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

Subcommittee on Audits

 

FROM:

Theresa E. Savo 

 

SUBJECT:

Board of Regents Oversight Ė Financial Accountability

 

DATE:

November 15, 2006

 

STRATEGIC GOAL:

Goal 5

 

AUTHORIZATION(S):

 

 

Executive Summary

 

Issues for Discussion

 

            Four items are presented for discussion with the Members of the Subcommittee on Audits including:

 

1.                  Reporting of Violent and Disruptive Incidents by Public Schools

2.                  New York State Education Departmentís Reading First Program

3.                  Types of Audit Reports Presented to the Regents Subcommittee on Audits

4.                  Completed Audits

 

Reason(s) for Consideration

 

            Update on Activities

 

Proposed Handling

 

            Discussion and Guidance

 

Procedural History

 

The information is provided to assist the Subcommittee in carrying out its oversight responsibilities related to audits of financial and reporting practices; performance audits or reviews; ethical conduct issues arising from audits; internal controls; and compliance with laws, regulations, and policies.

 

 

Background Information 

 

1.                  Reporting of Violent and Disruptive Incidents by Public Schools Ė Department staff will brief the Members on the 90-day response to the Comptrollerís audit and the schools on the Persistently Dangerous Schoolsí list.

 

2.                  New York State Education Departmentís Reading First Program Ė Department staff will brief the Members on the results of the audit as well as the audit resolution process.

 

3.                  Types of Audit Reports Presented to the Regents Subcommittee on Audits Ė Staff will brief the Members on the different types of audits that are presented to them for review.  The different audit groups will be described as well as report release processes. (Attachment II)

           

4.         Completed Audits

            Reports are provided as follows:

 

            Office of Audit Services

Clinton-Essex-Warren-Washington BOCES

 

United States Department of Education - Office of Inspector General

New York State Education Departmentís Reading First Program

 

Office of the State Comptroller

Sullivan West Central School District

Windham-Ashland-Jewett Central School District

Waterloo Central School District

Solvay Union Free School District

South Country Central School District

Seneca Falls Central School District

Cornwall Central School District

Kinderhook Central School District

Berlin Central School District

Chenango Forks Central School District

Wheatland-Chili Central School District

 

            Audits from Previous Months Available in Regents Office

           

            Office of Audit Services

Our World Neighborhood Charter School

The Milestone School for Child Development

 

Office of the State Comptroller

Village Child Development Center

Written Support of Internal Controls Over the State Aid Management System

Marathon Central School District

Wyandanch Union Free School District (2)

Dundee Central School District

East Irondequoit Central School District

Westmoreland Central School District

Deposit Central School District

Saranac Lake Central School District

Enlarged City School District of Troy

William Floyd Union Free School District

Geneva City School District

Port Jervis City School District

Lowville Central School District

Bolivar-Richburg Central School District

Schuylerville Central School District

Andes Central School District

McGraw Central School District

Seneca Falls Central School District

Waverly Central School District

 

Suffolk County Grand Jury

Special Grand Jury Report (the report is also available at:

http://www.co.suffolk.ny.us/da/press/pdf/GrandJurySD.pdf)

 

            All audit summaries are attached at end of this Regents item.          

 

Recommendation

 

For item one (Reporting of Violent and Disruptive Incidents by Public Schools), item two (New York State Education Departmentís Reading First Program), item three (Types of Audit Reports Presented to the Regents Subcommittee on Audits), and item four (Completed Audits), no further action is recommended.

 
Timetable for Implementation

 

            N/A

 

The following materials are attached:

               Roadmap

               Minutes of the September Meeting (Attachment I)

               Audit Report Process (Attachment II)

               Audit Report Abstracts (Attachment III)

o        the first 13 abstracts will be discussed this month;

o          the next 14 abstracts were previously provided for the September    meeting of the Subcommittee, but were not discussed; and

o          the last 10 abstracts were to have been discussed at the October meeting, but the Subcommittee was cancelled.

               Audit Reports for the December meeting

 


 

REGENTS SUBCOMMITTEE ON AUDITS

MEETING ROADMAP

 

Date:  December 2006

Time:  TBD

Location:  TBD

TOPIC

OUTCOME

WHO

MINUTES

Opening Remarks

 

Chair

2

Review Agenda/Minutes (Attachment I)

Approval

Conway

1

Follow-up on Previous Meeting Including OIG Audits of William Floyd and Wyandanch

Update

Conway

10

Reporting of Violent and Disruptive Incidents by Public Schools

Update

Staff

15

New York State Education Departmentís Reading First Program

Update

Staff

10

Types of Audit Reports Presented to the Regents Subcommittee on Audits (Attachment II)

Update

Spring

10

Audit Report Abstracts (Attachment III)

Questions Addressed

SED and OSC Staff

10

Next Session

Preview

Staff

2

 


Attachment I

 

MEETING OF THE REGENTS SUBCOMMITTEE ON AUDITS

September 11, 2006

 

Subcommittee Members in Attendance:

 

Regent Geraldine D. Chapey, Chair

Regent Joseph E. Bowman, Vice Chair

Regent John Brademas

Regent Arnold Gardner

 

 

Other Members of the Board of Regents in Attendance:

 

Regent Roger B. Tilles

 

Discussion Items

 

Regent Chapey opened the meeting by noting that an emerging Roosevelt issue had pre-empted the scheduled agenda.  On Friday, September 8th, Department officials learned Roosevelt has a $5 to $6 million deficit.  Roosevelt Superintendent Ron Ross, board president Ed McCormick, and interim business manager Charles Winters were in attendance to respond to questions.   

 

The Commissioner stated that he first learned of the deficit on Friday evening, September 8th, and that it was estimated that it could be in the $5 to $6 million range. He immediately notified the appropriate Members of the Board of Regents as well as Department staff. It was later learned that the amount of the deficit was in some dispute and was probably between $1.9 and $4.4 million. However, he stated that the existence of the deficit, as well as the late point at which it was disclosed, is unacceptable.

 

The Commissioner informed the Members that a new fiscal administrator will be joining Roosevelt on September 26th.  He is a CPA with experience in school district finances, will report to the Commissioner directly, and will be able to report on District finances on a month-to-month basis.

   

The Departmentís Coordinator of School Operation and Management Services, clarified the amount and provided a brief summary of the issues that created the deficit.  At the end of the 2004-2005 school year, Roosevelt had a $3.9 million fund balance.  However, during the 2005-2006 school year, the District had incurred an operating deficit. Some contributing factors to the deficit were a $1.5 million teacher retirement payment that was not accrued and $900,000 in budgeted State aid payments that the District did not receive.  The Coordinator stated that the he felt the District lacked the appropriate controls to prevent expenditures from exceeding revenues, from revenues being overestimated, and from expenditures exceeding budget amounts. In addition, the amount of the Districtís State aid changed during the course of the year, but was not reflected in the accounting records.  

 

Roosevelt has not been a district in fiscal stress, but will be identified as such, depending on the final deficit reflected in the 2005-2006 certified financial statements. There are between 8 and 16 districts in the State in the category.

 

Roosevelt officials stated they believe the deficit is $1.9 million and they had prepared a plan to address it.  They presented the plan to the Commissioner prior to the meeting and indicated it had been in the works since August.

 

The District has set their tax rate accordingly and made drastic cuts to eliminate it.  They do not disagree with the teachersí retirement amount and plan to spread the costs over time.  They also need to investigate the State aid decrease.  Roosevelt believes this is a one-year aberration, not a ten-year problem.

 

The Superintendent assured the Members of the Subcommittee that he has not seen any criminal intent nor would he allow it.  He felt they had provided the five-year plan as requested and this new plan is merely a take-off of that plan. 

 

The Members of the Subcommittee questioned why the deficit was not noted earlier.  They stated that Roosevelt is the Departmentís district and staff should be overseeing every aspect of its operation. One Regent questioned whether the defeat of the Districtís budget twice was a reflection of the lack of confidence the community has in the Superintendent and the Board. 

 

The Commissioner stated the Department needs to know the correct amount of the deficit.  There must be a specific, verifiable plan in place.  This plan must be shared with the Office of the State Comptroller (OSC) and the Department needs accurate monthly reporting. 

 

Staff from OSC indicated they have concerns.  Required reports have not been received and the current school year budget has not been submitted. 

 

William Floyd Union Free School District

 

The discussion of an audit conducted by OSC of the William Floyd Union Free School District was deferred from this meeting. However, Regent Tilles identified a problem he has observed with board conflict of interest and fiduciary responsibilities. He stated it is public knowledge and the board members admit they are contracting with the board and merely abstaining from votes addressing these contracts. 

 

The Commissioner indicated that staff are reviewing the Comptrollerís audit report regarding this situation and will report to the Subcommittee at its October meeting.


Attachment II

 

Regents Subcommittee on Audits

December 2006 Meeting

Audit Report Process

 

The Regents Subcommittee on Audits (RSOA) receives audit reports from numerous audit organizations examining USNY institutions. The audit organizations follow auditing standards and the reporting processes are similar. However, some differences exist. Below is a discussion of the four sources of audit reports that are received by the RSOA.

 

 

New York State Education Department Ė Office of Audit Services (OAS)

 

Three types of audits:

 

  1. External audits of USNY institutions primarily focused on school districts and BOCES;

 

  1. Internal audits of Department operations; and

 

  1. Audits of providers of pre-school special education programs. These audits, though issued by OAS, are often times conducted by accounting firms under contract with counties or the NYC Department of Education.

 

Reporting process - standard process of preliminary findings, draft to auditee for comments, and final report including response to the draft.  OAS requests the written status of recommendations 90 days after issuance of final report. There is no process to prepare a press release upon final audit.

 

 

Office of the State Comptroller (OSC)

 

Division of State Services Ė State Audit Bureau

 

Several types of audits are provided to the RSOA including:

 

  1. Audits of State Education Department programs and grants;

 

  1. Tuition Assistance Program (TAP) recipients; and

 

  1. Follow-up audits.

 

Reporting process Ė standard for SED program and grants, as well as TAP.  Preliminary findings, draft report for comments and final report including the response to the draft. Normally, they are issued by some type of press release depending on the nature of the audit.

 

Follow-up audits Ė compressed time period. The OSC issues a discussion document to auditee and then a final report without the response to the draft attached.

 

The release of these audits is often accompanied by a press notification or release. 

 

Local Government Services and Economic Development

 

Local Government Services and Economic Development - responsible for audits of municipalities of all types.

 

Audits presented to the RSOA would include audits of school districts and BOCES. This Office follows the preliminary, draft, final report process, with the response to the draft attached to the final.

 

The release of these audits is often accompanied by a press notification or release. 

 

United States Department of Education Ė Office of Inspector General

 

This Office of Inspector General has conducted audits of the Departmentís administration of federal grant programs as well as individual school districts compliance with grant requirements. The audit process follows the preliminary, draft, final process, with the response to the draft being included as part of the final.  However, the final resolution of the audit is referred back to the federal program office and not handled by the Office of Inspector General. There is a press release which announces the issuance of the audit.

 

New York State Federal Single Audit Findings

 

Any entity which expends over $500,000 in federal grants must have a Single Audit conducted in accordance with the Federal Office of Management and Budgetís (OMB) Circular A-133.  Findings must be included in the report, and the entity must prepare a corrective action plan. The specific findings related to the State Education Department are presented to the RSOA.

 

 

 

 

 


Attachment III

 

Audit Report Abstracts

Regents Subcommittee on Audits

December 2006

 

Office of Audit Services

Audit

Major Finding(s)

Recommendation/Response

Clinton-Essex-Warren-Washington BOCES

Report BOC-0403-4,

4th Judicial District

$0 adjustment

 

The audit found some required internal control policies and procedures were not in place, budget status reports were not presented routinely to the Board, and the monthly cash report prepared by the treasurer did not include a reconciliation to the bank statement.

 

The audit found the Board meetings did not identify the purpose of all executive sessions.

 

The audit found some differences between the reporting on the SA-111 and the independent auditís financial statement, federal aid revenues were not reported under the correct revenue code on the SA-111, all Operation and Maintenance CO-SER expenditures were not recorded, post-closing adjustments recommended by the independent auditor were not made, and there were mathematical inaccuracies between EPE program summaries and class attendance reports. 

The audit also found that four individuals had duties that should be segregated, the required triplicate pre-numbered cash receipt forms were not used, and nobody was designated to be responsible for each petty cash fund.

20 recommendations

 

The report recommends that all policies and procedures required by law, regulation, and good business practice be developed; quarterly or monthly budget status reports be submitted to the Board; and that reconciliations to the bank accounts be included in the monthly cash report.

 

The report recommends that the purpose of executive sessions be identified and entered in the official minutes. 

 

The report also recommends that the correct activity codes and federal aid revenue codes be used on SA-111 forms; O&M activity be reported as a separate service program and be pro-rated back to other service programs; and post closing journal entries be made so books of record and financial statements agree. The report also recommends that EPE data summaries be checked and contract hour data be accounted for on SA-160 forms.

 

The report recommends that the duties of business office employees be better segregated, triplicate, pre-numbered treasurerís receipts be used for cash receipts, and individuals collecting money are authorized to do so by the Board.

 

District officials agree with the recommendations and indicated they plan to take corrective action.

United States Department of Education - Office of Inspector General

Audit

Major Finding(s)

Recommendation/Response

New York State Education Departmentís  Reading First Program

Report ED-OIG/A02G0002

$118 million adjustment

 

The audit found that the New York State Education Department (Department) could not provide support that 66 approved LEAs (who received $216 million in Reading First Subgrants) met seven Elementary and Secondary Education Act (ESEA) required activities.

 

The audit noted that the Department inappropriately used competitive priority points to approve approximately $118 million in Reading First subgrants for 9 out of 66 approved LEA applications.

 

The audit also found that the Department could not provide signed Conflict of Interest Statements for two of the three expert reviewers for the Yonkers Cohort B Reading First application. 

 

8 recommendations

 

The report recommends that The Department provide support to demonstrate that the reading programs at the 66 LEAs met the seven ESEA required activities or return the unsupported awards and take appropriate action to protect the balance of funds that the Department awarded to the LEAs.

 

The report recommends that the Department utilize priority points in accordance with ESEA, ensure that all Reading First applications are scored correctly, and return the $118 million of unallowable Reading First funds.

 

The report further recommends that the Department determine if any conflict of interest existed for the two expert reviewers whose Conflict of Interest Statements were missing and report any necessary corrective actions they plan to take if conflicts existed. The report also recommends that Conflict of Interest Statements for each cohort are provided prior to the reviewing of applications.

 

Department officials agree with six of the eight recommendations.  However, stated that the scoring rubric and the LEA Proposal Review Summary Sheets were sufficient support to demonstrate that all 66 funded LEAs met ESEA requirements.

 

Department officials strongly disagreed with the recommendation to return $118 million citing United States Department of Education approval of the LEA application process, advice from consultant, and a rigorous competitive process.

Office of the State Comptroller

Audit

Major Finding(s)

Recommendation/Response

Sullivan West Central School District Report 2006M-50

3rd Judicial District

$8,400 adjustment

 

The audit found that a comprehensive strategic plan was not adopted to address the Districtís financial, educational, managerial, and personnel issues related to the merger of Narrowsburg, Jefferson-Youngsville, and Delaware Valley Central School District; that District officials knew 75 percent of capital project costs in State building aid would be received and that the District did not address actual and projected staffing levels from the merger that were identified in the merger study. The audit found that planning for pupil-per-class levels did not occur.

 

The audit also found that the Treasurerís duties were not adequately segregated, purchasing controls were not sufficient, and capital asset records were not up-to-date.

 

Lastly, in 2002 the Board improperly paid $8,400 to a former business manager for unused vacation time.

7 recommendations

 

The report recommends that District officials develop a comprehensive strategic plan to address school building use based on occupancy needs and enrollment projections, staffing levels based on reasonable teacher-pupil ratios, and realistic projections of revenues and expenditures. 

 

The report also recommends that the Board review the duties of the treasurer and institute controls to ensure proper segregation of duties, ensure all staff follow procurement policies, enhance internal controls over purchasing with prior approval of purchase requisitions, and ensure that capital assets records are accurate and up-to-date.

 

Lastly, the report recommends that leave benefits be paid in accordance with employment agreements and/or Board resolutions and that the Board consider steps to recover the improper payment made to the former business manager.

 

District officials generally agree with the recommendations and indicated they plan to take corrective action.

Windham-Ashland-Jewett Central School District Report 2006M-51

3rd Judicial District

$0 adjustment

 

The audit found that the Districtís purchasing policy did not address RFPís for professional services, including audit services. 

 

The audit also found that the CPA firm failed to obtain an understanding of internal controls relating to the Districtís use of information technology and that the CPA firmís audit documentation was not organized to provide a clear link to the findings, conclusions, and recommendations in the report. 

2 recommendations

 

The report recommends that the Board establish policies and procedures for procuring professional services and issue an RFP for audit services at least every five years.

 

The report also recommends that the Board ensure that the external auditors fulfill the engagement contract, meet auditing standards, and provide oversight for the Districtís operations.

 

District officials agree with the recommendations and indicated they plan to take corrective action.

Waterloo Central School District Report 2006M-56

7th Judicial District

$4,292 adjustment

 

The audit found that the District does not have adequate internal controls over separation payments which resulted in a Superintendent being paid $4,292 for 63 days of unused sick accruals and 6 days of unearned vacation accruals. 

 

The audit also found that the Board has not adopted a written policy authorizing reimbursements to officials for using their personal Internet service for business purposes.

 

Lastly, capital asset records were not maintained or available for the auditors to review.

9 recommendations

 

The report recommends that separation payments be made when specifically authorized, that these payments be monitored, that employment contracts be reviewed by the Districtís attorney prior to approval, and that the improper separation payment be recovered.

 

The report recommends that Board members reimburse the District for the cost of Internet service and that a comprehensive inventory record of capital assets be completed along with inventory updates and tagging of assets. 

 

District officials generally agree with the findings.

 

Solvay Union Free School District Report 2006M-60

5th Judicial District

$68,000 adjustment

 

The audit found that the Board has not adopted adequate control policies, has not defined the roles and responsibilities of the audit committee, has not engaged an internal or external auditor to assess risk and test controls, and has not addressed internal control concerns raised by the independent auditor. 

 

The District has engaged the same audit firm for over 20 years and has no record of seeking competitive proposals or considering alternative auditors.  The audit found that some separation payments made to employees were improper and resulted in preventable losses of approximately $68,000 during the audit period.

 

The audit found that the Board does not audit claims and that the District has vested virtually all control over its fiscal activities in one individual, without establishing appropriate checks and balances.   

 

Finally, control policies or procedures to safeguard technology assets or food inventories have not been established.

15 recommendations

 

The report recommends that the Board develop an operating style that supports a strong control environment, that the Board provide oversight guidance to District management and that the Board fully implement the Five-Point School Financial Accountability Plan. 

 

The report also recommends that labor agreements be clearly written, that separation payments be specifically authorized and that improper payments to employees be recovered.

 

Lastly, the report recommends that the Board audit claims or appoint a claims auditor; that District management segregate recordkeeping, authorization, and cash disbursement duties, to the extent practical, and cost effective; and that District personnel be aware of policies to safeguard the Districtís assets.

 

District officials generally agree with the recommendations and indicated they plan to take corrective action.

 

South Country Central School District

Report 2006M-77

10th Judicial District

 

 

$0 adjustment

 

The audit found that District officials did not accurately record and report the Districtís financial activities to allow the Board to monitor and evaluate the Districtís financial condition.  It also found inadequate Board oversight of District officialsí performance and incompetent independent audits.

 

Finally, the audit found that purchasing policies were not consistently enforced, which may have resulted in overpayments for some goods and services.

11 recommendations

 

The report recommends that the Board develop policies and procedures for financial planning and that the Board together with District officials eliminate the general fund deficit and cash flow problem. The report also recommends the Board ensure that the Assistant Superintendent for Business and District Treasurer possess the knowledge and expertise for their positions.

 

The report recommends that the Board require periodic reports and timely financial information, review the reliability of revenue and appropriation estimates, revise future budget formats to include the actual revenues for prior completed years, actual revenues and expenditures of the current fiscal year, and requires proceeds from TANís be used for expenditures that relate to the correct year.

 

The report recommends that the Board ensure that the policy for purchase orders be followed, that the use of confirming purchase orders be limited, that competitive bids are sought (as identified in the purchasing policy), that the claims auditor reviews contract purchase information and verifies voucher packets, and that the Board approve all written agreements with firms and individuals providing professional services.

 

District officials agree with the recommendations and indicated they plan to take corrective action.

Seneca Falls Central School District Report 2006M-83

7th Judicial District

$0 adjustment

 

The audit found food inventory controls did not provide information about the availability of these assets and that food inventory policies do not assign responsibility to personnel.

 

The audit also found that cellular phone assignments, usage and reimbursement should be monitored, and that guidance on cellular phones was limited.

2 recommendations

 

The report recommends that based on a risk assessment, policies and procedures that assign responsibility for food inventories be established and implemented.

 

The report also recommends that a formal policy covering cellular phone issuance and usage be adopted.

 

District officials agree with the recommendations and indicated they plan to take corrective action.

Cornwall Central School District Report 2006M-88

9th Judicial District

$0 adjustment

 

The audit found that the District lacked a procedure to ensure checks were deposited timely and that the District did not maintain a record of checks received by mail. 

 

The audit also found that District officials performed conflicting duties, competitive bidding did not follow the Boardís policy, and that capital asset inventory lists are not comprehensive. 

7 recommendations

 

The report recommends that District officials monitor compliance with their newly adopted policies that require documentation of when funds are received and that deposits occur within three days of receipt.

 

The report recommends that District officials assign critical duties when the regularly assigned employee is absent from work and the clerk not be responsible for maintaining personnel records or instituting a compensating control procedure.

 

The report also recommends that bids should be solicited for security services, that the new purchasing policy include requirements for written agreements and that periodic physical inventories be performed, with discrepancies resolved. 

 

District officials agree with the recommendations and indicated they plan to take corrective action.

Kinderhook Central School District Report 2006M-94

3rd Judicial District

$0 adjustment

 

The audit found that a districtwide inventory listing was last completed in 2001.  Audit testing was performed on an IT inventory list and 5 items out of 85 could not be located.

 

The audit also found that the District does not have a policy or adequate procedures to safeguard food inventories. 

7 recommendations

 

The report recommends that a comprehensive capital asset policy be developed and communicated, that a property control manager be responsible for tracking assets, and that a physical inventory count be conducted annually, with discrepancies resolved.

 

The report also recommends that policies and procedures address the acquisition, storage and use of food inventories along with analytical reviews of unusual food inventory items or trends.

 

District officials agree with the recommendations and indicated they plan to take corrective action.

Berlin Central School District Report 2006M-102

3rd Judicial District

$0 adjustment

 

The audit found that the business administrator performs conflicting duties, including purchasing, wire transfers, journal entries, and banking access; and is also the system administrator. 

 

The audit also found that $48,000 in assets were not recorded on the capital asset inventory records, and that fixed assets are neither monitored or tagged.

7 recommendations

 

The report recommends that the Board designate an individual outside of the business office operation to be responsible for system administration, review access logs to ensure employees are performing duties consistent with their job description, and appoint someone independent of the business office to review the audit log from the financial management system.

 

The report also recommends that a comprehensive capital asset policy be developed, a property control manager be designated, assets be tagged, serial numbers be documented on the asset listing, and that the inventory record is comprehensive and up-to-date.

 

District officials agree with the recommendations and indicated they plan to take corrective action.

Chenango Forks Central School District

Report 2006M-112

6th Judicial District

$0 adjustment

 

The audit found that the District should improve records and control procedures to account for capital assets.

1 recommendation

 

The report recommends that the Board adopt and monitor compliance with a comprehensive capital asset policy, including an annual physical inventory with investigation of discrepancies and the tagging of assets.

 

District officials agree with the recommendations and indicated they plan to take corrective action.

Wheatland-Chili Central School District

Report 2006M-125

7th Judicial District

$0 adjustment

 

The audit found that the business managerís duties were not properly segregated, accounting software built-in controls were under-utilized, and the accounting software did not generate reports to properly monitor financial activity.

2 recommendations

 

The report recommends that the Board ensure that financial duties, particularly recordkeeping, check preparation and bank reconciliation are assigned so that duties are segregated; and that built-in controls within the accounting software are utilized to promote the segregation of duties. 

 

The report also recommends that if the accounting software cannot generate necessary reports that the Board consider purchasing replacement software or implementing compensating controls.

 

District officials agree with the recommendations and indicated they plan to take corrective action.

 


Previous Monthís Audit Summaries

 

Office of Audit Services

Audit

Major Finding(s)

Recommendations/Response

Our World Neighbor- hood Charter School 

Report CH-1005-1

11th Judicial District

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0 adjustment

 

The audit found the Board of Trustees (Trustees) meeting minutes did not document adequate monitoring of the Schoolís financial condition or discussions of audit findings and staff requests to attend training/ conferences.

 

The Schoolís fiscal year and the actual number of school days provided were inconsistent among the Schoolís Charter, by-laws, and the School calendar. School bank reconciliations were not signed and dated by the preparer or the reviewer.

 

The audit also found the Parent Teacher Organization (PTO) is not independent of the School in financial matters; the Schoolís Chief Administrative Officer is a signer on the PTO checking account and the PTO is using the Schoolís tax-exempt identification number. The School does not have specific procedures that define the types of expenditures that are appropriate and the documentation required for reimbursement from the petty cash fund.

In addition, personnel files do not contain all necessary information such as documentation of reference checks and evidence of required certifications.

 

Finally, the School did not establish adequate controls over the $2.8 million in assets that it owns.  Specifically, about $200,000 of furniture and equipment lacked School identification tags, the fixed asset inventory did not contain sufficient identifying information, and a physical inventory was not taken within the last year.

29 recommendations

 

The report recommends the Board officially meet to approve the budget and any budgetary transfers; monitor the budget and establish a process to monitor budget status reports; authorize bank accounts for School use; approve corrective action plans to address audit findings; and establish a policy to review staff requests to attend training conferences.

 

In addition, the report recommends amending the School by-laws to reflect the dates in the Charter for the fiscal year, strengthening School bank reconciliation procedures, separating financial operations between the PTO and the School, and modifying the petty cash procedures to provide guidance on appropriate expenditures and required documentation for reimburse- ment.

 

Furthermore, the report recommends that personnel file documentation be strength- ened to include support for references and appropriate certifications, and that the School establishes policies and procedures for fixed assets and equipment inventory.

 

School officials agree with all but one of the recom- mendations; they have taken action to implement the recommendations that they agree with. In response to the recommendation they disagree with, School officials believe they have an adequate process in place to approve bank reconciliations.

The Milestone School for Child Develop-ment

Report CA-0602-12

 

An audit conducted by the Office of the Auditor General, Department of Educa- tion of The City of New York and Approved by the State Education Department Pursuant to Education Law Section 4410

2nd Judicial District

$67,696 adjustment

 

The audit determined that the School did not comply with some State Education Department (SED) regula- tions and guidelines that govern fiscal operations of schools for children with disabilities.

 

 The School both under and over-reported student enroll- ment data; misreported personal service and fringe benefit costs; and did not maintain adequate docu- mentation for other-than-personal-service and admin- istration expenses, some of which were not reim- bursable.

 

Parking violation fines, late payment fees to credit card companies, and corporation franchise taxes paid above the minimum allowed amount were disallowed by the auditors as not reimbursable.

3 recommendations

 

The report recommends that the School calculate its enrollment data in accordance with SED regulations, report accurate personal service and fringe benefit data to the appropriate cost center, comply with SED guidelines for all reimbursable expenditures, and maintain the required documentation for all expen- ditures.

 

School officials generally agree with recommendations.

 

The Rate Setting Unit will use the results of the audit to establish audited tuition rates.

 

Office of the State Comptroller

Audit

Major Finding(s)

Recommendations/Response

Village Child Development Center  Report 2004-S-81

12th Judicial District

$600,101 adjustment

 

The audit found material errors on Village Child Development Centerís (VCDCís) Consolidated Fiscal Reports (CFR) for fiscal years 2003 and 2004, which totaled $600,101.  The errors on the CFRs resulted from the misclassifications of personal service costs and the inclusion of ineligible other-than-personal-service (OTPS) costs.  For example, VCDC improperly charged staff salaries to the wrong program or care class- ification; claimed non-reimbursable consulting, accounting, legal, and entertainment costs; and lacked documentation to support other various expenses.

 

The report also found that VCDC combined costs on the CFR for two of its programs and neglected to use the CFR Manualís prescribed methodology to calculate full-time equivalent (FTE) enrollments.

3 recommendations to SED

6 recommendations to VCDC

 

The report recommends that SED review the adjustments identified in the audit report and take appropriate action to recover any overpayments; require VCDC to report program information on the CFR separately; and formally advise VCDC to comply with the Manualís methodology for calculating FTE enrollment.

 

The report also recommends that VCDC ensure personal service costs reported on the CFR are accurately charged to the appropriate program, all costs are reported correctly as either direct care or non-direct care, and all OTPS costs reported on the CFR are eligible and adequately documented. In addition, VCDC should report program information separately on the CFR and comply with the Manualís methodology for calculating FTE enrollment.

 

SED officials agree with all of the recommendations. VCDC did not respond specifically to the recommendations, but indicated disagreement with findings regarding retainer payment to its accountants and payments to other consultants for team meetings.

 

The Rate Setting Unit will use the results of the audit to establish audited tuition rates.

 

Written Support of Internal Controls Over the State Aid Management System

Report 2006-S-32

$0 adjustment

 

The audit found the Departmentís written support documenting internal controls over the State Aid Unit and the State Aid Management System is adequate. These controls help provide assurance that the financial information for reporting support of public schools to the Office of the State Comptroller for use in the Stateís Comprehensive Annual Financial Report is reliable.

0 recommendations

Marathon Central School District - Internal Controls Over the Audit of Claims

Report 2006M-27

6th Judicial District

$0 adjustment

 

The audit found that the Board of Education (Board) has not established policies or procedures for the audit of claims, nor has the Board deliberately and thoroughly audited them.  In addition, Board members stated that they do not audit every claim because they trust the work of District staff to ensure the accuracy and appropriateness of claims.

 

An audit test of 80 claims revealed that eight lacked evidence that goods or services were received and two included mileage reimbursements that were paid at rates other than the established rate set by the Board.

1 recommendation

 

The report recommends that the Board enhance the Districtís internal controls by establishing policies and procedures to ensure the deliberate and thorough audit of all individual claims.

 

District officials agree with the recommendation; they stated that they would appoint a part-time internal claims auditor and prepare written internal control policies and procedures.

Wyandanch Union Free School District Ė Independent Audit Services

Report 2006M-3

10th Judicial District

$0 adjustment

 

The audit found the District did not effectively procure its annual audit services by obtaining requests for proposals. The District contracted with the firm they had used in the past without seeking competitive offers from other firms.

 

The audit also found that the CPAís annual audit of the District did not meet several critical professional stan- dards. Specifically, the CPAís were not in compliance with standards for consideration of fraud, risk of District management overriding controls, under- standing internal controls, documentation of work, and disclosure of non-compliance with law and regulations.

6 recommendations

 

The report contains four recommendations regarding the proper procurement of audit services at least every five years. The report recommends that the District and Board ensure they understand the scope and limitation of the annual independent audit. Finally, the report recommends the district establish an audit committee.

 

District officials generally agreed with the recom- mendations and indicated they planned to take corrective action.

 

 

Wyandanch Union Free School District - Internal Controls

Report 2006M-7

10th Judicial District

$0 adjustment

 

The audit found District officials did not adopt policies, maintain perpetual inventory records, conduct periodic inventories, nor establish other safeguards to ensure that capital assets were protected from loss. Auditors found that the District has possession of less than 50 percent of computer equipment obtained through a SED surplus computer program; they were unable to locate 74 of the 181 donated computer-processing units, 24 donated laptops, and 81 of the 120 donated monitors.

 

The report also found the control environment over employee personnel files and payroll processing is weak.  Personnel files lacked proof of fingerprint clearances, background checks, and SED clearances to work with children.  In addition, District personnel made recordkeeping errors that led to the overpayment of 17 employees and the underpayment of 14 employees.  Furthermore, the auditors could not determine how a 1.5 percent employee bonus was calculated.

 

The District did not comply with its own procurement policy and General Municipal Law competitive bidding requirements.  Ten contracts totaling more that $600,000 were awarded without using a request for proposal process, two contracts totaling $130,000 were for consultant services that the District did not need, and the contractual service provision for one contract totaling $68,000 was never fully realized.

 

The District had one person performing the duties of accountant and treasurer.  The treasurer/accountant prepared deposits, posted entries in the accounting records, printed and signed checks, and performed bank reconciliations.

21 recommendations

 

The report recommends that the Board establish compre- hensive capital assets policies, take immediate action to recover the missing computers, update its payroll policies and procedures, assign payroll duties appropriately, ensure vouchers are audited prior to payment, provide procurement guidance, and review payments on contracts where services were either unneeded or not provided (to determine legal action/repayment).

 

The report also recommends that the District ensure that its capital assets inventory is complete and up-to-date, contracts are clear and concise, contractual com- pliance is monitored, and employee duties are segregated.  The report also recommends the District require that personnel files contain all required forms, create a system to accurately track employee time records, and develop and document criteria for the 1.5 percent employee bonus.

 

District officials agreed with the recommendations and indi- cated they plan to initiate corrective action.

Dundee Central School District - Food Inventories

Report 2006M-45

7th Judicial District

$0 adjustment

 

The audit found that District officials did not establish the controls and maintain the records necessary to safeguard food inventories.  Auditors found that the Districtís cafeteria manager performed virtually all of the administrative duties asso- ciated with the cafeteria with little or no oversight, and did not keep a perpetual inventory system.  In addition, custodial staff had access to food inventories without managerial super- vision.  Auditors also noted discrepancies (shortages and overages) with the Districtís physical inven- tories.

4 recommendations

 

The report recommends the Board and District manage- ment establish policies and procedures to address the acquisition, storage, and use of food inventories. The report also recommends that the cafeteria manager establish and maintain a perpetual inventory system; District officials improve physical security over stored food items; and the Districtís internal auditor perform periodic reviews to identify any unusual food inventory items or trends.

 

District officials generally agreed with the recom- mendations and indicated they plan to initiate corrective action.

East Irondequoit Central School District - Internal Controls Over Payroll and Personal Services

Report 2006M-74

7th Judicial District

$0 adjustmemt

 

The audit found that the Districtís internal controls over payroll and personal services are appropriately designed and operating effectively.

 

 

 

 

 

0 recommendations

 

Westmoreland Central School District - Internal Controls Over Procurement and Capital Assets

Report 2006M-30

5th Judicial District

$0 adjustment

 

The audit found that District personnel are not complying with the Board procurement policy.  Auditors examined 23 purchases totaling $200,000. Support for these purchases in the form of oral or written quotes, or requests for proposals from vendors were nonexistent.  Additionally, auditors found no written evidence supporting a sole-source determination for a $31,150 public works contract.

 

The audit also found that District officials did not ensure capital assets were protected from loss by assigning responsibility for record maintenance to someone independent of purchasing.  The District did not maintain adequate perpetual inventory records, conduct periodic inventories, tag District assets, and approve capital asset transfers to District employees.

6 recommendations

 

The report recommends the Board ensure District em- ployees follow the Districtís procurement policy, assign responsibility for updating capital asset records to someone independent of the purchasing process, and approve and note in minutes of its meetings any transfers of capital assets to District employees.

 

The report also recommends that District officials ensure that District personnel maintain adequate capital asset/ computer equipment records, perform inventory reviews, and identify all District property via decals, tagging, or serial numbers.

 

District officials generally agreed with the recommendations and indicated they plan to initiate corrective action.  

Deposit Central School District - Cash Disbursements;

Report 2006M-61

6th Judicial District

 

$0 adjustments

 

The audit found that the Districtís internal controls over non-payroll cash disbursements were appropriately designed and operating effectively and there was adequate segregation of duties over cash disbursements.

 

 

0 recommendations

Saranac Lake Central School District - Internal Controls Over Capital Assets; Report 2006M-42

4th Judicial District

$0 adjustment

 

The audit found that the Board of Education (Board) had not adopted a written policy to protect and account for the Districtís fixed assets.

 

The audit also found that the Districtís fixed asset inventory records for its capital assets were not timely or accurate.  Auditors were only able to locate 70 of 77 computers that were in the Districtís inventory records.  In addition, serial numbers for 30 of the 70 computers were not recorded in the inventory records.

 

Lastly, the audit found that the District does not have written guidelines for the disposition of computers and computer equipment.  Auditors found that the District gave away an unknown number of com- puters, however, because guidelines and supporting documentation did not exist, they were unable to determine whether the computers should have been discarded.

5 recommendations

 

The reportís recommendations focus on the establishment and implementation of fixed asset policy and disposal guidelines for the Districtís capital assets, and requiring District personnel to assign an identification number to all applicable capital assets.

 

District officials generally agreed with the recom- endations and indicated they plan to initiate corrective action.

 

 

Enlarged City School District of Troy Ė Internal Controls Over Information Tech-nology and Payroll

Report 2006M-62

3rd Judicial District

$0 adjustment

 

The audit found that the District has inadequate controls over the assigned passwords used to access the Districtís computer network, and that the Board had not established policies and procedures for the creation and administration of the usersí network passwords.  Auditors found that the District does not require users to change passwords periodically; in fact, all users can use their initial assigned password for the entire period of their employment.

 

The audit also found that the District assigned certain users in the business office with administrative rights for the financial management system when they had no need for full access to the system. These rights allow them to view, modify, edit, create financial transactions in functions, and create management overrides.

 

Finally, the audit found that the District did not have a standard procedure for documenting the calculation and supervisory approval of employeesí retirement pay- ments, and it identified weaknesses in the segregation of duties over payroll and authorized signatures on paychecks.  Auditors found that the District allowed the former Superintendent to cash in 11 unused vacation days in the amount of $5,450 and determined that the former Associate Superintendent was paid $5,010 for vacation days that were in excess of her available leave balance.  Auditors also found that the Districtís payroll clerk performed a majority of the payroll duties at the District.

13 recommendations

 

The reportís recommendations focus on establishing policies and procedures over the administration of user accounts; restricting access to the financial management system; strengthening controls over employee leave records, benefits, and retirement pay- outs; and instituting additional payroll processes.

 

District officials generally agreed with the recom- mendations and indicated they plan to initiate corrective action.

William Floyd Union Free School District Ė Controls Over District Assets

Report 2006M-36

10th Judicial District

$0 adjustment

 

The audit found that the Districtís internal control structure was inadequate to detect and prevent fraud.  Auditors identified several control deficiencies including employment contract approvals subsequent to service provision, unapproved changes to the Superintendentís contract, failure to segregate critical duties, lack of communication between the Treasurer and the Board of Education (Board) regarding District financial information, failure to monitor the effectiveness of internal controls by the Board or the Superintendent.

 

The audit also found that the District incurred $3.2 million in inappropriate or ques- tionable costs.  Auditors found District administrators were paid without Board approved contracts, the Superintendent increased his own salary and obtained reimbursement for personal costs, the former business manager transferred the ownership of life insurance policies from the District to six District officials, and various District officials obtained meals and lodging costs in excess of federal per diem rates.

 

Furthermore, the audit found the District had ineffective contract procurement and claims processing policies, and procedures that did not detect improper payments or overpayments for District procurements. Auditors found that the Board contracted with the former Assistant Superintendent for Business immediately after his retirement and even though he was ineligible to perform the services the District paid him approx- imately $834,920 over a six-year period based on an unspecific and unsigned contract.  In addition, auditors found the District paid seven providers for services amounting to $940,451 without Requests for Proposals for the services, nor did it negotiate written contracts with six of the seven providers, and the District paid for services that were not competitively bid.

 

Finally, the audit identified deficiencies in the Districtís controls over payroll and capital assets.  Payroll deficiencies allowed the District to make unautho- rized payments of $159,197 to its former Treasurer and allowed the Superintendent

 

to increase nine admin- istratorsí salaries, which totaled approximately $40,182 without Board approval.  Capital asset inventories were not properly accounted for, cost records were not up-to-date, and District policy does not provide guidance on inventory updates that result from the disposal of assets or a change in an assetís location.

35 recommendations

 

The reportís recommendations focus on strengthening internal controls; providing public accountability for decisions involving employment contracts and other District business;  increasing Board oversight to lessen the likelihood for future theft, misuse, and waste of District funds; strengthening procurement, claims processing, and payroll practices; and improving capital asset inventory policies, procedures, and record keeping processes.

 

District officials generally disagreed with the audit, which they believed focused unfairly on past problems, and contend that they had already implemented most of the reportís recommendations.

Geneva City School District Report

2006M-41

7th Judicial District

$13,904 adjustment

 

The auditorís found that two of eight administrators who terminated employment with the District during 2004-2005 received separation payments from the district.  The relevant collective bargaining agreements did not provide for separation payments, therefore the district overpaid the two former administrators by $13,904. 

 

The District does not adequately track capital assets or maintain reliable records for acquisitions, location of assets or their disposal. 

 

The Districtís inventory system is unreliable and food inventories are virtually uncontrolled. 

14 recommendations

 

The report recommends that policies and procedures be adopted for unused leave payments upon separation of employment; payments should be authorized as stated in the Districtís policy; such payments monitored; and steps to recover the $13,904 in improper separation payments made should be taken. 

 

A comprehensive capital asset policy and related procedures should be established; physical inventory should be taken with discrepancies resolved; capital asset tags should be utilized, and procedures should be developed on the reporting of suspected thefts of capital assets.

 

The report further recommended that a comprehensive policy for effective inventory management and control procedures should be established to assign responsibilities for purchasing, storing and tracking the use of food stores, and to segregate duties.  A perpetual inventory system should be set up to accurately record food items received and used; periodic physical inventories should be reconciled to records and differences resolved; physical security over food items at central receiving and the cafeterias improved; a periodic analytical review performed on unusual food inventory items or trends that might require further investigation; and employees should not be allowed to purchase bulk food at cost.

 

District officials generally agree with the recommendations and indicated they plan to take corrective action.

Port Jervis City School District Report

2006M-46

9th Judicial District

$0 adjustment

 

The audit found that employment contracts between the District and employees not covered by collective bargaining agreements did not require the earning of fringe benefits to be prorated over the school year.  Annual fringe benefits were paid to a former Superintendent and a former Assistant Superintendent for a full year even though they worked just two and three months, respectively, of the school year.  Specific language was not in their contract that required fringe benefits to be accrued over the course of the year, and prorated, which would have saved about $24,100.

 

Policies and procedures were not adopted to govern the use of cellular phones or the purchase of meals and refreshments at meetings.  The travel and conference expense policy was inadequate and key duties in the treasurerís office were not segregated. 

 

A general ledger control account was not maintained for capital assets and a current listing of capital assets was not readily available.   

 

10 recommendations

 

The report recommended that future employment contracts for employees not covered by collective bargaining should clearly describe how benefits will be paid upon separation.  Formal guidelines should be considered.

 

A policy should be adopted on the Districtís payment for meals and refreshments at school meetings with provisions for monitoring; and the assignment and use of District owned cellular telephones, with terms stated for personal use.

 

The travel policy should be revised to set maximum rates for lodging and per diem rates for meals. 

 

The report further recommends that the treasurerís duties should be reviewed to segregate incompatible functions.

 

Finally, the report recommends that a general ledger control account that shows the total value of all capital assets should be kept and reconciled to the detailed inventory records.  Annual physical inventories should be performed and differences with records resolved.  A uniform system for identifying capital assets should be developed, assets should be tagged, and the missing computer investigated. 

 

District officials generally agree with the findings as recommended.

Lowville Central School District Report 2006M-48

5th Judicial District

$0 adjustment

 

The audit found the Board had not adopted a comprehensive capital asset policy and one person should have overall responsibility for tracking capital assets and for the accuracy of asset records. 

3 recommendations

 

The report recommended that the Board establish a comprehensive capital asset policy; capital assets should be tagged; physical inventories should be conducted, compared with records, and differences resolved.

 

District officials generally agree with the findings.

Bolivar-Richburg Central School District Report 2006M-72

8th Judicial District

$0 adjustment

 

The audit found that while the District contracts with an appraisal company to conduct a physical inventory of capital assets, the District has not conducted a physical inventory since 1995.  Therefore, the District does not know whether inventory records are accurate and if they have custody of purchased capital assets. 

 

Certain duties are not properly segregated: the business manager has the ability to prepare and sign checks and also perform bank reconciliations; a clerk that prepares and records payroll and another clerk who records contractual expenditures have the ability to electronically produce and sign payroll and accounts payable checks.

4 recommendations

 

The report recommends that periodically the District should conduct a physical inventory and compare it to the capital asset inventory records and investigate discrepancies.  All capital assets should have a tag affixed and missing capital assets should be investigated.

 

The report also recommends that the duties performed by the business office personnel should be reviewed to better segregate recordkeeping duties from the preparation of bank reconciliations and the processing of disbursements.

 

District officials generally agree with the recommendations and indicated that they either have or plan to implement the findings. 

Schuylerville Central School District Report 2006M-67

4th Judicial District

$0 adjustment

 

The audit found that the Board has not established adequate controls over computer and electronic inventory; reimbursements for meals and beverages; and employee expenses. 

12 recommendations

 

The report recommends that a comprehensive policy for effective management of capital assets should be established; an individual designated as responsible for inventories; and physical access to assets limited. Procedures should be implemented to record equipment purchases, student-built computers and disposals; to affix tags to assets; to complete a comprehensive inventory of computer and electronic equipment; and investigate differences between counts and records. The District should also investigate the two missing computers and three missing palm pilots and report to the Board.

 

The report also recommends that formal written policies that define reimbursable costs should be adopted. The Board should investigate the camera equipment and other reimbursements claimed by the Superintendent; staff dinners and luncheons, especially ďbar salesĒ; and the reimbursement of District officials for internet service costs with a policy for this practice, if appropriate. The Board should discontinue the practice of providing gifts for staff at District expense and appoint an independent claims auditor. 

 

District officials generally agree with the findings as recommended.

Andes Central School District Report

2006M-75

6th Judicial District

$0 adjustment

 

The audit found that the Districtís internal control policies and practices relating to capital assets are weak and even non-existent in certain instances. A capital assets policy outlining procedures for staff to follow when acquiring and disposing of District assets has not been established; tagging of capital assets is not done; the treasurer is not notified when assets are disposed; and a physical inventory has not been performed since January 27, 2003.

2 recommendations

 

The report recommends that the Board should adopt a comprehensive capital asset policy that all assets be recorded, identifying tags should be affixed to assets, procedures should exist for acquiring and disposing of assets; physical inventories should be required; and inventories should be reconciled with the detail property records and discrepancies resolved.

 

The report also recommends that all staff should follow the requirements of the procurement policy and obtain quotes for goods and/or services as stated in the policy.

 

The District officials generally agree with the recommendations and indicated they plan to take corrective action.

McGraw Central School District Report 2006M-76

6th Judicial District

$0 adjustment

 

The audit found that District officials have not adopted a capital asset policy setting forth the duties, records, and procedures required to adequately safeguard capital assets.  District personnel do not consistently affix tags to assets or perform periodic physical inventories to verify the accuracy of the capital asset inventory records. 

 

3 recommendations

 

The report recommends that a comprehensive capital assets policy should be prepared and adopted; periodic physical inventories of capital assets should be taken; and inventories should be compared to accounting records, with differences resolved. The final disposition of missing computers should be documented and records adjusted.

 

District officials generally agree with the findings as recommended.

Seneca Falls Central School District Report 2006M-83

7th Judicial District

$0 adjustment

 

While no significant problems in District operations were found, there were weaknesses in internal controls over food inventories and District-issued cellular phones.  District management has not established policies that describe managementís expectations for the use of these assets or procedures that state how the assets should be tracked and accounted.

2 recommendations

 

The Board and District officials should assess the value of and risks to food inventories. Based on this assessment management should establish formal policies and procedures that:  assign responsibility for food inventories; describe the control systems, practices and procedures that must be implemented to account for these inventories; and describe how management will oversee the effectiveness of established controls.

The Board should adopt a formal policy covering cellular phone issuance and usage, and update the policy as needed.

 

District officials generally agree with the findings as recommended.

Waverly Central School District Report 2006M-97

6th Judicial District

$0 adjustment

 

The audit found that one Board member has a prohibited conflict of interest with the District. This Board member is an employee, part owner and an agent for The Partners Insurance Company. The District annually purchases their insurance policies from The Partners Insurance Company and the Board member is the authorized representative for that policy. The District paid about $429,000 during the audit period to The Partners Insurance Company.

 

Assets totaling about $40,000 purchased during the 2004-2005 school year were not recorded on the capital asset inventory record. Also, the District does not monitor the fixed asset inventory and assets are not tagged.

 

The District does not segregate duties over payroll. The payroll clerk creates and deletes employees within the system, maintains the employeesí   time records, processes the payroll, and                                                                                                             distributes the paychecks. The business manager reviews each payroll for mathematical accuracy prior to the payroll clerk entering the payroll into the financial management system (MUNIS); however, the business manager has full access to all payroll functions within MUNIS. In addition there are weaknesses in assigning user rights to the financial management system and security over the electronic signature disk.

9 recommendations

 

The report recommends that immediate action should be taken to eliminate the conflict of interest in its purchase of insurance from The Partners Insurance Company.

 

A comprehensive capital asset policy should be developed and a property control manager designated to track capital assets and ensure the accuracy and usefulness of records. Each piece of property to be tracked should be identified when it is received, tagged, and the serial number of the property should be documented on the asset listing. A physical inventory count of assets should be conducted at least annually and discrepancies investigated.

 

Finally, the audit report recommends that payroll duties should be assigned to employees in such a manner that incompatible duties are segregated.

 

The District officials generally agree with the recommendations and indicated they plan to take corrective action.

 

 

Suffolk County Special Grand Jury

Audit

Major Finding(s)

Recommendation/Response

Grand Jury Report CPL ß190.85(1)(C)

10th Judicial District

 

$0 adjustment

 

The special grand jury conducted an investigation into fiscal matters relating to school districts in Suffolk County. It received evidence of examples of fraud, waste, and criminal conduct in the financial arena of school districts. The report concludes that there was a lack of oversight by those charged with the responsibility to safeguard public funds, as well as a pervasive lack of internal controls. The report identified six areas of concern relative to fiscal controls over school districts.

 

The grand jury found that information regarding salaries and fringe benefits paid to administrators is beyond the reach of citizens. In addition the report found that many school district administrators receive perks and benefits more usually associated with private sector employees.

 

The report also notes recurrent internal control weaknesses identified in school district management letters and the audits of the State Comptroller. Some of the frequent weaknesses identified were unsupervised accounting entries; insufficient separation of duties; inadequate oversight of Capital Assets; lack of written policies for cell phones, credit cards, computers, and travel and meal reimbursements; failure to obtain bids; and excess unappropriated fund balance.

 

Pension fraud was also identified in the report as an area of concern.  The report identifies instances of individuals collecting pension checks and continuing to collect payments from school districts through a consultant arrangement.  The report concludes in many instances the consultant arrangement was in name only, and the individuals were actually employees of the school district, and therefore subject to limitations on compensation.

 

The report also discusses the lack of a requirement for continuing education for school district administrators, unfunded mandates placed on school districts, and mismanage-ment of grant funds.  

55 recommendations

27 to the legislature

22 to administrative entities

6   to the executive branch

 

The recommendations center on the creation of a New York Inspector General for Education, mandating continuing education for public school administrators, improved access to salary and benefit information, and establishing school district compensation committees.

 

The report also recommends increased penalties for pension abuse, tightening the pension waiver process, and modifying the grant reporting process.