 to $834 each occurrence. The supporting documentation attached did not provide an explanation as to the nature of the expense and number of people that dined. The credit card payment request simply had the approval of the Assistant Principal or Chief Business Of?cer. 3. Various travel expenses via Airline ticket charges to the credit card re?ected amounts ranging from $80 to $1,265. Review of the charges indicated travel arrangements were made for ?rst/business class fares. The supporting documentation did not provide any explanation as to the nature of the travel expenses. 4. Various charges for hotel accommodation with costs ranging from $300 to $2,934 for a hotel stay of I to 4 days. The ?scal policies and procedures indicated that hotel rates should be negotiated at the lowest level possible, however, from the supporting documentation provided, such effort cannot be identi?ed. In addition, there were hotel accommodation charges on the credit card near the airport the day before and after the travel date. There is no indication that the employee travelling lived 50 miles away from the originating airport location. 5. There were charges on the credit card statement where it was indicated as ?personal use? which is inappropriate and does not align to the purpose for use of the public credit card. From the notation on the credit card statement, there were only a handful of reimbursements made by the Mr. Jonathan Wasser El Camino Real Charter High School Notice To Cure Page 2 of 3 employee for such usage and the turn-around time of payback to the school ranges from two to three months. This appears excessive in time ?'ame. 6. Per the policies and procedures, expenses with missing receipts will be the responsibility of the individual making the purchase. On more than one occasion, these instances had occurred, but there is no indication that the school had put into place a procedure that provides for the collection process of reimbursing the funds back to the school from the liable employee. 7. Based on documents reviewed, supporting documents show that expense reports submitted by the School Director indicated mere approval either by the Chief Business Of?cer or the Assistant Principal. There is no indication that a board member reviewed/approved such credit card expenses as stated in the Fiscal Policies and Procedures. 8. There were various charges for the purchase of furniture from a recurring vendor with total costs over $10,000. The only supporting document attached to the payments was the ?Credit Card Summary Recap? prepared by the ?nance of?ce and approved by the School Director or Assistant Principal. Veri?cation with regards to delivery/installation address, nature of expense and number of units purchased cannot be performed due to absence of invoice and bill of lading for items purchased. Request for board actions to remedy, including. but not limited to: 1. Update the ?scal policies and procedures to include a policy for Credit Card Use. The policy should include threshold amounts and should qualify the types of transaction to be charged on the credit card. Expenses that do not fall under the Credit Card Use policy should be submitted and paid through the check disbursement process. 2. Implement a review and approval process that will require a requisition form that will provide for the explanation as to the nature, estimated amount and purpose of the expense prior to the purchase being charged on the credit card. 3. Develop and adopt documentation that clearly shows that the card holder is aware of all of the credit card policies. 4. Implement a threshold amount whereby it will require the approval of the expense by a board member for credit card charges. Such approval should be required as part of the supporting documentation prior to payment processing. CHECK DISBURSEMENTS: The school?s main operating account is maintained with Paci?c Western Bank. Requests for payments are received, reviewed, and approved for processing at the school site prior to forwarding to ExEd for payment. Checks over $5,000 require co?signature for non-recurring items. Computer checks bear the electronic signatures of the School Director and the Assistant Principal. Lastly, the school possesses a manual check stock at the school site with the School Director and Assistant Principal as the authorized signers of the check. Results of Review: 1. All purchases made did not have a requisition form to indicate that expenditure was budgeted, veri?ed for funds availability, and use of funds is consistent with the ?scal policies and procedures. Expenses were incurred ?r st and then reviewed and approvals were made upon receipt of vendor invoice or purchase receipts from school personnel for payment. Mr. Jonathan Wasser El Camino Real Charter High School Notice To Cure Page the items paid for Robotic Materials, the invoice showed a delivery address other than the school address. The invoice bears a name other than the person who requested the purchase. 3. For the expense reimbursement requests, the mileage calculation shows a starting point from the residence of the employee to the location of the conference. The Internal Revenue Service basic rule is that commuting is a personal expense, hence, the miles driven from home to of?ce is not included in the mileage reimbursement calculation. 4. On one of the items selected for review, there is one expense reimbursement to an employee for Spring 2015 tuition fee geared towards career advancement. There is no clear indication from the ?scal policy whether such bene?t is available to all staff of the school. In addition, there is no threshold amount that speci?es the school?s limit for tuition reimbursements. 5. On more than one occasion, there were expenses incurred for construction related work that were not accompanied by a fully executed contract agreement as required, per the ?scal policies and procedures. Request for board actions to remedy, including. but not limited to: l. Require that all check request bears the approval of an authorized personnel on the purchase requisition form. Furthermore, instruct the ?nance of?ce to ensure that only the school address should be used on the sales order prior to processing payments. 2. Update the travel expense form to indicate the proper calculation of mileage reimbursement. Reimbursement should deduct the distance from place of residence to regular work location out of the total mileage claimed. 3. Require the ?nance of?ce to process payment for services rendered, leases, loans etc., only upon receipt of a fully executed contract. 4. Update the ?scal policies and procedures to include ?Tuition Reimbursement Policy? which will specify threshold amounts and quali?cation for reimbursements. Based on the above, please provide copies of updated board approved ?scal policies and procedures and proof of implementation of the above requested board action items no later than close of business on November 30. 2015. Lastly, please provide your action plan to have the remedies in place. Provide the action plan by close of business Friday, October 30. 2015. Respectfully, Aaron bairleywine Phone 2 I 3.241 .0383 Cell 714.642.5098 C: Jose Cole-Gutierrez, CSD David Fehte, Executive Director, ECRHS Dr. Robert Perry, CSD Emmaliza Baquir, CSD Amy Long, CSD Lourdes Echavarria, CSD