Meeting of the Board of Regents | April 2009

Report of

 

REGENTS SUBCOMMITTEE ON AUDITS

 

to

 

The Board of Regents

April 20, 2009

 

Regent Geraldine Chapey, Chair of the Regents Subcommittee on Audits submitted the following report.

 

Your Regents Subcommittee on Audits had its scheduled meeting on April 20, 2009. Members of the Subcommittee in attendance were Regents Chapey, Bowman, and Vice Chancellor Cofield. Chancellor Tisch, Regents  Bendit, Cea, Norwood, Tilles and Young also attended 

 

Items for Discussion

 

Chair’s Remarks:  Regent Chapey welcomed everyone and opened the meeting by informing the attendee’s that the Chancellor and the Commissioner will be speaking to the Regents about the American Recovery and Reinvestment Act over the course of the two day Regents’ meeting.  The Act will provide unprecedented funding that will allow New York to continue to advance educational reform across school districts in the State. The massive influx of funds attached to requirements for distributing them on an extremely rapid schedule while maintaining transparency and accountability will place increasing emphasis on auditing, fiscal monitoring and analysis.   .

 

Follow-up on the Audits

 

Staff briefed the Subcommittee on follow-up actions the Department has taken in the first quarter of 2009. Staff continues to follow-up on audits that have been identified by the Internal Audit Workgroup and presented to the Subcommittee. One area of follow-up concerns the appropriate funding of reserves in general, particularly the Employee Benefit Accrued Liability Reserve. We discussed the guidance that is available and agreed that the policy implications should be further discussed at the State Aid Subcommittee.   

 

Analysis of the Financial Statements of School District and BOCES

 

The monitoring of the financial condition of school districts and BOCES is an important step in enhancing accountability of fiscal resources. The Department annually receives reviews and analyzes more that 700 certified financial statements and almost an equal number of federal single audits. Because of this information the Department is well positioned to assess the impact of the stimulus funds on school districts.  Staff from the Office of Audit Services described the process used by the Department to analyze financial statements and monitor the fiscal condition of school districts and BOCES. The process involves receipt and analysis of financial statements and Federal single audit reports. The members were provided with a list of school districts in fiscal stress and fiscal concern. After some discussion the Subcommittee asked for a combined longitudinal analysis of both fiscal and academic performance indicators of the eight districts identified as being in fiscal stress. By examining these indicators it is believed the Department can gain a more complete understanding of the issues and possible solutions to the problems faced by those districts. A future joint meeting between the Regents Subcommittees on Audits and State Aid will be scheduled to discuss the results.

 

We also discussed the analysis of financial statements of charter schools. We were informed that the Department has not developed a process to identify charter schools in fiscal stress. The members asked that the development of such as system be considered. 

 

The members were also briefed on the fiscal condition of the Wyandanch and Roosevelt school districts. After some discussion it was agreed that Roosevelt School District Officials would be asked to meet with the Full Board of Regents at a meeting in the near future.

 

Presentation of Audits

 

Nine audits were presented to the Subcommittee this month. Eight were reviewed by the Department’s Internal Audit Workgroup and none of the eight were identified for further review and follow-up. However, a ninth audit was issued by the Office of the State Comptroller subsequent to the meeting of the Workgroup. That audit was presented to the Subcommittee and staff from the Office of the State Comptroller provided a summary of the findings. The audit found that 2 of 12 schools tested had overstated their graduation rate by more than 5 percentage points and four of 12 schools had understated their dropout rates by more than 5 percentage points. We discussed the particular audit methodology used. Department staff updated us on the system improvements already taken.

 

The Subcommittee was presented with eight audits in addition, to the one already mentioned. The findings were in the areas of procurement, cash, information technology, financial reporting, payroll, claims processing, use of recycled paper and billing for facility rentals.

 

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

 

Regents Subcommittee on Audits

April 2009

Review of Audits Presented

Department’s Internal Audit Workgroup

 

 

Newly Presented Audits

 

We reviewed nine audits that are being presented to the Subcommittee this month.  One audit was of a Department function, five were of school districts and three were of BOCES; all were issued by the Office of the State Comptroller (OSC).  The findings were in the areas of procurement, information technology, financial reporting, claims processing, cash, payroll, extraclassroom activity fund, and other, such as payments for facility rentals, purchases of recycled paper, and reporting high school graduation and dropout rates.  Two of the BOCES audits which assessed the reliability of controls at Regional Information Centers did not result in any recommendation.

 

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 did not identify any of the audits for further review and follow-up.