Melvin Phillips, the recently appointed internal audit supervisor, briefed the Fiscal Management Committee on Sept. 17 on a fiscal‑2025 recap and the FY26 internal‑audit work plan, saying the office will refocus on audit oversight and away from day‑to‑day activity‑fund administration. "My goal is to dig a more clear trench between IAU as an entity of the board and the superintendent's operations," Phillips said.

IAF balances and CIF: Phillips reported the Independent Activity Fund (IAF) closed FY25 at about $21.1 million, up $1.7 million from the prior year. He said receipts have exceeded disbursements in recent years and that the Central Investment Fund (CIF) — a centralized savings vehicle for school activity funds that earns interest (3.28% cited) — holds a majority of the IAF assets (about 61% of total IAF assets, he said). "The opportunity in our audits is to determine what the most appropriate CIF levels should be," Phillips said, noting wide disparities in school IAF balances.

Planned audit approach and outputs: Phillips said the audit unit will take a risk‑based approach to school IAF audits (considering fund size, prior findings and turnover) and will issue an opinion on audits going forward ("clean," "needs improvement," or "unsatisfactory"). He proposed a sample‑and‑risk approach to complete up to roughly 101 school audits this year and to evaluate whether IAF funds are used for student benefit rather than accumulating without specific purpose. He described planned process changes, including more interviews with booster and PTA stakeholders and clearer pre‑audit expectations for schools.

Independence and professional standards: Phillips said the unit will pursue staff professional development tied to Institute of Internal Auditors standards and will clarify boundaries so IAU does not perform routine accounting operations for schools. "It blurs the boundary between audit oversight and financial operations," he said of the current workload. He said the office has six auditors and that the objective is to achieve more strategic, higher‑level audits over time.

Committee questions and equity concerns: Board members asked about CIF balances and whether donations or booster activity drive disparities across schools. Phillips said donation activity (often via boosters, PTAs) is a major factor and that the audit will evaluate whether CIF funds are being used to reduce costs for students (for example, lowering field-trip fees) and to recommend appropriate CIF balance targets by school.

What’s next: The internal-audit supervisor said future audits will publish opinions and recommendations and will include policy recommendations on CIF balance targets and IAF uses. He said auditors will evaluate IAF growth trends and advise whether funds are being used for student benefit.