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

 

TO:	The Honorable the Members of the Board of Regents
FROM:	Michael Abbott
COMMITTEE:	Audits
TITLE OF ITEM:	Audit Activities
DATE OF SUBMISSION:	November 19, 2004
PROPOSED HANDLING:	Discussion
RATIONALE FOR ITEM:	Enable the Board of Regents to review audits
STRATEGIC GOAL:	5
AUTHORIZATION(S):

 

SUMMARY:

 

The following materials are attached.

 

·        Roadmap

·        Minutes of November Meeting (Attachment I)

·        Audit Report Abstract (Attachment II)

·        Audit Report

 

 

 

 

Attachment I

 

MEETING OF THE REGENTS SUBCOMMITTEE ON AUDITS

November 4, 2004

 

Subcommittee Members in Attendance:

 

Regent Geraldine D. Chapey, Chair

Regent Arnold B. Gardner, Vice Chair

Regent Joseph E. Bowman

Regent Harry Phillips, 3^rd

 

Discussion Items

 

Regent Chapey opened the meeting by welcoming everyone and reminding them of the importance of accountability in the public sector and our responsibilities under Regents Goal 5. She cited the danger of a loss of public trust and mentioned that Commissioner Mills and Comptroller Hevesi have appeared together to discuss ways to build the public trust.

 

Previous Meeting Minutes

 

The Subcommittee approved the minutes of the prior meeting.

 

Current Issues

 

Staff briefly updated the members on some on-going issues.

 

• The Board of Directors has been reconstituted, and senior management has been replaced at the Highbridge Advisory Council Family Services, Inc. These changes occurred in response to the Office of the State Comptroller’s (OSC) audit of the agency that was presented at the last Subcommittee meeting.
• The federal audits of Medicaid payments to school districts were discussed. The audits are under appeal by the New York State Department of Health. Department staff raised serious objections to the findings. The Subcommittee will be updated at future meetings.
• VESID management and staff are working to improve the controls over procurement practices in the district offices. The Attorney General's Office is investigating the questionable transactions. Audit staff is completing the review of all district office data to determine if patterns of questionable activity exist for future audits.
• The members were given a document entitled "Fiscal Accountability" that was created by staff of the Office of Elementary, Middle, Secondary, and Continuing Education. The document is for use by school board members and managers and highlights important considerations in assessing accountability.

 

Staff provided the members with a summary of the Five-Point Plan that was developed by the Schools Accountability Coalition (Coalition). The Coalition consists of members from the OSC, the Department, the New York State Society of Certified Public Accountants, the School Boards Association, the Council of School Superintendents, and the Association of School Business Officials. The five elements of the plan being proposed include the following:

 

·        Enhance the effectiveness of external audits

·        Require audit committees

·        Require a competitive Request for Proposal (RFP) for selecting auditors

·        Create an internal audit function

·        Require training

 

There was a discussion of how to implement these elements of the plan. It is the opinion of Department staff that some could be implemented through guidance, law, and regulation. Department staff will keep the Subcommittee informed on future activities of the Coalition and that any proposed guidance, regulation, or law will be initially shared with the Subcommittee.

 

Members expressed concerns that current thinking in the area of training for school district officials needs to be shared with Deans of Education in the higher education community. It was agreed that Dr. Kevin McGuire would be invited to a future Subcommittee meeting to discuss this issue.

 

Topics for Future Meetings

 

Members were presented with topics for the remaining Subcommittee meetings. One member asked that the March meeting include a discussion of the quality of audits of school districts.

 

Audit Plan

 

The draft audit plan for the period December 1, 2004 to June 30, 2006 was presented for input.

Attachment II

 

Audit Report Abstract

Regents Subcommittee on Audits

December 2004

 

New York City Office of Auditor General
Audit	Major Finding	Recommendations/Response
A Summary of Findings and Recommendations from the Fiscal Year 2003 Internal Audits of Schools of the Department of Education (DOE) for the City of New York Report 05-15	$0 adjustment   The report was prepared by the DOE's Office of Auditor General in conjunction with Ernst and Young, LLP and presents summary findings of internal audits conducted at 34 elementary/middle schools, 1 special education school and 8 high schools.  The audit found exceptions in many of the areas reviewed. The specific areas addressed included record keeping for per diem and paid class coverage, documentation and usage of procurement cards (p-cards), weaknesses in performing computer and audio-visual equipment inventories, and weaknesses in some controls over fund raising activities.	30 recommendations   The report contained 30 recommendations. Some of the key recommendations were to: integrate the per diem payroll and employee identification system to better monitor use of per diem and paid class coverage; automate and standardize processes to track paid class coverage assignments; and require principals to review information regarding teacher absences.   Other key recommendations are to: reinforce the need for compliance with procedures for p-card usage; make school personnel aware of their responsibility and train them to create, maintain, and update inventory records; and verify that school personnel involved with fund raising activities are familiar with requirements for recording keeping and use of funds.