THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234

 

TO:

The Honorable the Members of the Board of Regents

FROM:

Michael Abbott

COMMITTEE:

Audits

TITLE OF ITEM:

Audit Activities

DATE OF SUBMISSION:

May 28, 2004

PROPOSED HANDLING:

Discussion

RATIONALE FOR ITEM:

Enable the Board of Regents to review audits

STRATEGIC GOAL:

5

AUTHORIZATION(S):

 

 

SUMMARY:

 

The following materials are attached.

 

·        Roadmap

·        Minutes of May Meeting (Attachment I)

·        Audit Report Abstracts (Attachment II)

·        Audit Reports

 

 

REGENTS SUBCOMMITTEE ON AUDITS

MEETING ROADMAP

 

Date:  June 22, 2004

Time:  TBD

Location:  TBD  

TOPIC

OUTCOME

WHO

MINUTES

Opening Remarks

 

Chair

2

Review Agenda/Minutes (Attachment I)

Approval

Sheldon

1

KPMG’s Single Audit of Federal Programs

Understand the Process and Results

KPMG Partner

25

Prior Meeting Follow-up

Update

Abbott

5

Audit Report Abstracts (Attachment II)

Questions Addressed

SED and OSC Staff

15

Next Session

Preview

Staff

2

 

 

 

 

 

 

 

Attachment I

 

MEETING OF THE REGENTS SUBCOMMITTEE ON AUDITS

May 17, 2004

 

Subcommittee Members in Attendance:

 

Regent Geraldine D. Chapey, Chair

Regent Arnold B. Gardner, Vice Chair

Regent Joseph E. Bowman

Regent Harry Phillips, 3rd

 

Discussion Items

 

Regent Chapey opened the meeting by welcoming everyone and reminding them of the importance of accountability in the public sector. She also mentioned that Associate Commissioner Sheldon will be retiring in the near future and thanked him for his leadership in guiding the Subcommittee.

 

Previous Meeting Minutes

 

The Subcommittee approved the minutes of the prior meeting.

 

Update on Issues

 

Staff updated the members on issues discussed in previous meetings as well as informing them of some emerging concerns.

 

·        The New York State Society of Certified Public Accountants (NYSSCPA) has received the Department's curriculum that is used in training school districts on fiscal matters.  Society staff feel the curriculum is appropriate, they see no need for change, and have offered to help in any way they can.

 

·        More information was provided to the members regarding KPMG's Audit Committee Institute.  Members were provided a copy of the Institute’s FlashPoint publication that addressed the expanded role of audit committees in state and local government.  Staff have contacted KPMG staff to determine if they have updated a document called "Audit Committees in the Public Sector," that was provided by Regent Gardner.  Staff will update the members at a future meeting.

 

·        Staff described a significant theft at the Roslyn Union Free School District. Law enforcement officials are investigating the former Assistant Superintendent for Business who is suspected of the wrongdoing. This led to a discussion of the difficulty of convincing organizations of the importance of internal controls. A subcommittee of the NYSSCPA is going to put together a document that connects instances of fraud with the routine controls that may have prevented them.

 

·        Staff also informed the members of a federal Medicaid audit which has been finalized and the federal government is seeking recovery of $174 million from upstate school districts. 

 

Audits

 

OAS staff were available to answer the Regents questions on the following audits:

 

 

Tactical Audit Plan

 

Staff briefed the members on the development of the 2004-2006 Tactical Audit Plan. A chart with the staffing levels as well as the current audit initiatives was provided. The members will be informed of the process and asked for input on the plan.


Attachment II

 

Audit Report Abstracts

Regents Subcommittee on Audits

June 2004

 

Office of Audit Services

Audit

Major Finding

Recommendations/Response

Niagara Falls City School District

SD-0703-1

 

8th Judicial District

$0 adjustment

 

The review found that the District has many of the necessary management controls in place, but identified opportunities for improvement including: developing a long-term financial plan and improving budget controls related to mass encumbering, keeping expenditures within budgeted amounts, and initiating timely budget transfers. There is an opportunity to improve controls by closely monitoring revenues and expenditures and managing the District’s fund balance to increase the amount available for contingencies. The District could also improve controls over cash receipts by separating duties, using pre-numbered cash receipt forms, and adhering to the $100 maximum limit for the petty cash fund. The procurement and payment process could be improved by strengthening controls over the approval process, documentation, and credit card charges. The District should comply with its transportation policy and properly account for and report transactions of the extraclassroom activity funds. Finally, the District can improve controls over reporting student data and conduct periodic physical inventories for equipment.

 

 

40 recommendations

 

The report contains specific recommendations for improvements in governance and planning, accounting and reporting, revenue and cash management, purchasing and expenditures, facilities and equipment, and student related data.

 

District officials agree with the recommendations.

 

 

Schuyler-Chemung-Tioga BOCES

BOC-0703-01

 

6th Judicial District

$0 adjustment

 

The audit determined that Schuyler-Chemung-Tioga Board of Cooperative Educational Services (SCT BOCES) had many of the necessary controls in place, but identified opportunities for improvement including:  establishing an audit and finance committee, requiring prior approval of attendance at conferences, and including revenue on the budget status reports.  SCT BOCES should improve its documentation of EPE contact hours and expenditures, and should ensure its annual financial reports reconcile with the financial statements.  Controls over cash could be improved by use of pre-numbered, multicopy receipt forms and restrictively endorsing checks upon receipt.  Improvements could also be made related to the use of purchase orders, the treasurer’s report, petty cash, inventory controls, and extraclassroom activity funds.

20 recommendations

 

The report contains specific recommendations for improvements in governance and planning, accounting and reporting, revenue and cash management, purchasing and expenditures, facilities and equipment, and student services.

 

SCT BOCES’ officials generally agreed with the recommendations.  In regard to the recommendations concerning blanket or open purchase orders and using pre-numbered, multicopy receipt forms, SCT BOCES’ officials indicated they do not need them.

Office of the State Comptroller

Controls Over State Aid Processing

2003-S-25

$0 adjustment

 

The audit examined the general and application information technology controls over the State Aid Processing System.  The audit found that the Department controls over access were effective.  

Several Recommendations

 

The auditors provided recommendations to Department staff to improve controls during the course of the audit. To further ensure the security of the system, the recommendations were provided in a separate confidential document.

 

Department officials agree in part with the recommendations.

Policies and Practices for Reviewing Applications and Monitoring Operations for Charter Schools -
Follow up 2003-F-47

$0 adjustment

 

The audit revisited the recommendations that were contained in the initial report issued on October 24, 2002. That report found that Department’s charter school application review policies needed to be improved by addressing two key items:  the adequacy of community support and the fiscal impact of the proposed school on other public and non-public schools in the area. The report also noted the Department’s monitoring of charter school enrollment data needed improvement.

 

The follow-up audit found that the Department has made significant progress in addressing the recommendations. Of the seven prior audit recommendations directed to the Department, six were implemented and one was partially implemented.

7 recommendations to the Department

 

The Department has fully implemented six of the recommendations. The one partially implemented relates to the assessment of the fiscal impact on other public and non-public schools in the area.

 

Department officials indicated that there is no “one-size fits all” criterion for evaluating potential impact. The Department requires applicants to describe the projected fiscal impact by comparing the cost of the proposed charter school (based on anticipated cost per pupil) with the budgets of those districts that may be impacted. The Department has developed guidelines providing that there should be heightened scrutiny of fiscal impact when it exceeds five percent of an affected district’s budget.