Meeting of the Board of Regents | December 2007

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

TO:

Subcommittee on Audits

FROM:

Theresa E. Savo 

SUBJECT:

Board of Regents Oversight – Financial Accountability

DATE:

November 16, 2007

STRATEGIC GOAL:

Goal 5

AUTHORIZATION(S):

REGENTS SUBCOMMITTEE ON AUDITS

MEETING ROADMAP

Date:  December 2007

Time:  TBD

Location:  TBD

TOPIC

OUTCOME

WHO

MINUTES

Opening Remarks

Chair

2

Review Agenda/Minutes (Attachment I)

Approval

Conway

5

Follow-up on Previous Meetings

Information

Conway

5

Audit of the Financial Statements of New York State

Information

KPMG Staff

20

Proposed Process for Providing Information to the Regents Subcommittee on Audits

Information/

Acceptance

Conway

15

Audit Report Abstracts (Attachment III)

Questions Addressed

SED and OSC Staff

10

Next Session

Preview

Staff

3

Office of Audit Services

Orleans Niagara BOCES

√

√

√

√

Special Kids Intervention Program, Inc. (SKIP)

√

√

VESID Rochester District Office

√

√

Office of the State Comptroller

Averill Park Central School District

√

√

Avon Central School District

√

√

√

Bainbridge-Guilford Central School District

√

√

√

Ballston Spa Central School District

√

Bronxville Union Free School District

√

√

Cleveland Hill Union Free School District

√

√

√

√

Clymer Central School District

√

√

√

√

√

Edwards-Knox Central School District

√

√

√

√

√

Elmsford Union Free School District

√

√

Gilbertsville-Mount Upton Central School District

√

√

√

√

Haldane Central School District

√

Hampton Bays Union Free School District

√

√

√

Holland Patent Central School District

√

Lafayette Central School District

√

Lewiston-Porter Central School District

√

√

√

Massena Central School District

√

√

√

Mexico Academy and Central School District

√

√

√

√

Minerva Central School District

√

Northeastern Clinton Central School District

√

√

√

√

√

Onondaga-Cortland-Madison BOCES

√

√

√

Peekskill City School District

√

√

√

Pine Plains Central School District

√

√

√

Putnam Central School District

√

Quogue Union Free School District

√

Randolph Academy Union Free School District

√

√

√

St. Johnsville Central School District

√

Schodack Central School District

√

√

Sewanhaka Central High School District

√

√

√

Sherburne-Earlville Central School District

√

√

√

Sherrill City School District

√

√

√

√

Tonawanda City School District

√

√

Victor Central School District

√

Waterville Central School District

√

Wellsville Central School District

√

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Westminster Community Charter School

√

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Wheelerville Union Free School District

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Yorktown Central School District

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√

√

December Total

12

0

16

17

14

6

15

15

1

1

3

May 2007

June 2007

July 2007

October 2007

December 2007

Total

Procurement

9

11

12

20

12

64

Capital Assets

10

1

2

4

0

17

Claims Processing

13

3

12

17

16

61

Payroll

12

3

11

20

17

63

Cash

6

2

8

15

14

45

Financial Reporting

12

3

2

16

6

39

Information Technology

10

10

9

14

15

58

Capital Construction

2

1

1

0

0

4

Extra Classroom Activity Fund

1

1

0

1

1

4

Segregation of Duties

0

0

3

0

15

18

Budgeting

2

3

0

1

1

7

Conflict of Interest

0

0

0

4

3

7

Other

0

2

0

0

0

2

Total

77

40

60

112

100

389

Office of Audit Services

Audit

Major Finding(s)

Recommendation/Response

Orleans-Niagara BOCES Pre-Kindergarten Special Education Programs for the Periods July 1, 2000 through June 30, 2001 and July 1, 2003 through June 30, 2004

SE-0706-1

8th Judicial District

$0 adjustment

Orleans-Niagara (ON) BOCES had overstated reimbursable expenses for the Pre-K Special Education programs in 2000-2001 by $117,054 and understated reimbursable expenses for 2003-2004 by $49,982. There were discrepancies in allocation methodology and documentation of allocations related to rent, operation and maintenance, utility and administration costs.

Student absences were also not adequately documented and some key policies were not adopted to guide ON BOCES operations.

7


recommendations

The report's recommendations focused primarily on strengthening the policies and procedures regarding payroll; cash and disbursements; and financial reporting.

District officials generally agreed with four of the seven recommendations, disagreed with two and partially agreed with one.

The District disagreed with the recommendation concerning the reporting of absences and the total re-allocated expenses to one of the sites that run a school-age program.

Special Kids Intervention Program, Inc. (SKIP)

New York City Department of Education Special Education Preschool Audit

Audit Approved Pursuant to Education Law Section 4410

CA-1002-3

11th Judicial District

$23,801 adjustment

SKIP did not comply with SED regulations which govern the fiscal operations of schools for children with disabilities. It did not properly allocate expenses and did not maintain necessary documentation to support some of its expenses. SKIP also made several accounting and reporting errors and reported non-reimbursable expenses. It is recommended that an adjustment of $23,801 be made to the total reported costs.

Disallowances included computer leasing expenses, unsupported insurance expenses, car leasing, life insurance policies, directors’ salaries and New York City tax expenses. There was also insufficient documentation involving office supplies, postage expenses, and tax expenses. Some funds were also used for non-school related activities.

FTE attendance was not calculated in accordance with regulations. FTEs were decreased for the full-day two-month program by .166 and the ten-month program by .175 and increased for the half-day ten-month program by 1.38.

6


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding financial reporting and payroll.  

District officials generally agreed with the findings and recommendations, except for the disallowance and reallocation of the directors’ salaries.

VESID Rochester District Office

AI-0505-3

4th Judicial District

$0 adjustment

One year after the implementation of improved internal controls, the Rochester District office has eliminated the practice of reissuing a counselor code and reduced the number of authorizations issued following the assigned counselor’s departure from state service. They have also reduced the number of backdated authorizations and the number of authorizations issued after a case was closed.

Weaknesses still exist in documenting compliance with written policies regarding van purchases, rebates, purchasing equipment, self-employment, waivers, and home modification.

There were also discrepancies in the documentation of receipt of rebates, refunds, and returned checks in the consumer’s case file.

8


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding procurement and information technology.

VESID officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action as soon as possible.

Office of the State Comptroller

Audit

Major Finding(s)

Recommendation/Response

Averill


Park Central School District

Internal Controls Over Selected Financial Activities and Computer Access

2007M-126

3rd Judicial District

$0 adjustment

Computer data was not effectively safeguarded because the proper procedures regarding passwords and access were not established. The business office has control over access to the District's computerized financial system and user rights had not been adequately restricted.

There were inadequate internal controls over reimbursements made to, or on behalf of, certain District officials and employees. Seventy-eight claims were paid to 10 administrators, totaling $18,787 and 6 of the administrators were reimbursed $2,410 for benefits and expenses that were not properly authorized or were lacking adequate documentation.

4


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding information technology and payroll.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action as soon as possible.

Avon


Central School District

Internal Controls Over Payroll and Information Technology

2007M-168

7th Judicial District

$0 adjustment

The District’s controls over payroll processing and information technology were not appropriately designed or operating effectively.

There were several internal control weaknesses in the business office because there was inadequate segregation of the payroll clerk’s duties.

There were also internal control weaknesses in the computerized financial system. Several users of accounting software have access rights that exceeded requirements of their duties. The treasurer’s electronic signature was not password protected and was widely available to staff.

4


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding information technology and payroll processing.

District officials generally agreed with the recommendations and have agreed to initiate corrective action as soon as possible.

Bainbridge-Guilford


Central School District

Internal Controls Over Payroll and Information Technology

2007M-148

6th Judicial District

$0 adjustment

The treasurer creates the employee records, inputs payroll data, and prepares employees’ paychecks, which does not allow for the proper segregation of duties.

Additionally, the board did not adequately safeguard the District’s computerized data and assets due to lack of policies and procedures related to access controls, physical security, and disaster recovery.

3


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding payroll and information technology.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Ballston


Spa Central School District

Internal Controls Over Payroll

2007M-139

4th Judicial District

$0 adjustment

The District has developed a comprehensive set of procedures establishing an adequate internal control structure over payroll processing. Time sheets, employee records, leave time records, and payroll registers were all examined, and there were no significant deficiencies. Overall, the system was well designed and operating efficiently.

0


recommendation

There were no recommendations.

Bronxville Union Free School District

Internal Controls Over Cash Receipts and Purchasing

2007M-194

9th Judicial District

$0 adjustment

The District’s internal control system for cash receipts and disbursements appeared to be appropriately designed and operating effectively. Based on the review, policies and procedures have been adequately implemented, duties are properly segregated, and all received cash is recorded and deposited in a timely manner.

Additionally, the District's controls over purchasing were appropriately designed and operating effectively. Vendors were reviewed and it was found that proper procurement processes were used to select them. The District used proper competitive procedures such as request for proposals and obtaining quotations.

0


recommendation

There were no recommendations.

Cleveland Hill Union Free School District

Internal Controls Over Claims Processing and the Treasurer's Duties

2007M-164

8th Judicial District

$0 adjustment

Internal controls over the District’s claims processing function are not appropriately designed and are not operating effectively. Board members do not review each claim to ensure that the proper original documentation is attached to the claim.

Additionally, $129,564 in claims was not properly documented. The District’s purchasing policies and procedures contain inconsistencies which make them unclear with respect to the process and dollar amounts for obtaining written quotations.

Internal controls over the District treasurer’s duties were also not operating effectively. The treasurer is responsible for recording receipts; making daily deposits; transferring funds between and from District accounts; signing checks; and preparing, entering, and approving journal entries. All of these duties are done without any oversight or review. Board approved bank reconciliations also incorporated a number of inconsistencies and errors.

4


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding claims processing and the segregation of duties.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Clymer


Central School District

Internal Controls Over Selected Financial Operations

2007M-162

8th Judicial District

$9,187 adjustment

There were numerous problems in District financial operations mostly due to poor policies and procedures. District officials deliberately eliminated a key control over wire transfers, and now unlimited transfers of District funds are being allowed by the authorization of one official. Additionally, 66 percent of the accounts in the trust agency fund do not belong there. District officials did not take the time to determine the correct way to handle these accounts.

There were also weaknesses found in the controls for assigning user rights to the computer system, the use of passwords, and the addition and deletion of users from the system. The District has not adopted internal controls for cash transfers and there is no approval or documentation for the monitoring of cash transfers. The District was also able to make $20 million in bank transfers without any authorization.

Twelve separation payments were reviewed and the District inappropriately paid $1,932 to four employees in accumulated sick benefits, and did not appropriately calculate for one employee, resulting in an underpayment of $7,255.

19


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding information technology, cash transfers, claims processing, payroll, and the trust and agency fund.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Edwards-Knox


Central School District

Internal Controls Over Non-Payroll Disbursements

2007M-157

4th Judicial District

$0 adjustment

There were weaknesses in the District’s control over non-payroll disbursement transactions. The business manager/treasurer has unchecked control over the accounting records for non-payroll cash disbursements; has check writing and wire transfer authority; and controls bank reconciliations. He also has full transaction authority and administrator rights to the District’s computerized accounting system.

The board did not implement an adequate internal control system over the auditing, approval, and payment of claims. The business manager/treasurer improperly paid $500,000 for claims that he did not present to anyone else for audit and authorization.

The board also approved District contracts for the purchase of liability insurance coverage through an agent who is the spouse of a board member which was not previously disclosed and therefore, violates General Municipal Law.

9


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding cash disbursements, claims, and conflicts of interest.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate correction action as soon as possible.

Elmsford Union Free School District

Internal Controls Over Selected Financial Transactions and Information Technology

2007M-158

9th Judicial District

$0 adjustment

The District’s accounting for tax certioraris was not in compliance with generally accepted accounting principles. The amounts encumbered have not been based upon court decisions or judgments and have consistently exceeded annual payments. It appears that the District has encumbered funds instead of establishing a reserve to circumvent the restrictions placed on reserve funds.

The Board also has not established formal policies to address potential computer-related disasters and backup tapes were not stored off-site. Passwords were not required to be changed, and locking screens were disabled on five of the six computers.

4


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding financial transactions and information technology.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate correction action shortly.

Gilbertsville-Mount


Upton Central School District

Financial Management

2007M-125

6th Judicial District

$0 adjustment

There were weaknesses in the design and operation of the internal controls over cash receipts and disbursements. The claims auditor does not directly report to the board and is not independent of business office operations. The cash disbursements process does not properly minimize the risk of unauthorized disbursements occurring and being detected. There is also insufficient segregation of duties over the cash receipts process.

Ten sample claims were tested, and six of them did not have supporting evidence that staff solicited the recommended three quotes. The purchases were also approved without the required quotes.

4


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding cash receipts, disbursements, and purchasing.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Haldane


Central School District

Internal Controls Over Cash

2007M-175

9th Judicial District

$0 adjustment

The District's cash handling procedures appeared to be effective in both design and implementation. Duties were properly segregated and cash transactions were properly initiated, approved, recorded, and documented. There were no discrepancies or inconsistencies.

0


recommendations

There were no recommendations.

Hampton Bays Union Free School District

Controls Over Financial Operations

2007M-136

10th Judicial District

$0 adjustment

The District officials did not always adhere to board-adopted policies regarding purchasing and credit card use. The District did not solicit requests for proposals when obtaining professional services and paid four professional service providers $107,168 during the 2005-2006 fiscal year without the benefit of competition. A fifth professional, who received $11,605 did not have a contract with the District. Also, the District paid a computer parts vendor $47,630 during the 2005-2006 fiscal year without soliciting competitive bids. There was no proper documentation submitted with $1,704 in credit card charges.

Additionally, the proper policies and procedures were not implemented to safeguard computer data. The business administrator also acts as the purchasing agent and finance system administrator, and has the ability to perform management overrides.

7


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding procurement and information technology.

District officials generally agreed with the recommendations and have indicated that they plan to initiate correction action as soon as possible.

Holland


Patent Central School District

Internal Controls Over Claims Auditing

2007M-205

5th Judicial District

$0 adjustment

There are no written policies and procedures outlining the roles and responsibilities for the claims auditor. The Board failed to conduct a proper audit of claims prior to appointing a claims auditor and failed to provide the claims auditor with a written job description.

There were also numerous occurrences where claims were paid prior to audit and approval by the board or the claims auditor.

Eleven credit card claims ($4,752) were not supported with the appropriate receipts and six claims ($135,605) did not have evidence of an audit by the board or claims auditor.

3


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding claims auditing.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action as soon as possible.

LaFayette


Central School District

Separation Payments

2007M-174

5th Judicial District

$0 adjustment

The employment contract of the former assistant superintendent for business did not clearly explain when leave time provided under the contract was to be considered earned and thereby payable upon separation from the District. The District officials’ interpretation of her contract resulted in a separation payment for unused leave time that reflected the vacation and sick leave that she was entitled to, had she worked the entire year. The District superintendent received payment for unused leave time based on leave earned for a full year, rather than an amount proportionate to her six months of service.

1


recommendation

The report’s recommendation focused primarily on strengthening the policies and procedures regarding separation payments.

District officials generally agreed with the recommendation, and have indicated that they plan to initiate corrective action in terms of creating a more specific language contained in the personal services contract. However, they disagreed with the audit report assumption that the District improperly allowed the payment of accrued vacation leave to departing administrators.

Lewiston-Porter


Central School District

Internal Controls Over Cash Receipts and Disbursements

2007M-137

8th Judicial District

$0 adjustment

Internal controls over cash receipts and disbursements were not appropriately designed or operating effectively. There were no written policies adopted for cash receipts and no job descriptions provided to staff involved. Duties were not properly segregated, especially in terms of access rights to financial software and wire transfer processes. Additionally, there is no written job description, nor any training provided to the claims auditor.

6


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding cash receipts and disbursements and the segregation of duties.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Massena


Central School District

Segregation of Cash Disbursement Duties

2007M-191

4th Judicial District

$0 adjustment

District management has not adequately segregated cash disbursement duties. The treasurer can perform most cash recordkeeping and disbursement transactions with little effective oversight. We found that the former claims auditor had not audited 9 of the 35 claims because District procedures (at that time) did not require it.

1


recommendation

The report’s recommendation focused primarily on strengthening policies and procedures regarding segregation of cash disbursement duties.

District officials generally agreed with the recommendation and have indicated that they plan to take steps to segregate recordkeeping, treasury and bank reconciliation duties.

Mexico


Academy and Central School District

Internal Controls Over Financial Operations

2007M-197

5th Judicial District

$0 adjustment

There were internal control weaknesses in the District’s operations relating to cash disbursements that could lead to errors or irregularities occurring and not being detected. In addition, the treasurer’s duties were not effectively segregated. The treasurer’s signature is applied to District checks without her direct supervision.

The payroll clerk’s duties are also not properly segregated. Duties include adding new employees, updating salaries, inputting bi-weekly payroll, and directly receiving signed checks.

District computer access controls were also deficient in that many employees have full access to all phases of the District’s computerized financial system.

8


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding cash disbursements, information technology, and payroll.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Minerva


Central School District

Internal Controls Over Information Technology

2007M-161

4th Judicial District

$0 adjustment

The board did not establish control policies and procedures to safeguard the District’s IT system equipment and data. The board’s limited IT policies do not provide adequate overall controls of the District’s technology systems. For example, communications to prohibit the use of web-based e-mail accounts were not supported by an official board policy.

There were no established policies or procedures for creating and administering the user’s network passwords. The District also did not require the computer network connection to time out after a reasonable period of inactivity.

7


recommendations

The report’s recommendations primarily focused on strengthening policies and procedures regarding information technology.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action as soon as possible.

Northeastern Clinton Central School District

Internal Controls Over Selected Financial Activities

2007M-141

4th Judicial District

$0 adjustment

There were instances where the board had either not established critical internal controls or controls that had been established were not implemented correctly.

In the extraclassroom activity fund, the moneys were not maintained in accordance with the policy. There was no indication that transactions were adequately monitored. The extraclassroom activity fund’s software lacks the controls to prevent sequentially-issued check and receipt numbers from being edited and re-issued. There were 13 cancelled checks with duplicate numbers ($7,482) and two receipts totaling $798 with duplicate receipt numbers.

There are also no written policies and procedures to provide guidance and internal controls for payroll processing; leave time accruals; and cash receipts. The District’s multi-fund bank account also was overstated by at least $21,035 and as much as $78,128 for the period.

19


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding extraclassroom activity funds, financial operations, and information technology.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Onondaga-Cortland-Madison BOCES

Central


New York Regional Information Center


(RIC)

2007M-182

5th Judicial District

$0 adjustment

The Regional Information Center (RIC) personnel print checks for several school districts using signatures embedded in the software at the RIC. There is no requirement that the treasurer from the school district oversee the printing of checks.

Several of the support staff have access to the financial accounting applications and data of those districts that have their financial data processed and stored by the RIC.

Onondaga-Cortland-Madison BOCES does not perform a complete, regionwide annual inventory of its technological assets or require annual inventories of BOCES equipment.

Lastly, the RIC does not periodically update its disaster recovery plan.

4


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding claims processing, information technology, and financial reporting.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action as soon as possible.

Peekskill


City School District

Internal Controls Over Selected Financial Activities

2007M-138

9th Judicial District

$0 adjustment

The board did not establish and implement adequate internal controls over payroll, budget transfers, and claims processing.

There were also significant internal control weaknesses relating to the policies and procedures designed to prevent and detect unauthorized and inaccurate budget transfers. The audit reviewed 33 budget transfers and noted 7 instances where the actual transfers were different from the board-authorized amounts.

The board and District officials also did not adopt formal policies and procedures for processing payroll, especially adding and removing substitute teachers from the payroll system.

Of the 127 separate payments to substitute teachers reviewed, 66 were incorrect.  Errors in payments were due to manual calculation by the payroll clerks.

In addition, the claims auditor does not report to the Board.

8


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding budget transfers, payroll, and claims.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Pine


Plains Central School District

Internal Controls Over Cash Disbursements and Information Technology

2007M-199

9th Judicial District

$0 adjustment

The treasurer’s responsibilities are not properly segregated due to limited personnel. Recently, the District hired an assistant to work with payroll issues and assigned the reconciliation of bank accounts to another employee.

Certain users of the accounting system had unlimited rights to all of the modules, while others had unlimited rights to a limited number of modules. This allows the possibility that staff could make changes without appropriate approval. The District also had not prepared a secure backup plan for financial and student data.

5


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding information technology and cash disbursements.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Putnam


Central School District

Internal Controls Over Claims Processing

2007M-129

4th Judicial District

$0 adjustment

After initial testing showing payments of claims prior to audit, the test was expanded to include a total of 79 claims paid in July and August of 2006.  Results of the test showed that 40 of the 79 claims amounting to $51,151 were paid without prior audit.

2


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding claims processing.

The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Quogue Union Free School District

Internal Controls Over Payroll and Personal Services

2007M-202

10th Judicial District

$0 adjustment

The District has established adequate internal controls over payroll and personal services. We reviewed payroll related payments to all 28 District employees and all employees were paid in accordance with their respective salary agreements, collective bargaining agreements, and board resolutions.

0


recommendation

There were no recommendations.

Randolph


Academy Union Free School District

Internal Controls Over Claims Processing and Leave Time

2007M-193

8th Judicial District

$0 adjustment

The board has not established effective internal controls over its claims processing function and has not adopted any written procedures for the duties of the claims auditor.

Thirty-five claims were reviewed ($145,418), and exceptions were found with 32 of them ($137,514). The deficiencies included lack of proper documentation, itemization of expenses, evidence of approval by the department head, evidence of approval by the purchasing agent, evidence that goods or services were received, and/or an indication that the claim was a proper District expense.

In addition, 47 credit card purchases amounting to $4,029 were also reviewed, and found 33 purchases worth $3,295 with exceptions.

Officials should also strengthen controls over the District’s payroll function. The superintendent’s duties are not properly segregated, such as certifying payroll, authorizing absences and approving leave time requests. The former superintendent authorized employees to leave earlier without charging leave time throughout the 2005-2006 fiscal year.

3


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding claims processing and payroll.

The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

St. Johnsville Central School District

Internal Controls Over Purchasing

2007M-146

7th Judicial District

$0 adjustment

The system of internal controls over purchasing was well designed and compliance with the system was adequate. Additionally, purchase orders were properly approved prior to making each purchase, claims were properly audited by the District prior to payment, and all purchases included documentation that indicated a specific District purpose.

0


recommendation

There were no recommendations.

Schodack


Central School District

Compliance with Fiscal Accountability Legislation

2007M-186

3rd Judicial District

$0 adjustment

The audit examined the District's compliance with the terms of the Fiscal Accountability Legislation.  The District is in compliance with requirements related to claims auditing, board training, requests for proposals for independent auditing services, and audit committees.  However, from July 1, 2006 through March 23, 2007, the District expended $973,000 on services provided by Questar III (inter-municipal agreement with Rensselaer, Columbia and Greene Counties BOCES). Because of the material nature of these payments, a Questar III employee serving as the internal auditor would not be independent in performing the internal audit function. The current arrangement is not acceptable because significant programs or services being evaluated as part of the internal audit function include the services provided to the District by Questar III, the employer of the internal auditor.

1


recommendation

The report’s recommendation focused primarily on strengthening the policies and procedures regarding claims processing.

District officials generally agreed with the recommendation and have indicated that they plan to initiate corrective action as soon as possible.

Sewanhaka


Central High School District

Internal Controls Over Financial Operations

2007M-198

10th Judicial District

$0 adjustment

There were discrepancies in the District’s controls and procedures over procurement of professional services, computer operations, and disposition of capital assets.

District officials did not consistently follow the board’s policy requiring competition of Requests for Proposals when awarding contracts for professional services. The District paid 19 professional service providers a total of over $1.8 million without soliciting any form of competition, and 21 of the services procured were not approved by the board. Also,  $355,554 in services were rendered without a contract.

The District has not established a disaster recovery plan, or a computer security policy with protocols, procedures, and controls for maintaining a secure and reliable IT system.

The function of the financial software is not properly segregated from the accounting function. The senior accountant who maintains the District’s accounting records is also the system administrator of the District’s financial software.

8


recommendation

The report’s recommendations focused primarily on strengthening policies and procedures regarding procurements and information technology.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action as soon as possible.

Sherburne-Earlville


Central School District

Segregation of Duties

2007M-169

6th Judicial District

$0 adjustment

The board did not adequately segregate the treasurer's duties over cash disbursement or implement compensating controls. The District treasurer prepares and enters journal entries and performs electronic bank wire transfers to outside agencies and electronic transfers to District bank accounts. She also deposits cash receipts and prepares the monthly bank reconciliations. There is inadequate segregation of duties in payroll processing to ensure that wage and benefit payments are in accordance with board authorizations and approved employment contracts.

1


recommendation

The report's recommendation focused primarily on strengthening policies and procedures regarding cash and payroll.

District officials generally agreed with the recommendation, and have indicated that they plan to initiate corrective action as soon as possible.

Sherrill


City School District

Internal Controls Over Selected Financial Operations

2007M-196

5th Judicial District

$0 adjustment

The District has limited controls and oversight over the check signing machine, the treasurer’s signature plate, and the blank manual check stock. The treasurer also had not compared check payments to certified warrants or payrolls for any of the District check payments prior to disbursement.

There was lack of segregation of duties for the senior account clerk and the payroll clerk positions.

Additionally, the claims auditor was not provided a written job description.

The District has not established adequate internal control over cafeteria sales receipts.  Not all moneys received were ran through the cash register.  There is no reconciliation of moneys received.

12


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding cash, payroll, and claims processing.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Tonawanda


City School District

Internal Controls Over Financial Operations

2007M-145

8th Judicial District

$0 adjustment

The District did not implement sufficient internal controls, nor did they follow established policies for claims processing. Of the 79 claims examined, the claims auditor did not review 44 percent of them prior to payment. The claims also did not contain adequate documentation such as itemized receipts or sufficient explanations to determine if expenditures were appropriate. The District also lacks policies and procedures for travel, expense reimbursement, gift and prepaid phone cards.

The District also did not follow proper procedures for donated computer equipment. Of the 149 donated computers, only 34 of them were placed in classrooms.  These 34 computers were also the only donated computers that the District tracked by service tag and location.

8


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding claims and information technology.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Victor


Central School District

Internal Controls Over Procurement

2007M-132

7th Judicial District

$0 adjustment

District officials have not developed written procedures or regulations to supplement board policy on procurement of goods and services. District personnel have not received detailed guidance on when they are required to obtain RFPs/quotes, the number they must obtain, and the documentation they should retain.

The District’s Director of Food Services made purchases without soliciting competitive bids. Of the 11 payments ($542,695) to school lunch fund vendors reviewed, 4 payments amounting to $42,135 in goods were purchased without soliciting competitive bids.

2


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding the procurement process.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action as soon as possible.

Waterville


Central School District

Authorization of Supplemental Payments

2007M-120

5th Judicial District

$0 adjustment

The District does not have adequate policies or procedures in place concerning payments for unused vacation leave to employees not covered under collective bargaining agreements. During the 2005-2006 fiscal year, the District allowed six District employees not covered under collective bargaining agreements to cash in 61 unused vacation days, for approximately $10,750. None of their individual contracts provided for the reimbursement of unused vacation leave.

The board also had not designated a District official to review proposed supplemental payments to confirm that they are provided for by contract terms or board resolution.

2


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding payroll.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Wellsville


Central School District

Internal Controls Over Selected Financial Activities

2007M-195

8th Judicial District

$0 adjustment

The District has not adopted detailed regulations for credit card usage and travel reimbursements. Of the 55 credit card and travel-related purchases reviewed ($33,751), 49 exceptions were found ranging from lack of appropriate approvals, to lack of an appropriate original invoice.

Additionally, the BOCES employee serving as the internal auditor is not independent in performing the internal audit function.

3


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the internal audit function.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Westminster


Community Charter School

Internal Controls Over Claims Processing and Payments

2007M-151

8th Judicial District

$0 adjustment

The board has not adequately segregated incompatible duties with regard to the processing of claims. The board also does not review claims prior to payment, nor has it designated the responsibility to someone independent of the business function. The control environment has been weakened through the use of credit cards for many purchases. Eighteen of the 21 disbursements ($1.2 million), were determined to be without required board approval.

2


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding claims processing and payments.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.

Wheelerville Union Free School District

Internal Controls Over Purchasing

2007M-187

4th Judicial District

$0 adjustment

The audit reviewed 26 claims which showed that purchase orders were properly initiated by the submission of a requisition form, purchase orders were approved before the purchases were made, and claims were properly audited by the District before the payments were made.

0


recommendation

There were no recommendations.

Yorktown


Central School District

Internal Controls Over Selected Financial Activities

2007M-176

9th Judicial District

$0 adjustment

There were weaknesses with the District's internal controls over separation payments, claims processing, and physical security over data generated by the District's computer system. There were two instances where District management deviated from the terms of board-approved individual employment contracts and overpaid two former administrators for unused vacation days ($7,531). There is no monitoring system for leave records for District administrators.

The District's claims auditor was not aware that she was required to report to the board and has not reported to the board at any time during her tenure.

Additionaly, adequate controls have not been established to provide adequate physical security over the business office computerized accounting system network.

4


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding payroll, claims and information technology.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.