Establishing a separate position with the responsibility for auditing claims may increase the effectiveness of this key control because a claims auditing official would be performing this function as one of his or her primary (or sole) responsibilities. Providing dedicated resources to perform this function will help ensure that this key control activity mitigates risks associated with the expenditure of public money. Although boards are not required to establish a position with claims auditing responsibilities, many have found it to be a successful approach to fulfilling this key responsibility. The size and complexity of local government or school district operations plays an important role in deciding whether or not the appointment of a claims auditing official would be beneficial for your locality. Several sections of law (see Appendix A) specifically authorize the governing board to establish a position with claims auditing responsibilities. When a claims auditing official is appointed, the governing board generally no longer performs the audit of claims function. When a governing board decides to establish a separate position with claims auditing powers, the following guidance should be considered:
- As a best practice, the governing board may provide the claims auditor with a job description and other guidance to communicate the claims auditor’s responsibilities, as long as such guidance is consistent with legal requirements.
- In order to keep the claims auditing function as independent as possible, discussions regarding the approval of specific claims should be directed to the governing board rather than to the department head that may have placed or approved the purchase in question.
- The claims auditor should attend training specific to responsibilities of the position.
- In the case of an appointed claims auditing official, to maintain the proper segregation of duties, the claims auditor should be someone who is independent of both the purchasing and treasury (check signing) functions.
- The claims auditing official should indicate his or her approval of claims by signing or initialing each individual voucher packet or an abstract of audited claims, which typically would then be forwarded to the officer responsible for preparing and signing checks.
- After the claims auditing official has audited claims, it is essential that the audited documentation be canceled (marked to prevent reuse) and be retained for a specified period of time, as enumerated in record retention schedules.3
Depending on the size and complexity of your local government or school district, either a part-time or a full-time claims auditor may be necessary. It may also be possible to share a claims auditor with one or more other localities.
3 See Records Retention Schedules published by the New York State Department of Education at www.archives.nysed.gov/records/local-government-record-schedule/fiscal.