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:

August 5, 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 June Meeting (Attachment I)

        Audit Report Abstracts (Attachment II)

        Audit Reports


 

REGENTS SUBCOMMITTEE ON AUDITS

MEETING ROADMAP

 

Date:  September 2004

Time:  TBD

Location:  TBD  

TOPIC

OUTCOME

WHO

MINUTES

Opening Remarks

 

Chair

2

Review Agenda/Minutes (Attachment I)

Approval

Abbott

1

Current Issues

Update

Abbott

10

Status of Audit Plan

Update

Conway

5

Roles and Responsibilities

Agreement

Abbott

20

Audit Report Abstracts (Attachment II)

Questions Addressed

SED and OSC Staff

10

Next Session

Preview

Staff

2

 

 

 

 

 

 

 


Attachment I

 

MEETING OF THE REGENTS SUBCOMMITTEE ON AUDITS

June 22, 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 and our responsibilities under Regents Goal 5.

 

Previous Meeting Minutes

 

The Subcommittee approved the minutes of the prior meeting.

 

New York State Single Audit

 

A partner and senior staff person from KPMG presented an overview of the federally required single audit and the Department's involvement. The single audit looks at the Department's internal controls related to the larger federal grant programs as well as compliance with federal regulations. The Department receives in excess of $2.5 billion in federal funds, most of which is sent to local education agencies. The partner indicated that the Department has done well in the audits with only some relatively minor findings. The partner stated that, although the Department's findings were relatively minor, there have been significant findings at other agencies.

 

Audits

 

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

 

 

Staff from the Office of the State Comptroller were available to answer questions on the following audits:

 

 

Prior Meeting Follow-up

 

Staff briefed the Members on the on-going situation at the Roslyn Union Free School District. The local district attorney as well as auditors from the Office of the State Comptroller are at the District investigating the extent of the fraud. Staff from the Office of Audit Services will be joining the audit.

 

Summary of Subcommittee Activities

 

Staff presented the Members with a summary of the Subcommittee's activities for the past year. Regent Chapey will present the summary to the full Board of Regents.


Attachment II

 

Audit Report Abstracts

Regents Subcommittee on Audits

September 2004

 

Office of the State Comptroller

Audit

Major Finding

Recommendations/Response

Highbridge Advisory Council Family Services, Inc.

Reporting Costs and Enrollments for Tuition Rate-Setting Purposes

2003-S-3

$2,524,991 adjustment

 

The audit found that about $2.5 million in expenses reported to the Education Department on the Consolidated Fiscal Report were not reported in compliance with proper procedures. The adjustment included $1,866,693 in personal service costs and $658,298 in other than personal service costs.

 

The personal service cost adjustments were caused by the Council improperly charging non-special education administrative staff to the special education programs.

 

The other than personal service cost adjustments were caused by the lack of documentation of expenditures, most of which was related to consultant care costs.

 

The report concluded that some of these errors appeared to have been designed to mislead or conceal the correct cost of operating theses programs.

 

Finally, the report found that the Council inaccurately reported full-time equivalent student enrollment, had insufficient Board oversight, was missing time sheets for two employees, inadequately monitored the provision of IEP mandated services, and did not monitor the licensing status of teachers. 

 

 

 

 

15 recommendations (4 to the Department)

 

The report recommends the Department evaluate the disallowances, provide training, perform follow-up site visits and verify that the FTE enrollment is calculated appropriately.

 

The Department agrees with all of the recommendations. The Department annually provides training on the CFR and updates the instruction manual, which is available on line to all providers.

 

11 recommendations to the Council

 

The report recommends the Council prepare its CFR in accordance with the provisions of the Reimbursable Cost Manual. Specifically the Council should only include allowable costs, verify all costs (personal and other than personal service costs) are appropriately allocated and documented, maintain support for journal transfers and other adjustments, and ensure executive compensation does not exceed established limits. The report also recommends the Council recalculate the FTE enrollment for the 1999-2000 and 2000-01 fiscal years.  The report also contains recommendations to implement formal procedures to improve Board oversight related to major Council functions, to require supervisory sign off on all employee timesheets, to ensure IEP's are maintained for all special education students, to ensure only IEP prescribed services are provided, and ensure that all teachers are certified and that all certifications are current.

 

Council officials agree with 9 of the 11 recommendations and have already taken steps to implement some. They believe that many of the other than personal service costs disallowed due to inadequate documentation were appropriate expenditures. They also disagree that the executive director's full compensation was not reported on the CFR.

No Child Left Behind

2003-S-47

$0 adjustment

 

The audit found the Department, districts and individual schools did a good job in carrying out the first year requirements of the No Child Left Behind Act. The Departmentís oversight and monitoring efforts were effective in enabling districts and schools to comply with the provisions of the act examined. The audit also determined that all of a sample of poor performing schools developed implementation plans and procedures to notify parents of the option to transfer their children to other schools.

0 recommendations