Melvin Phillips, internal audit supervisor, briefed the Fiscal Management Committee on the Internal Audit Unit’s FY25 recap and FY26 work plan, saying independent activity funds (IAF) need clearer policy guidance on appropriate CIF (centralized investment fund) balances and that the audit unit will move toward a more risk‑based approach.
Phillips said the IAF closed FY25 at about $21.1 million, up from $19.4 million the prior year, and that receipts have exceeded disbursements for several years. "The opportunity for us here is to really understand the funds growth," he said, noting CIF balances currently earn about 3.28 percent interest and that schools may transfer funds in and out as needed.
The audit unit plans to grade school audits with three opinion levels ("clean," "needs improvement," and "unsatisfactory") and to use a risk‑based sample selection reflecting fund size, prior findings and turnover. Phillips said the unit has absorbed day‑to‑day IAF transactional support during staffing shortages and that he intends to "descope" operational tasks so the audit unit can preserve objectivity and independence.
Phillips described operational audit topics the unit will pursue, including CIF policy recommendations, the transportation depot inventory review, revenue‑sharing formula reassessment, payroll and purchase card reviews, and evaluation of purchase‑card policy effects at schools. He said the unit will add sponsor/booster/PTA interviews to gather independent field evidence and that auditors will pursue professional development to meet Institute of Internal Auditors standards.
Board members raised equity concerns; one member asked whether donation patterns explained CIF disparities and urged audits examine whether student charges for activities (for example, graduation fees) vary by school. Phillips acknowledged disparities and said audits will consider enrollment, participation and other metrics when recommending optimal CIF balances.
No formal board action was taken; Phillips said future audits will include an opinion and recommendations to help schools align CIF balances to student needs.