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Meeting of the Board of Regents | October 2008

Wednesday, October 1, 2008 - 8:00am

A Report on the October 20, 2008 Meeting

Of the Regents Subcommittee on Audits



Your Regents Subcommittee on Audits met yesterday morning.


The Members of the Subcommittee were briefed on the status of Department and District actions regarding the financial condition of the Wyandanch Union Free School. District officials indicated they ended the 2007-08 school year with a $2.5 million deficit. In addition, the District’s 2008-09 budget contains a $1.5 million revenue shortfall. The District and Department staffs have been working closely together to address these issues. Department staff met with the interim Superintendent, other District officials, and two Board members to emphasize the Board’s responsibility to balance the 2008-09 budget and address any current deficit. The District has made significant cuts and is continuing to examine other possible reductions. The Department has told Wyandanch officials they would be supportive of any effort of the District to secure deficit financing to address the overall fiscal condition. In addition, the Department has identified staff to assist the District in efforts to enhance revenue or reduce costs. The Department is monitoring the District’s financial condition by reviewing monthly fiscal reports. The District’s financial statements will soon be finalized and the Department will have more specific information on the prior year deficit. The Subcommittee will receive a final report on the District’s fiscal condition at the next Subcommittee meeting.


We were presented with 15 audit summaries this month.  The audits were of 11 school districts, 1 BOCES, 1 preschool special education provider, and 2 of Department operated programs.  These audits involved findings related to procurement, information technology, payroll, claims processing, cash, financial reporting, segregation of duties, extaclassroom activity fund, budgeting, conflict of interest, fingerprinting, administration of the Higher Education Opportunity Program (HEOP) and  a follow-up on Security of Regents Examinations.   Audit staff will follow-up with these districts, BOCES, and preschool to identify any possible future actions.  The Department will provide a 90-day update on the status of the recommendations contained in the HOEP program.


The Internal Audit Workgroup, which is comprised of Deputy Commissioners’ Ahearn and Savo, Coordinator Charles Szuberla, Deputy Counsel Erin O’Grady-Parent, Audit Director James Conway, and other staff from the Offices of Management Services and Audit, reviewed all audit summaries. Based on the significance of the findings, the group highlighted eight of the audits: five school district audits, one BOCES audit and the two audits of Department operated programs for further review and follow-up.


I have attached the results of the full Review of Audits presented by the Department’s Internal Audit Workgroup for your information.


Staff presented information on another audit trend that has been identified through the audits of school districts.  The audit trend was related to conflict of interests in Board members and school district officials.  Audit findings related to conflicts of interest have been found in 18 of the 407 audits that have been presented to the Subcommittee.







Regents Subcommittee on Audits

October 2008

Review of Audits Presented

Department’s Internal Audit Workgroup



Newly Presented Audits


We reviewed 15 audits that are being presented to the Subcommittee this month.  The audits were of 11 school districts, 1 BOCES, 1 preschool special education service provider, and 2 were of Department functions. The audits were issued by the Office of the State Comptroller (OSC) and the findings were in the areas of procurement, information technology, payroll, cash, claims processing, financial reporting, segregation of duties, extraclassroom activity fund, budgeting, conflict of interest, fingerprinting and other. The audits of Department functions were related to the Higher Education Opportunity Program and a follow-up on Regents Examination Security.


The Department has issued letters to the auditees, reminding them of the requirement to submit corrective action plans to the Department and OSC within 90 days of their receipt of the audit report.


The Department’s Internal Audit Workgroup identified five school district audits, one BOCES audit, and two Department audits for further review and follow-up.


  • ElmiraCity School District


Summary of Audit


Unauthorized and inappropriate payments for unused leave were made to a former assistant superintendent amounting to $35,312.  Six employees who transferred to the Greater Southern Tier BOCES Central Business Office were paid for unused and accrued vacation time, and allowed to carry over vacation days from one fiscal year to the next without contract provisions.  These transfers necessitated a BOCES contract change increasing it by $56,000 which the superintendent approved without formal board approval, to cover for, among others, the vacation time cost that the District agreed to fund for transferred employees.  Three former school administrators provided educational consulting services without the benefit of a written contract for one of the two years. 


Follow-up Action


Upon Elmira’s submission of the corrective action plan for this audit, Office of Audit Services’ (OAS) staff will review to ensure all findings have been addressed.


  • Highland Falls-Fort Montgomery Central School District –


Summary of Audit


The District did not obtain fingerprint-supported background checks for 27 of 58 employees and four contractors who were in direct contact with students.


Follow-up Action


The response to the draft audit report indicated that the District has implemented procedures to ensure all employees and contractors having direct contact with students undergo criminal background checks and fingerprinting as prescribed by law. In addition, the Department’s Office of School Personnel Review and Accountability (OSPRA) will provide annual guidance to remind school employers about their obligations under the SAVE law and to inform interested parties about new technology advancements for the processing and management of fingerprint applications and information. OSPRA staff will continue to provide technical assistance.


  • Roosevelt Union Free School District


Summary of Audit


The District did not receive a $4 million cash advance on future State aid because District officials failed to prepare and file a five-year financial plan with the Commissioner. (Subsequent to the issuance of the audit report, Roosevelt did file the five-year plan and received the $4 million cash advance.)  The District has potential operating surplus for year ending June 30, 2008 of over $21 million which may lead to over $13 million of fund balance at the end of the 2007-08 fiscal year.  This may decrease by $766,000 if District officials subsidize the school lunch fund operations and transfer funds to eliminate the 2006-07 school lunch fund deficit of $573,000 and the 2007-08 operating deficit of $192,000.


Follow-up Action


Upon Roosevelt’s submission of the corrective action plan for this audit, OAS staff will review to ensure all findings have been addressed.


  • Unadilla Valley Central School District, Union-Endicott Central School District and Elmira City School District (also mentioned above)


Summary of Audits


These districts appointed their respective BOCES as claims auditor.  Each BOCES provides significant services to the districts.






Follow-up Action


A Department workgroup has been convened to study the OSC audit findings related to Central Business Office functions.


  • OswegoCounty BOCES


Summary of Audit


Policies and procedures have not been established to ensure adequate segregation of duties and oversight of handling and recording cash receipts.  There were no effective internal checks on the coordinator of the Art Department who was responsible for the collection of about $73,000 in revenue for 2006-07.  There was also discrepancy in the amount of revenue recorded by the Adult Education Department ($710,000) and by the Business Office ($686,000) which had not been reconciled.


Follow-up Action


Staff from the Office of Education - P-16 Education and OAS will meet with the district superintendent to discuss this issue.


  • SED - Higher Education Opportunity Program -


Summary of Audit


The primary objective of the audit was to determine whether Higher Education Opportunity Program (HEOP) funds were used for the prescribed purpose at the four schools selected for audit.  The audit found all four schools appeared to be using HEOP funds solely for their prescribed purpose.  However, one of the four schools audited (Long Island University-Brooklyn) had an unresolved discrepancy between the amount of total expenditures reported to the Department at year-end and the amount shown in the school’s records.  Detailed HEOP records are not retained by the school as required by the Department.  The audit also aimed to determine whether the four schools accurately reported the number of students receiving HEOP services and aid.  It concluded that there was minimal risk the four schools were inaccurately reporting HEOP enrollments to the Department.


Follow-up Action


As part of the internal control risk analysis for HEOP, program Department staff will be conducting a site visit at LIU-Brooklyn during this 2008-09 program year.  A focus during the visit will be to discuss the audit recommendations.  LIU is 1 of 3-4 site visits planned for this year at postsecondary institutions that offer HEOP.





  • SED - Security Over Regents Examinations Follow-up Report -


        Summary of Audit


The original report issued on June 5, 2007, identified a number of schools not in compliance with SED guidance.  It also indicated that there were increased breaches in security at certain locations over the examination such as schools storing materials in unauthorized locations and/or opening sealed packages before the allowed time.  This is a follow-up report to assess the extent of implementation of the initial recommendations.  The result is all recommendations have been implemented by the Department.


Follow-up Action


No action necessary.