FLORIDA DEPARTMENT OF EDUCATION

Dr. Eric J. Smith
Commissioner

Ed W. Jordan
Acting Inspector General

Florida Department of Education
Office of the Inspector General
325 West Gaines St., Suite 1201
Tallahassee, Florida 32399-0400

Telephone:
850-245-0403

Fax:
850-245-9419

MEMORANDUM

Date:	February 8, 2008

To:	Lucy Hadi, Chancellor for Workforce Education
	Alex Penn-Williams, Director, Adult Education, Adult Migrant, GED, and Career Planning & Product Distribution
	
From:	Ed Jordan, Acting Inspector General

Re:	GED Internal Control Review	

We were requested to review internal controls in the GED office in Adult Education, after an individual’s transcript/diploma request was returned to the wrong person.  We reviewed job descriptions, interviewed employees, reviewed relevant documentation, and observed GED processes.  The following internal control and other management issues are presented for your consideration:

1.  There is inadequate segregation of duties in cash handling.  Segregation of duties is an important component of the internal control environment that helps prevent errors and fraud.  We recommend:
a)	Checks and money orders be restrictively endorsed immediately upon receipt and listed on a check log; 
b)	Deposits be prepared by someone other than the employee who opens the mail; 
c)	Payments received be forwarded to the Comptroller’s Office the same day received; and 
d)	If credit cards are to be accepted, ensure Payment Card Industry Data Security Standard compliance is designed into the system and followed.  
The ideal segregation would separate the following functions of the cash handling process: 
Collecting cash and other payments
•	Handling payments and entering transactions into the system
•	Preparing manual check listing
Depositing and recording
•	Preparing bank deposit and deposit slip
•	Maintaining accounts receivable records (if applicable)
Control activity
•	Comparing daily listing of checks to bank deposit
•	Comparing any system receipt reports to bank deposit
2.  The GED office collects and stores a wide array of data on candidates including academic history, demographics, and tests scores.  These records consist of two disparate sets of records:  an electronic database which maintains all records generated since 1995; and the 1945 to 1995 paper and Microfiche records.  The old records are neither safe nor secure.  The current 

media could be stolen or destroyed by daily wear and tear, a beverage spill, or fire.
We recommend:  
a)	The old records be digitized and permanently saved on a safer and more secure, preferably encrypted, medium; and 
b)	A backup copy be secured offsite in a fire-proof vault.

3.  Services currently provided by the GED office are either not charged for or are charged a nominal $4 fee; this amount does not reflect the cost of providing the service.  The current fees charged were established by the State Board of Education (SBOE) in 1998 in Florida Administrative Code, 6A-6.021.  When a requestor’s records are not found, the $4 payment is returned even though the GED office has spent time researching the records.  Whether or not a document is produced, the work must be performed to ascertain whether a record exists.  There is no charge for verifications, which take from 5-30 minutes to complete.  Based on current salaries, the GED office has an average labor cost of $24 per hour.  

Testing materials and staff costs have increased over the years with no corresponding increase in the fee.  If indexed for inflation since the last price increase (March 1, 1998), the $4 charge for each transcript or diploma would now be $5.17, based on the Consumer Price Index compiled by the Bureau of Labor Statistics.  We recommend:  
a)	The use of cost analysis to determine the costs of each process; and 
b)	The SBOE be requested to approve periodic adjustments to the amount charged based on costs and inflation.

4.  We were informed the GED office is considering replacing the current information system, which presents opportunities to improve many aspects of the current processes.  We recommend prioritizing improvements for a new information system as follows:
a)	Ensure data confidentiality and integrity in all GED processes;
b)	Ensure segregation of duties;
c)	Digitize and secure old GED data; and
d)	Improve processes and customer service

Recommendations 4 b) and 4 c) are addressed in paragraphs 1 and 2 above, respectively.  For recommendation 4 a), controls over confidential information should be thoroughly reviewed and evaluated.  Securing such information is more important now than when the current database was created; if the GED office moves to a web-based application, the risks to data integrity and confidentiality will increase.  

For recommendation 4 d), the GED office should review their responsibilities, current processes, and desired levels of service.  This review could be as simple as updating the system to reflect current technology or as extensive as a re-engineering project.  The latter could include management capabilities to log, track, and control every GED request as well as static and ad hoc reporting.  New capabilities could improve internal and management controls while simplifying processes and improving service capabilities.  A logging and tracking system could be initiated using technologies such as scanning, bar coding, or other tracking mechanisms.

c:	Eric Smith
	Theresa Klebacha
	Linda Champion