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Meeting of the Board of Regents | July 2009

Saturday, July 4, 2009 - 11:00pm

sed seal                                                                                                 

 

 

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:

June 4, 2009

 

STRATEGIC GOAL:

Goal 5

 

AUTHORIZATION(S):

 

 

SUMMARY

 

Issues for Discussion

 

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

 

  • Proposed Office of Audit Services Two-Year Audit Plan (July 1, 2009 – June 30, 2011) (Attachment I)
  • Completed Audits – Including a Summary of the Department’s Internal Audit Workgroup (Attachment II)

 

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.          Proposed Office of Audit Services Two-Year Audit Plan (July 1, 2009 – June 30, 2011)

              An audit plan will guide the work of the Office of Audit Services in meeting its goals and objectives for the next two years. A draft list of proposed topics is being presented to the Subcommittee for their advice and guidance.  (Attachment I)

 

2.           Completed Audits

              The Subcommittee is being presented with 36 audits this month.  The audits have been reviewed by the Department’s Internal Audit Workgroup.  Their report is attached.  (Attachment II)

             

              Audits are provided as follows:

 

Office of Audit Services

 

Questar III BOCES - Eastern NY Regional School Support Center

Variety Child Learning Center

 

Office of the State Comptroller

 

Amsterdam (Greater) School District

Beacon City School District

Blind Brook-Rye Union Free School District

Campbell-Savona Central School District

Captial Region BOCES

Chenango Valley Central School District

Churchville-Chili Central School District

Dansville Central School District

East Moriches Union Free School District

Fabius-Pompey Central School District

Fillmore Central School District

Greenwood Lake Union Free School District

Lancaster Central School District

Liberty Central School District

Monroe-Woodbury Central School District

Niagara Wheatfield Central School District

Oneonta City School District – 2 reports

Patchogue-Medford Union Free School District

Pembroke Central School District

Phelps-Clifton Springs Central School District

Roosevelt Union Free School District

St. Mary’s School for the Deaf

Schenectady City School District

South Country Central School District

Southampton Union Free School District

Southern Westchester BOCES

Spencerport Central School District

State Education Department - Follow-up Report on Assessment of Selected

     Financial Management Practices

Susquehanna Valley Central School District

Troy (Enlarged) City School District

Wayne Central School District

Willsboro Central School District

York Central School District

             

Recommendation

 

For item one (Proposed Audit Plan), the advice and guidance of the Members of the Subcommittee is sought. For item two (Completed Audits), no further action is recommended.

 

Timetable for Implementation

 

              N/A

 

The following materials are attached:

  • Roadmap
  • Proposed Office of Audit Services Two-Year Audit Plan (July 1, 2009 – June 30, 2011) (Attachment I)
  • Review of Audits Presented – Department’s Internal Audit Workgroup (Attachment II)
  • Summary of Audit Findings (Attachment III)
  • Audit Report Abstracts (Attachment IV)


 

REGENTS SUBCOMMITTEE ON AUDITS

MEETING ROADMAP

 

Date:  June 2009

Time:  TBD

Location:  TBD

TOPIC

OUTCOME

WHO

MINUTES

Opening Remarks

 

Chair

3

Review Agenda

Information

Conway

2

Proposed Office of Audit Services Two-Year Audit Plan (July 1, 2009 – June 30, 2011). (Attachment I)

Advice and feedback

Conway

15

Completed Audits – Including a Summary of the Department’s Internal Audit Workgroup (Attachment II), Summary of Audit Findings (Attachment III), and Audit Report Abstracts (Attachment IV) 

Questions answered

Department Audit Staff

10


Attachment I

 

 

Audits of Schools Districts

 

  • State Foundation Aid – Audits of the accuracy and reliability of key district data used to generate formula aid.
  • Key School District Data – Audits of the accuracy and reliability of other data including student assessment, graduation, dropout, and cohort data.
  • New York City use of IDEA funds.
  • ARRA Payment Requests and Data on Results – Audits of the validity of ARRA payment requests submitted to the Department as well as the reliability of key ARRA reporting data.

 

Internal Audits of Department Operations

 

  • Procurement – Will include an audit of some aspect of procurement including State operated schools.
  • Internal Control Assessment Process – Will involve an audit of the Department’s process to identify risk, controls, and corrective actions.
  • Grants Administration – Will audit the Department’s system for sub recipient monitoring.
  • The 211 Waiver Process – Will audit Department’s compliance with enhanced requirements for Section 211 waivers.
  • Information Technology Cost Allocations – Will audit the Department’s process for allocating Information Technology costs to other offices.
  • Reviews of Department processes for approving, monitoring, and accuracy of ARRA information received from sub recipients.

 

Audits of Other Institutions

 

  • Local Governments that Receive Funding from the State Archives and Records Management Improvement Fund – Will audit compliance with grant guidelines and fiscal requirements.

 

Fraud, Waste, and Abuse Hotline Follow-up 

 

  • Continue to follow-up on complaints.

 

 

 

Review of Financial Statements, Single Audit Reports, and Other Fiscal Data 

 

  • Financial Statements and Single Audit Reports – Financial condition, improvement opportunities, and compliance with reporting requirements.
  • Other fiscal data.
  • Collection of and review of corrective action plans issued by school districts and BOCES in response to audits.

 

Technical Assistance and Training 

 

  • Continue to provide technical assistance and information to Department staff, USNY institutions, government officials, and others.
  • Continue to partner with various organizations (Office of the State Comptroller, Association of School Business Officials, New York State Society of CPAs, New York State School Boards Association, and others) to improve fiscal accountability.
  • Upon request, continue to provide training sessions to school business officials, school board members, superintendents, CPAs, and others (in conjunction with Department program staff).

 

Other Activities

 

  • Continuing Professional Education – Under Government Auditing Standards each auditor is required to receive 80 hours of continuing professional education every two years.


Regents Subcommittee on Audits

June 2009

Review of Audits Presented

Department’s Internal Audit Workgroup

 

 

Newly Presented Audits

 

We reviewed 36 audits that are being presented to the Subcommittee this month.  There were three individual audits issued, one of a Department function, one of an Early Childhood Direction Center and one of a State Supported School. Eighteen of the audits were of school districts, twelve were of school district budget reviews, and three were of BOCES. 

 

Two of the audits were issued by the Office of Audit Services (OAS) and the rest were by the Office of the State Comptroller (OSC).  The findings were in the areas of procurement, budgeting, financial reporting, payroll, information technology, claims processing, cash, and other, such as reserve funds, fuel inventories and equipment inventory.

 

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 11 of the audits for further review and follow-up.

 

  • State Education Department - Follow-up Report on Assessment of Selected Financial Management Practices

 

Summary of Audit

 

This was a follow-up on a previous audit entitled Assessment of Selected Financial Management Practices (Report 2006-S-99). That audit examined certain aspects of the Department’s property control, payment, and payroll systems. The original audit found weaknesses in control over the Department’s equipment inventory, the timeliness of payments to certain vendors, and the process for updating payroll information. The objective of the follow-up report was to assess the extent of implementation of the recommendations included in the initial report. The original audit contained 17 recommendations for strengthening controls in these areas.

 

The Department has implemented, or partially implemented, all recommendations, except for the following:

  • To perform annual physical inventories of equipment.  The Department indicates that they plan to perform an independent physical inventory of all equipment in the Albany area by this summer to address the annual physical inventory recommendation. 

 

  • To recover the location pay overpayment from the employee.  The Comptroller’s Office advised SED that the overpayment of the location differential was not recoverable.

 

Follow-up Action

 

The Office of Audit Services will continue to follow-up until the recommendations are fully implemented or no longer applicable.

 

  • Findings on Fund Balance and Reserves - Churchville-Chili, Fillmore, Lancaster,  Niagara-Wheatfield, Phelps-Clifton Springs, Spencerport

 

Summary of Audit

 

The findings generally indicate that the districts routinely overestimated their expenditures and underestimated their revenue resulting in the accumulation of operating surpluses over the years and unreserved fund balances exceeding the limit allowed by law.  These surpluses are used to establish various reserves.  Some of the districts did not use the reserve funds for its intended purpose and made payments out of the General Fund instead.  Other findings include over funding of some of the reserves and not crediting the interest earned in the reserve account.

 

Follow-up Action

 

The Subcommittee will work on recommendations to the Board of Regents regarding proposed policy changes related to fund balance limit.  OAS will also monitor any legislative changes affecting various reserves, such as Employee Benefit Accrued Liability Reserve (EBLAR), and Other Post-Employment Benefits (OPEB), and will keep the Subcommittee informed.

 

  • Questar III BOCES – Eastern NY Regional School Support Center

 

Summary of Audit

       

The contract payments to Questar III exceeded the actual costs incurred in two of the years.  The total amount of overpayments for the two-year period was $116,000.  Consultants who are not regular employees of Questar III were not always paid according to their contracts. Eastern RSSC did not always comply with proper expenditure rates for travel.  A physical inventory of 76 items showed that 5 could not be located and were not reported to authorities.

Follow-up Action

 

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

 

  • Fillmore Central School District

 

Summary of Audit

 

Findings in the area of Extraclassroom Activity (ECA) Fund include inadequate segregation of duties between cash receipts and disbursements; $43,000 was not  deposited intact, that is cash was substituted with personal checks or checks that were unrelated to the fund; $7,260 in cash receipts were unaccounted for and potentially misappropriated. District employees received additional pay ($139,058) that was not properly authorized, or supported with proper documentation. Prior to the appointment of the claims auditor, $3.7 million in disbursements were not properly supported by a warrant certifying board approval. District credit card charges totaling $4,770 were not supported with receipts, meals were purchased in excess of board-approved rates, and $66,000 in lunch fund disbursements were not paid in a timely manner.

 

Follow-up Action

 

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

 

  • Lancaster Central School District

 

Summary of Audit

 

The District did not follow its procurement policy to ensure that the required bids and purchase quotations were obtained. Six of twenty-five purchases tested ($73,792 of $256,655) were made through State contract or cooperatively purchased through BOCES but without the appropriate documentation. Purchases totaling $104,438 lacked documentation to indicate that written quotations and competitive bids were obtained.

 

Follow-up Action

 

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

 

 

 

 

 

  • South Country Central School District (Budget Review)

 

Summary of Audit

 

The predicted fund balance at the end of June 2009 is $10.9 million which is $6.7 million more than the legal limit.  The District issued a $3 million bond anticipation note in October 2008 without prior notice to the State Comptroller, as required by law, and the District’s required quarterly reports were not submitted timely. The District also did not provide the Comptroller’s office with the necessary documentation to support budget appropriations for the Teachers Retirement System or the Employees Retirement System.

 

Follow-up Action

 

Staff from the Office of Education - P-16 will contact the BOCES District Superintendent to discuss findings and identify any appropriate follow-up actions.

 

  • Roosevelt Union Free School District (3rd Quarter Result of Operations)

 

Summary of Audit

 

The District’s 2008-09 third quarter results of operations indicate that the District is on track to exceed its revenue projection and to stay within its budgeted expenditure limits.  While the District has been working to improve their over-expenditure of budget line codes, 85 budget codes are still over-expended by $4 million as of March 2009.  The $6 million Academic Improvement Grant has been appropriated in the budget, but only $2.8 million has been designated for specific purposes.  There were also findings related to the special aid fund such as the charging of current year’s salaries to grants that expired on June 30, 2008 and the budgeted appropriations being greater than the estimated revenue by $94,667.

 

Follow-up Action

 

The Department will continue to closely monitor the District’s fiscal controls and condition.

 

  • St. Mary’s School for the Deaf

 

Summary of Audit

 

The School did not often follow procedural guidance provided by the Department and its own internal policies and procedures when procuring goods and services.  As a result, there is limited assurance that it received goods and services at the lowest possible prices. Out of a sample of 20 transactions that should have been competitively bid, only one was properly bid according to the Department’s guidelines. The remaining 19 transactions (totaling $1.8 million) had several issues, such as non-public advertising, and/or written specifications.  Also, the School spent $30,395 on fund raising activities that is not a reimbursable use of State funds.

 

Follow-up Action

 

The Department is exploring the most appropriate method to enhance accountability over the use of State funds related to procurement for State-supported schools.

 

 


Audit

Procurement

Claims Processing

Payroll

Cash

Financial Reporting

Information Technology

Budgeting

Other

 

Office of Audit Services

* Questar III BOCES - Eastern NY RSSC (footnote 1)

 

 

 

 

 

 

 

* Variety Child Learning Center (footnote 1)

 

 

 

 

 

 

 

 

Office of the State Comptroller

** Amsterdam (Greater) School District

 

 

 

 

 

 

 

 

Beacon City School District

 

 

 

 

 

 

 

Blind Brook-Rye Union Free School District

 

 

 

 

 

 

 

** Campbell-Savona Central School District

 

 

 

 

 

 

 

 

Capital Region BOCES

 

 

 

 

 

 

 

** Chenango Valley Central School District

 

 

 

 

 

 

 

 

Churchville-Chili Central School District

 

 

 

 

 

 

 

* Dansville Central School District (footnotes 2 and 3)

 

 

 

 

 

East Moriches Union Free School District

 

 

 

 

 

 

 

** Fabius-Pompey Central School District

 

 

 

 

 

 

 

 

Fillmore Central School District

 

 

 

Greenwood Lake Union Free School District

 

 

 

 

 

Lancaster Central School District

 

 

 

 

 

 

** Liberty Central School District

 

 

 

 

 

 

 

 

Monroe-Woodbury Central School District

 

 

 

 

 

 

 

Niagara Wheatfield Central School District

 

 

 

 

 

 

 

Oneonta City School District (Internal Controls)

 

 

 

 

 

 

Oneonta City School District (Budget)

 

 

 

 

 

 

 

** Patchogue-Medford Union Free School District

 

 

 

 

 

 

 

 

Pembroke Central School District

 

 

 

 

 

 

 

Phelps-Clifton Springs Central School District

 

 

 

 

 

 

Roosevelt Union Free School District

 

 

 

 

 

 

 

St. Mary's School for the Deaf

 

 

 

 

 

 

 

** Schenectady City School District

 

 

 

 

 

 

 

 

South Country Central School District

 

 

 

 

 

 

 

* Southampton Union Free School District (footnote 3)

 

 

 

 

 

 

 

Southern Westchester BOCES

 

 

 

 

 

 

 

Spencerport Central School District

 

 

 

 

 

 

 

* State Education Department (footnote 4)

 

 

 

 

 

Susquehanna Valley Central School District

 

 

 

 

 

 

Troy (Enlarged) City School District

 

 

 

 

 

 

 

** Wayne Central School District

 

 

 

 

 

 

 

 

** Willsboro Central School District

 

 

 

 

 

 

 

 

* York Central School District (footnote 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 2009 Total

8

3

4

3

7

5

6

6

 

* Other:

1

Contract Compliance, Contract Payments and Expenditures, Internal Controls

2

Band Uniforms and Instruments

3

Gasoline and Diesel Fuel Inventories

4

Equipment Inventory

5

Control Environment

 

 

**

No Recommendations


 

Summary of Current and Prior Audit Findings

 

 

May 2007 - June 2008

September 2008

October 2008

November

 2008

December

2008

January

 2009

February 2009

March 2009

April 2009

June 2009

Running Total

Procurement

108

35

6

6

8

13

16

7

4

8

211

Capital Assets

18

1

0

0

0

0

0

0

0

0

19

Claims Processing

120

16

3

7

5

3

8

2

1

3

168

Payroll

122

24

5

7

10

12

11

1

1

4

197

Cash

96

21

4

4

5

5

13

2

1

3

154

Financial Reporting

70

15

3

8

5

8

11

5

1

7

133

Information Technology

109

25

6

11

11

10

12

6

3

5

198

Capital Construction

5

0

0

0

0

0

0

0

0

0

5

Extraclassroom Activity Fund

7

6

1

1

1

1

0

0

1

0

18

Segregation of Duties

54

6

2

2

1

1

2

1

0

0

69

Budgeting

16

1

1

0

1

1

0

1

1

6

28

Conflict of Interest

12

4

1

1

3

1

3

0

0

0

25

Fingerprinting

6

0

1

1

1

2

0

2

0

0

13

Other

14

19

4

17

1

23

5

1

3

6

93

Total

757

173

37

65

52

80

81

28

16

42

1,331

 


Definitions of Categories

 

Procurement – includes findings related to lack of a contract, failure to competitively bid, failure to use purchase orders, lack of segregation of duties, no approval of the purchase and a lack of documentation.

 

Capital Assets – includes failure to have a manager responsible, lack of policy, and inappropriate disposal.

 

Claims Processing – includes claims being paid without adequate documentation, failure to audit the claim, an untrained claims auditor, and a claims auditor that lacks independence.

 

Payroll – includes a lack of segregation of duties in the payroll process; no policy and procedures and inappropriate payments to district administrators including leave accruals and health benefits; improper classification of employees; insufficient policies and procedures for the employee retirement system; improper contractual benefit payments; and improper longevity payments to the former superintendent.

 

Cash – includes poor control of cash, failure to prepare bank reconciliations, and weaknesses in the treasurer’s duties.

 

Financial Reporting – includes inaccurate accounting statements, such as, an overstated fund balance, fund balance exceeding the legal limit, general fund transfers without voter approval, and improper use of accrued liability reserve funds.

 

Information Technology – includes lack of a disaster recovery plan, failure to back up information, inappropriate or undocumented user rights, inappropriate or missing password protection, and no policy and procedures.

 

Capital Construction – includes a lack of detailed accounting records related to a capital project, undocumented expenses, inappropriate and unapproved change orders.

 

Extraclassroom Activity Fund – includes poor accounting over funds and no documentation of expenses.

 

Segregation of Duties – includes weakness in control caused by individuals having responsibility for incompatible functions.

 

Budgeting – includes budget reviews required for school districts that have received approval for deficit financing, poor revenue projections and use of fund balance.

 

Conflict of Interest – includes personal conflicts of board members, district officials, and district employees where they have an interest in a contract, where they have the power, or may appoint someone who has the power to negotiate, authorize, approve, prepare, and make payment or audit bills or claims of the contract.

 

Fingerprinting – includes failure to fully comply with fingerprinting requirements.

 

 


Office of Audit Services

Audit

Major Finding(s)

Recommendation/Response

Questar III BOCES  Eastern New York Regional School Support Center - For the Periods July 1, 2004 through June 30, 2007

BOC-0607-1

3rd Judicial District

 

 

Questar III submitted four vouchers for reimbursement of approved costs incurred by the Eastern Regional School Support Center (RSSC) in operating its programs, but the contract payments to Questar III exceeded the actual approved costs incurred in two of the years. The total amount of overpayments for the two year period was $116,000.

 

The Eastern RSSC incorrectly calculated the direct cost base because they did not reduce Other than Personal Service (OTPS) expenditures by all BOCES purchased services. Eastern RSSC was under reimbursed by $939 for indirect costs.

 

Further, the contract between Questar III and the Department specifies that contracts will be maintained for services rendered by consultants who are not regular employees of Questar III. It was found that consultants were not always being paid according to their contracts. It was also found that Eastern RSSC did not always comply with proper expenditure rates for travel.

 

Finally, 5 out of 76 items (realty, equipment, and other non-expendable assets) tested during a physical inventory could not be located, and none of the missing items were reported to authorities.

 

18 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding internal controls, contract payments, contract expenditures, and contract compliance.

 

Questar III BOCES generally disagreed with the recommendations pertaining to the excess reimbursement of $116,000, the excess reimbursement of indirect costs of $12,534, the inclusion of ineligible costs when applying Indirect Rate, consultants attending staff meetings, and physical inventory. Questar III agreed with the recommendations regarding compliance with consultant contract terms, the documentation of travel expenditures, and consultants providing funding departments with a description of events and materials produced. The BOCES has implemented corrective action for the recommendations they agreed with.

The Early Childhood Direction Center of Variety Child Learning Center - For the Period July 1, 2005 through June 30, 2006

SE-0807-03

10th Judicial District

 

 

The Variety Child Learning Center (VCLC) operates an Early Childhood Direction Center (Nassau ECDC) to assist parents and professionals in securing services that meet the needs of children with disabilities from birth to age five, by providing information about available service options and service delivery systems. During the 2005-06 fiscal year, Nassau ECDC claimed reimbursement from the State Education Department for expenditures of $165,768.

 

The Department’s Office of Audit Services then conducted an audit of Nassau ECDC for the period July 1, 2005 through June 30, 2006 to verify compliance with their contract with the Department.

 

It was found that Nassau ECDC claimed $8,653 in costs that were unallowable (such as food purchases, or charges unrelated to the program), undocumented, or inadequately documented (charges for supplies, consultant services, and benefits).

 

It was also found that Nassau ECDC did not meet three contract requirements. A mandatory .5 full time equivalent (FTE) Community Outreach Education Coordinator was only employed as a .14 FTE. Nassau ECDC also failed to submit the required equipment inventory list with the final expenditure report, and held only fifteen training sessions, instead of the 20 indicated in the contract.

9 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding unallowable contract expenditures, undocumented or inadequately documented expenditures, and the improper classification of costs. The recommendations also pertained to mandatory position contract requirements, equipment inventory, performance measures, and internal controls.

 

 


Office of the State Comptroller

Audit

Major Finding(s)

Recommendation/Response

Amsterdam (Greater) School District Tentative Budget Report for the 2009-10 Fiscal Year

B5-9-16

4th Judicial District

 

(Contract for Excellence District)

 

An audit of the District’s 2009-10 budget was recently completed, in accordance with Local Finance Law Section 10.10, which requires all local governments that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the local government is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their tentative or preliminary budget for the next succeeding fiscal year.

 

Based on the review of the 2009-10 tentative budget, the budgeted estimated revenues and appropriations appear reasonable.

There were no recommendations.

 

Beacon City School District

2009-10 Budget Review

B8-9-14

9th Judicial District

 

 

An audit of the District’s 2009-10 budget was recently completed, in accordance with Local Finance Law Section 10.10, which requires all local governments that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the local government is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their tentative or preliminary budget for the next succeeding fiscal year.

 

Based on the audit findings, it appeared that the significant revenue and expenditure projections in the tentative budget were reasonable; however, the board should ensure that the District’s retained fund balance does not exceed the limit allowed by law.

1 recommendation

 

It is recommended that the District develop a multi-year financial plan for the use of unappropriated fund balance that exceeds the 4 percent limit.

 

Blind Brook-Rye Union Free School District Internal Controls Over Purchasing

2008M-267

9th Judicial District

 

 

The procurement policy adopted by the board is inadequate because it does not identify bidding threshold dollar amounts, provide guidance on emergency and sole source purchases, or address the procurement of professional services. District officials also have not developed procedures to describe methods to be used when procuring goods and services that are not required to be bid, and at what dollar amount each method will be used.

 

The District did not seek competition for $140,318 in professional services, and the purchasing agent did not ensure that the District solicited price quotations for purchases totaling $26,345.

 

1 recommendation

 

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

 

The District has agreed to implement a more detailed procurement practice for purchases, and move forward in its efforts to be fiscally prudent in areas of school business operations. The District disagrees with the findings regarding the Requests for Proposals (RFP) process, because the Comptroller’s Office takes the position that the District is not legally required to competitively bid when procuring professional services, but yet is stating that an RFP should be issued in all instances. The District has agreed to implement corrective action where necessary.

Campbell-Savona Central School District  2009-10 Budget Review

B2-9-11

7th Judicial District

 

 

An audit of the District’s 2009-10 budget was recently completed, in accordance with Local Finance Law Section 10.10, which requires all local governments that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the local government is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their tentative or preliminary budget for the next succeeding fiscal year.

 

Based on the audit results, it appeared that the significant revenue and expenditure projections in the proposed budget were reasonable.

There were no recommendations.

 

Capital Region BOCES Regional Information Center (RIC)

2009M-36

3rd Judicial District

 

 

The State Comptroller is statutorily required to audit all school districts, BOCES, and charter schools in the State by March 31, 2010. The school district audits often require the contact of a BOCES Regional Information Center (RIC) to gather information about a school district’s information technology systems that are provided or serviced by the RIC.

 

During the previous examination of the RIC in 2007, it was noted that BOCES officials had not developed a written disaster recovery plan. Since then, RIC officials have developed department-level disaster recovery plans, hired a disaster recovery coordinator, and have begun the process of hiring an outside vendor to further assist with disaster recovery planning.

1 recommendation

 

It is recommended that progress toward developing a comprehensive, entitywide plan, be continued for the Capital Region BOCES RIC.

 

The results and recommendations have been discussed with BOCES officials, and they have not yet submitted corrective action.

 

Chenango Valley Central School District  2009-10 Budget Review

B4-9-9

6th Judicial District

 

(Fiscal Stress District)

 

An audit of the District’s 2009-10 budget was recently completed, in accordance with Local Finance Law Section 10.10, which requires all local governments that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the local government is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their tentative or preliminary budget for the next succeeding fiscal year.

 

Based on the audit results, it appeared that the significant revenue and expenditure projections in the proposed budget were reasonable.  However, in the prior budget review issued in April 2008, a proposed school lunch fund budget for the 2008-09 school year was not provided and it was recommended that the District prepare and adopt a realistic school lunch fund budget and closely monitor actual results of operations throughout the 2008-09 fiscal year.

There were no recommendations.

 

Churchville-Chili Central School District  Financial Condition

2008M-234

7th Judicial District

 

 

District officials did not develop realistic budgets, but continually overestimated expenditures and underestimated revenues which resulted in operating surpluses. As a result, the District has had $20 million in surpluses over the past five years. The District has generated 14 percent more tax revenues than it has needed, for ongoing operations.

 

The District has used some of their surplus money to fund General Fund reserves, and there is about $4 million of excess funds in the General Fund. This can be evidenced by the fact that District officials have established a reserve for insurance (totaling $1,730,000), as of June 30, 2008, even though the District has adequate liability and casualty post-insurance coverage. The District also used a portion of its operating surpluses to fund Other Post-Employment Benefits (OPEB) accrued liability reserves (totaling $2,245,392), which it does not have the authority to do.

 

5 recommendations

 

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

 

District officials disagreed with the finding that the District’s conservative budgeting practices warranted the District increases in the tax levy, but contends that the increases also resulted from certain enhancements that the District implemented in its instructional program. The District also disagreed with recommendations pertaining to budget provision for transfers, using the surplus fund in the most efficient way to benefit District taxpayers, and the review of reserves and encumbrances.

 

After reviewing the report, the District has indicated that they (along with the board of education) will stand behind their long-standing practices of conservative fiscal management, and that any changes to their practices will be included in their forthcoming corrective action plan.

Dansville Central School District

Internal Controls Over Selected Financial Operations

2008M-229

7th Judicial District

 

 

District officials have not established formal written agreements with the Village of Dansville Police, Fire, Department of Public Works/Water Departments, and the West Sparta Fire Department, who use the same fuel inventories as the District's Transportation, Buildings, and Grounds Department. Internal control policies have not been developed for personnel records, meeting the Department of Environmental Conservation’s requirements, or the safeguarding of District fuel inventories. District personnel were not accurately reconciling measurements of deliveries, usage, and inventories on hand to control the inventory of fuel.

 

In September 2007, the software vendor, as requested by the transportation director, deleted the records for fuel usage from the computerized system. The disposal of these records was not in conformance with the applicable record retention schedule, and was done without proper authorization.

 

The District has also not developed sufficient procedures to identify and track the District's individual band uniforms. Twenty-nine uniforms (valued at $14,000) could not be accounted for. The District paid $20,000 more in finance charges and lost discounts by utilizing lease-purchases to acquire the uniforms and instruments, as opposed to acquiring the items as a cash purchase. The District also failed to seek the Commissioner of Education’s approval for the lease-purchases.

 

The District has not instituted procedures to manage the tuition reimbursement program provided by the contracts. As a result, it was noted that eight tuition reimbursements were paid without proper supporting documentation, two payments exceeded the allowable reimbursement rate (by $2,420), and two payments (totaling $3,518) were paid prior to completion of the course.

 

Several employees also have more access to computer functions than they should, and the board has not established formal policies and procedures to address potential disasters.

12 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding accurate records and an appropriate internal control system over gasoline and diesel fuel inventories, band uniforms and instruments being properly accounted for, tuition reimbursement, and information technology.

 

The District agreed specifically with the recommendations pertaining to procedures for fuel records management and back-up; key and pin number rectification; developing procedures as needed with municipalities; and obtaining legal counsel regarding personnel issues and division of duties. Additionally, the District has indicated that the new band director has developed procedures for timely uniform accountability, and that they are investigating purchasing guidelines. The District is also in the process of developing acceptable procedures toward documentation of course completion and tuition reimbursement. The District is also working on a revised information technology process. District officials have indicated that they will submit a corrective action plan shortly, to address the findings and recommendations.

 

East Moriches Union Free School District  2009-10 Budget Review

B7-9-5

10th Judicial District

 

 

This was an audit of the District’s 2009-10 budget, completed in accordance with Local Finance Law Section 10.10. That law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their tentative or preliminary budget for the next succeeding fiscal year to the State Comptroller.

 

The District’s budgeted estimated revenues and appropriations appeared reasonable, and it was found that District officials had generally implemented the recommendations that were made in the prior budget review, issued in April 2008, regarding the appropriation of adequate funds for the costs of health insurance.

 

Although budget estimates appeared reasonable, the District’s tentative budget does not include an appropriation for payments to retiring employees for their unused leave time. It is estimated that termination payments to those employees eligible for retirement, may cost the District up to $214,000, whereas the balance of the reserve is only $100,000.

1 recommendation

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the District’s tentative budget.

 

It is recommended that the District amend the budget to include an appropriation for the additional monies the District needs to pay these employees for their unused leave time upon retirement.

 

The District has not yet submitted a response to this recommendation.

 

Fabius-Pompey Central School District

2009-10 Tentative Budget Plan

B3-9-3

5th Judicial District

 

 

This was an audit of the District’s 2009-10 budget, completed in accordance with Local Finance Law Section 10.10. That law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their tentative or preliminary budget for the next succeeding fiscal year to the State Comptroller.

 

Upon review, it was concluded that the 2009-10 tentative budget for the District, and the budgeted estimated revenues and appropriations appear reasonable.

There are no recommendations.

 

Fillmore Central School District

Internal Controls Over Selected Financial Operations

2008M-200

8th Judicial District

 

 

The District had not adequately segregated duties over the cash receipts and disbursements process. Although the business manager was appointed Extraclassroom Activity (ECA) fund treasurer, he delegated this responsibility to the payroll clerk. The payroll clerk controlled all aspects of managing the ECA funds, and $43,000 was not deposited intact. There was $7,260 in expected receipts not accounted for.  Receipts in the amount of $21,000 were not deposited in a timely manner. The payroll clerk cashed personal checks that included third party checks and checks made payable to the ECA fund by herself, her relatives, co-workers, and District students. Additionally, the payroll clerk substituted cash for checks that were unrelated to student activity. There was no control over the District treasurer or business manager’s facsimile signature, and there were poor controls over District bank reconciliation activities.

 

District employees received additional pay ($139,058) that was not properly authorized, or was not supported with proper documentation. Prior to the appointment of the claims auditor, $3.7 million in disbursements were not properly supported by a warrant certifying board approval. District credit card charges in the amount of $4,770 were not supported with receipts, meals were purchased in excess of board-approved rates, and $66,000 in lunch fund disbursements were not paid in a timely manner.

 

Further, the District’s unreserved fund balance was about four times the amount allowed by law, and over the past six years the District has increased reserves from approximately $1.1 million to $2.4 million.

 

Finally, the BOCES employee serving as the internal auditor is not independent in performing the internal audit function.  Internal controls over the District’s financial management system and network were inadequate.

24 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding cash and disbursements, payroll, claims processing, financial condition, internal audit function, and information technology.

 

The District has agreed with the recommendations pertaining to internal controls and financial reports, audit trails for the Extra-Classroom Activity fund, bank reconciliations and journal entries, the certification of payroll, claims documentation, fund balance, the internal auditor, and internal controls over the financial management system. The District has indicated that they will implement corrective action to address the findings.

 

Greenwood Lake Union Free School District  Internal Controls Over Selected Financial Operations

2009M-1

9th Judicial District

 

 

The superintendent did not certify payrolls as required, and the District’s former payroll clerk incorrectly assigned 804 payroll check numbers that were not detected. There were no improper payroll disbursements.

 

The District improperly paid $56,000 to three service providers without obtaining Requests for Proposals (RFP’s), as required by District policy. The District does not have a credit card usage policy, and $20,200 was paid in credit card purchases without supporting documentation.

 

The District treasurer is performing conflicting duties, and budget transfers were made at year end instead of consistently throughout the year. The District relied on excess funds from other budget lines at year-end to cover the overspent budget lines, and the board did not review these budget transfers.

 

Further, the District improperly placed $1.9 million in the Employee Benefits and Accrued Liability Reserve (EBALR) for the purpose of funding prior service payments to the New York State and Local Employees’ Retirement System (ERS).

 

Finally, the deposit of funds into the District’s bank account from taxes were delayed, and the District could have earned almost $17,000 in interest if deposits were made on a timelier basis.

10 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding payroll, purchasing, cash disbursements and budget transfers, the EBALR, and tax receipts.

 

The District agreed with the recommendations specifically pertaining to internal controls over payroll and the duties of the business office staff, financial software, the RFP process, and the credit card policy. The District also agreed with the recommendations regarding monthly bank reconciliations, the EBALR, and tax receipts. The District has indicated that they will initiate corrective action shortly to address the areas of concern.

 

Lancaster Central School District  Financial Condition and Internal Controls Over the Procurement Process

2008M-258

8th Judicial District

 

(Contract for Excellence District)

 

There was at least $11 million in excess surplus funds which had accumulated because District officials do not prepare reasonable budgets. The District has also not been using the debt service fund, which had a balance of $8.2 million at June 30, 2007, and instead, debt service is being paid from the general fund. The District is also improperly reporting certain encumbrances which reduced the unreserved, un-appropriated fund balance by approximately $1.2 million in June 2007. Further, the District exceeded the fund balance statutory limits in each of the last three completed fiscal years by amounts ranging from $400,000, to $3.2 million.

 

Additionally, the District did not properly estimate appropriations and revenues, and as a result, cumulative operating surpluses have totaled approximately $4 million over the last three fiscal years. The District also did not prorate the value of certain teachers’ unused sick leave as provided in the collective bargaining agreement. 

 

Finally, the District did not follow its procurement policy to ensure that the required bids and purchase quotations were obtained. Twenty-five purchases were tested (totaling $256,655) and it was determined that six purchases (totaling $73,792) were made through State contract, or purchased without the appropriate documentation. Purchases in the amount of $104,438 lacked documentation to indicate that written quotations and competitive bids were obtained.

6 recommendations

 

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

 

The District has agreed with the recommendations specifically pertaining to excess funds in the Employee Benefit Liability Reserve, money in the debt reserve, year-end encumbrances, the adoption of more realistic budgets, competitive bidding, and the approval of purchase orders. The District has indicated that it is currently working to address all findings, and that some of the recommendations have already been completed.

 

Liberty Central School District

2009-10 Budget Review

B4-9-4

3rd Judicial District

 

 

This was an audit of the District’s 2009-10 budget, completed in accordance with Local Finance Law Section 10.10. That law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their tentative or preliminary budget for the next succeeding fiscal year to the State Comptroller.

 

Upon review, it was concluded that the 2009-10 tentative budget for the District, and the budgeted estimated revenues and appropriations appear reasonable.

There are no recommendations.

 

Monroe-Woodbury Central School District  2009-10 Budget Review

B8-9-10

9th Judicial District

 

 

An audit of the District’s 2009-10 budget was recently completed, in accordance with Local Finance Law Section 10.10, which requires all local governments that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the local government is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their tentative or preliminary budget for the next succeeding fiscal year.

 

Based on the audit results, it appeared that the significant revenue and expenditure projections in the proposed budget were reasonable.

1 recommendation

 

It is recommended that in the future, excess fund balance be used to finance non-recurring expenses or to reduce outstanding debt. District officials should closely monitor the use of fund balance to ensure that, if necessary, the appropriate action is taken to identify other funding sources that can be used, should fund balance no longer be available.

Niagara-Wheatfield Central School District  Internal Controls Over Financial Condition

2008M-255

8th Judicial District

 

 

The District did not prepare reasonable budgets for the 2004-05 through the 2007-08 fiscal years. The District underestimated revenues by $6.2 million and overestimated expenditures by $17.8 million, which generated significant operating surpluses. The District has approximately $8 million in excess funds that could be used to benefit taxpayers.

 

For the last four fiscal years, the District has annually appropriated between $4.3 million and $5 million of fund balance to fund current operations, which should have resulted in yearly operating deficits. However, because the appropriated fund balance in each year was less than the total budget variance, the District had operating surpluses in each fiscal year.

 

From June 2005 until June 2008, the District tax levy has increased from $23 million to over $26 million.

 

4 recommendations

 

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

 

The District has specifically agreed with the recommendations pertaining to the operating surplus and the General Fund Balance, and the development of a financial plan to benefit taxpayers. The District has indicated that they have already begun work on the appropriate recommendations specified in the report, and several corrective action measures were implemented even before the draft of the report was released.

Oneonta City School District

Internal Controls Over Financial Operations and User Access Rights

2008M-262

6th Judicial District

 

(Fiscal Concern District)

 

The business official has not ensured that health insurance billings and collections duties are properly segregated. The treasurer prepares and sends health insurance bills, collects, and deposits health insurance contributions and reconciles bank statements. The treasurer does not ensure that amounts billed are accurate and supported by proper documentation or have an adequate process to confirm eligibility. At least four individuals did not pay their full premium, resulting in uncollected revenues (of about $6,100).  The District also paid $5,373 in health insurance premiums for a deceased retiree.

 

The business official also did not implement compensating controls, such as regularly reviewing audit logs. Internal controls could also be improved in relation to the segregation of duties. There were no discrepancies in either of these areas; however, controls should be strengthened to avoid future problems from occurring.

 

8 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding financial operations, and user access rights.

 

The District is in agreement with the recommendations pertaining to the implementation of more adequate procedures over segregation of duties and controls over computer user access rights. The District has also indicated that their payroll clerk had been searching for the deceased retiree’s name in the obituaries as well as other websites, but had been spelling the name wrong. District officials were also in agreement with recommendations regarding the technology system’s errors, and uncollected revenues for health insurance premiums (which have since been recovered). The District will submit a corrective action plan shortly to address all of the findings.

Oneonta City School District

Regional Fuel Purchases

P4-8-03

6th Judicial District

 

(Fiscal Concern District)

 

An audit of fuel costs in three entities in the Binghamton Region was conducted. The purpose of the audit was to determine if the respective entities received the best price possible, if the fuel contracts’ bid specifications were complete, and if municipal officials had procedures in place to ensure they were being charged the correct price according to the prevailing contract.

 

The District did not receive the best possible price for fuel, and, as a result, it was determined that the District could have saved approximately $3,000 on diesel and fuel oil by using bid specifications similar to those used by the New York State’s Office of General Services (OGS). The fuel contract bid specifications were incomplete, and effective procedures were not in place to ensure they were charged correctly, and, as a result, the District was overcharged $133 on three propane purchases. The District also failed to monitor their implemented procedures for verifying fuel charges to ensure they were operating effectively.

 

5 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding fuel pricing research, ensuring a procedure for calculating the base price when soliciting bids, the verification of fuel bills, and seeking recovery of the amounts the vendor overcharged them.

 

The District has indicated that they are in agreement with the recommendations in the report, and will make sure that the specifications are more specific and complete, and they will consider other options for fuel purchasing in the future. The District will also request a refund from the vendor for the overcharge.

Patchogue-Medford Union Free School District

2009-10 Budget Review

B7-9-7

10th Judicial District

 

(Fiscal Concern District)

 

This was an audit of the District’s 2009-10 budget, completed in accordance with Local Finance Law Section 10.10. That law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their tentative or preliminary budget for the next succeeding fiscal year to the State Comptroller.

 

Upon review, it was concluded that the 2009-10 tentative budget for the District, and the budgeted estimated revenues and appropriations appear reasonable.

There are no recommendations.

 

Pembroke Central School District

Internal Controls Over Cash Receipts

2008M-261

8th Judicial District

 

 

Internal controls over District cash receipts and disbursements were not appropriately designed or operating effectively. The treasurer failed to make six deposits in the same amount and form as received. The cash deposited was substituted with two of the treasurer’s payroll checks ($465.96), one expense reimbursement check to the treasurer ($15.76) and three checks for petty cash ($87.65). This totaled $569.37.

 

The high school secretary acts as the central treasurer for the extraclassroom activities (ECA) fund. The central treasurer’s duties over cash receipts are not properly segregated. Additionally, $210 of the ECA cash receipts is missing, and the central treasurer indicated that the bank had failed to credit the amount. The central treasurer could not produce a receipt to prove that the bank was in error, and she did not alert the business office of the problem until three months after the incident had occurred.

 

Forty ECA cash receipts (totaling $12,375) were tested, and it was found that over $2,600 of ECA funds were unaccounted for, or may have been used for inappropriate purchases.

 

8 recommendations

 

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

 

The District agreed with the findings, but has indicated that many of the issues discovered were related to transactions and incidents that occurred during the earlier periods examined during the audit. Corrective action for many of the extraclassroom activity findings were previously implemented. Controls have also been put into place to reduce the possibility of mishandling funds. The District has also agreed with the recommendations pertaining to accurate job descriptions, the segregation of duties, written policies, and cash handling procedures. The District will implement corrective action to address the issues that have not already been handled.

Phelps-Clifton Springs Central School District  Financial Condition and Information Technology

2008M-238

7th Judicial District

 

 

The District routinely overestimated appropriations and or/underestimated revenues, which caused the District to have a surplus unreserved fund balance that was above the amount allowed by law. The District was also charging unauthorized expenditures to its Employee Benefit Accrued Liability Reserve (EBALR) fund, had transferred excessive monies to the unemployment insurance reserve fund, and was not using the monies in the EBALR and retirement reserve fund as is intended by law. The District’s balance in these funds is greater than necessary to finance future obligations. The District’s EBALR, unemployment insurance reserve fund, and the retirement contribution reserve is over-funded by a total of more than $3 million.

 

Further, internal controls over information technology are not appropriately designed and operating effectively. The District has not established a Disaster Recovery Plan to prevent loss of data and equipment, and several employees had inappropriate user access rights.

8 recommendations

 

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

 

The District specifically agreed with the recommendations pertaining to routinely understating revenues, the EBALR fund, the District-wide security plan, the Disaster Recovery Plan, user access rights and the segregation of duties. The District has indicated that they are already in the process of implementing corrective action.

 

Roosevelt Union Free School District

Third Quarter Report on the 2008-09 Budget

2009M-77

10th Judicial District

 

 

The following reports on the District’s 2008-09 third quarter results of operations based on the review of revenue and expenditure transactions recorded between January 1 and March 31, 2009.

 

It was determined that the District is on track to exceed its revenue projection and to stay within its budgeted expenditure limits.  The District planned to use $8 million of its accumulated fund balance this year to fund its ongoing operations.  This use of fund balance means that they also plan to have an operating deficit of $8 million at the end of the year.  However, because of the favorable result of the District’s operation to date, it could end up with an operating deficit of only $2.2 million, which will result in the District using $5.8 million less ot its fund balance than previously planned. While the District has been working to improve their overexpenditure of budget line codes, there were still 85 budget codes that were over-expended by $4 million as of March 2009.

 

Additionally, the District has appropriated all $6 million of their Academic Improvement Grant (AIG) funds this year, but has only designated $2.8 million for specific purposes. District officials are continuing to charge current year’s salaries to special aid fund appropriations from grants that expired as of June 30, 2008. The District’s revised special aid fund budget is also not balanced, with estimated revenues less than budgeted appropriations by $94,667.

5 recommendations

 

The budget report’s recommendations focused specifically on strengthening the policies and procedures regarding budgetary transfers of appropriations to accounts that are over-expended, AIG funds, budget transfers and budget account codes, grant program funds, and special aid fund revenues.

 

The District has indicated that they agree with the recommendations and will take corrective action to address the findings.

 

St.  Mary's School for the Deaf

Procurement and Contracting Practices

2008-S-126

8th Judicial District

 

 

$30,395 adjustment

 

The School did not often follow procedural guidance provided by the Department and its own internal policies and procedures when procuring goods and services.  As a result, there is limited assurance that it received goods and services at the lowest possible prices. Twenty transactions that should have been competitively bid were selected judgmentally and it was found that only one was properly bid according to the Department’s guidelines. The remaining 19 transactions (totaling $1.8 million) had several issues, such as non-public advertising, and/or written specifications.

 

Twenty-one smaller transactions (totaling $388,616) were also selected judgmentally, and it was found that the School did not comply with its own procedures for 16 of the 21 transactions. The board also failed to effectively monitor the School’s compliance with certain internal procedures such as the requirement for committee approval for contracts and major purchases. When the 20 transactions required to be competitively bid were reviewed, it could not be determined if the transactions had previously been approved. 

 

School officials did not comply with the Department’s requirement to disclose less than arm’s length transactions.  In the 2004-05 school year, the School employed an architectural firm owned by a board member.  The architectural firm was paid $14,254 in 2004-05 and $80,885 in 2005-06 school year. School officials disclosed the relationship to the Department in 2005-06, but not in 2004-05.

 

In addition, one transaction amounting to $30,395 was related to fundraising activities, which, according to the Department’s Reimbursable Cost Manual, could not be reimbursed by State funds.

8 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding procurement. Specifically, the report discussed policies in terms of conformance with the Department’s bidding guidance, purchases subject to school procedures, less than arm’s length transactions and board governance over procurement.

 

The report also recommended the School’s repayment of $30,395 in State funds used for fundraising purposes.

 

The School disagreed with two of the eight recommendations. Regarding recommendation #5, the School states that the one transaction mentioned in the audit report was in fact reported to the Department as a less than arm’s length transaction. For recommendation #8, the school noted that it disagreed that $30,395 relating to fund raising activities and/or that amounts inadvertently reported to and reimbursed by the Department can be paid back to the Department at this time.

 

The School agreed with the rest of the recommendations, and has indicated that they have either taken, or are taking steps to ensure that procurement policies are reasonable and responsible.

Schenectady City School District

2009-10 Budget Review

B6-9-12

4th Judicial District

 

(Contract for Excellence District)

 

An audit of the District’s 2009-10 budget was recently completed in accordance with Local Finance Law Section 10.10, which requires all local governments that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the local government is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their tentative or preliminary budget for the next succeeding fiscal year.

 

Based on the results of the audit, budgeted estimated revenues and appropriations appear reasonable.  However, the District's appropriation of fund balance to finance operating expenditures is a practice that the board should monitor closely to avoid depletion of this resource.

 

It was also advised that the District closely monitor the use of fund balance to ensure that action is taken, if necessary, to identify other funding sources that can be used to fund District operations if fund balance is no longer available.

There are no recommendations.

 

South Country Central School District

2009-10 Budget Review

B7-9-6

10th Judicial District

 

(Fiscal Concern District)

 

This was an audit of the District’s 2009-10 budget, completed in accordance with Local Finance Law Section 10.10. That law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their tentative or preliminary budget for the next succeeding fiscal year to the State Comptroller.

 

The District’s significant revenue and expenditure projections in the tentative budget were found to be reasonable. It is predicted that the District’s fund balance will be $10.9 million in June 2009, which is $6.7 million more than the legal limit, which should be used to benefit taxpayers. The District issued a $3 million bond anticipation note in October 2008 without prior notice to the State Comptroller, as required by law, and the District’s required quarterly reports were not submitted in a timely fashion. The District also did not provide the Comptroller’s office with the necessary documentation to support budget appropriations for the Teachers Retirement System or the Employees Retirement System.

5 recommendations

 

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

 

The District had implemented some of the recommendations noted in the budget review letter issued in April 2008, but it is advised that the board revise the budget format to include the actual revenues and expenditures for the current year-to-date, and revenue estimates and appropriations for the current fiscal year. The District has not yet submitted a response to the recommendations.

Southampton Union Free School District  Internal Controls Over Fuel Inventories

2009M-6

10th Judicial District

 

 

District officials have not developed proper internal control policies to describe the duties that District personnel must follow, the records that personnel must maintain, and the procedures that personnel must perform, in order to achieve adequate safeguards for the District’s fuel inventories. District personnel do not reconcile fuel records to ensure the accuracy of deliveries, usage, and inventory. Additionally, the custodian and the head mechanic had access to the fuel pumps and the computerized inventory system without compensating controls.

 

Further, the fuel delivery and fuel usage logs are not reconciled to the computerized system to ensure accuracy, and the District did not perform periodic reconciliations of fuel purchases, deliveries, usage, and inventory, in order to identify losses or gains of fuel. A vehicle log is also not required by the District.

 

There were nine occasions where 175 gallons of gasoline was dispensed, but was not recorded in the computerized records, and six occasions where 125 gallons of diesel fuel was not recorded in the computerized records. Incomplete and inaccurate usage records allow for the possibility of errors and irregularities to occur and go undetected.

4 recommendations

 

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

 

The District specifically agrees with the recommendations pertaining to the reconciliation of fuel records and the computerized fuel system. The District also agrees with the recommendations pertaining to the periodical review of fuel inventories and logs, the segregation of duties, and compensating controls. The District has indicated that they are currently in the process of addressing the recommendations.

 

Southern Westchester BOCES

Internal Controls Over Claims Processing

2009M-18

9th Judicial District

 

 

The BOCES claims audit function is not operating effectively. The board did not establish policies and procedures for the claims auditor to follow, and, as a result, the treasurer is paying claims prior to the claims auditor performing a proper audit.

 

Twenty claims (totaling $844,363) were examined, and it was found that the treasurer paid 18 of the 20 claims (totaling $811,731) without proper authorization from the claims auditor.

 

There were no other significant discrepancies in the claims other than the fact that they were paid prior to audit.

 

3 recommendations

 

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

 

The District specifically agreed with the recommendations pertaining to internal controls over claims processing, the preparation of a certified warrant by the claims auditor, the proper approval of claims, and the overall security of checks before they are audited. The District has indicated that they are already in the process of implementing corrective action to address the findings.

Spencerport Central School District

Reserve and Debt Service Funds

2008M-259

7th Judicial District

 

(Contract for Excellence District)

 

The District did not properly maintain reserve funds, appropriate moneys from the debt service fund for the payment of principal and interest, or credit reserve funds with the amount of interest earned. As a result, the District has accumulated over $7.1 million in excess funds that are not benefiting taxpayers. The District had accumulated reserve and debt service fund balances totaling over $12 million.

 

No payments were made from the Employee Benefit Accrued Liability Reserve (EBALR) during the audit period, and instead, compensated absences were budgeted for, and paid from, the general fund. The District also incorrectly assumed that retirement incentives and retiree health insurance could be included, and thereafter accumulated over $3.1 million for these purposes. Further, the District has not used the Insurance Reserve to pay for losses, claims, actions, or judgments.

 

The board transferred $415,000 from reserve funds into the capital building reserve fund, without voter approval, as required. The District’s Debt Service Fund balance has increased to over $793,000 due to interest earnings from ongoing capital projects. Finally, the District did not properly credit over $375,000 of interest earned to reserve funds in the 2007-08 fiscal year.

3 recommendations

 

The report’s recommendations focused primarily on strengthening the policies and procedures regarding reserve and debt service funds.

 

The District accepted the recommendations pertaining to proper procedures for transfers from the insurance reserve, property loss, and liability reserve funds, surplus fund balances to benefit taxpayers, and interest earned by the reserve funds. While the District acknowledges the recommendations, the District maintains that their management of reserves has resulted in fiscal stability to the taxpayers. The District has indicated that they will implement corrective action to address the areas of concern.

 

State Education Department

Follow Up on the Assessment of Selected Financial Management Practices (Report 2006-S-99)

2008-F-41

 

 

This was a follow-up on a previous audit entitled Assessment of Selected Financial Management Practices (Report 2006-S-99). That audit examined certain aspects of the Department’s property control, payment, and payroll systems. The original audit found weaknesses in control over the Department’s equipment inventory, the timeliness of payments to certain vendors, and the process for updating payroll information. The objective of the follow-up report was to assess the extent of implementation of the recommendations included in the initial report. The original audit contained 17 recommendations for strengthening controls in these areas.

17 recommendations

 

The Department has implemented, or partially implemented, all recommendations, except for those to perform annual physical inventories of equipment, and to recover the location pay overpayment from the employee, because the Comptroller’s Office advised them that the overpayment of the location differential was not recoverable. The Department indicated that they planned to perform an independent physical inventory of all equipment in the Albany area by March 31, 2009 to address the annual physical inventory recommendation.

Susquehanna Valley Central School District  Internal Controls Over Selected Financial Activities

2008M-268

6th Judicial District

 

 

The board appointed an employee of BOCES as the District’s claims auditor, which is against the Department’s guidance. It may not be appropriate for a BOCES to provide claims auditing services to its component districts, because most of the districts would have material and significant contract payments to that BOCES.

 

The board also appointed a second BOCES employee to serve as the District’s deputy claims auditor; however, there is no provision against this in Education Law.

 

1 recommendation

 

The report’s recommendation states that board members should audit District claims themselves or appoint only one individual as the District claims auditor who meets Department regulations.

 

The District has agreed with the recommendation, and has indicated that they are currently in the process of implementing corrective action.

Troy (Enlarged) City School District

2009-10 Budget Review

B5-9-17

3rd Judicial District

 

 

An audit of the District’s 2009-10 budget was recently completed, in accordance with Local Finance Law Section 10.10, which requires all local governments that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the local government is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their tentative or preliminary budget for the next succeeding fiscal year.

 

The District's significant revenue and expenditure projections in the tentative budget were found to be reasonable. However, the District's fund balance is approximately $1.4 million in excess of the amount currently allowed to be retained.

2 recommendations

 

It is advised that the District closely monitor it’s year-end fund balance projections and develop plans for using the unreserved fund balance in excess of the 4 percent limitation. The District should also use the excess fund balance to finance non-recurring expenses or to reduce outstanding debt.

 

Wayne Central School District

Internal Controls Over Purchasing

2009M-39

7th Judicial District

 

 

Claim records were examined for purchases made throughout the audit period from 94 vendors (totaling $1,155,371), including payments to employees. Purchases were reviewed to verify the receipt of goods, to see if goods and services were competitively bid, and to ensure that purchases were appropriate.

 

It was found that controls are operating effectively and there were no discrepancies.

There were no recommendations.

 

Willsboro Central School District

Internal Controls Over Payroll

2009M-16

4th Judicial District

 

 

The audit found that the District has established an adequate system of internal controls over payroll and personal services.  District officials have implemented specific procedures to ensure that the individuals included on each payroll are bona fide District employees, are paid at their approved salaries and wages, and receive only those benefits to which they are entitled.  The District has also established control procedures over the payroll process that include adequate supervision and oversight.

 

 

There are no recommendations.

 

York Central School District

Control Environment

2008M-244

7th Judicial District

 

 

The board has not formally adopted written policies for certain business operations, and the superintendent has not developed written procedures to ensure that the policies that were adopted were implemented. There is also no evidence that the board has updated their budget policy since 1993.

 

Additionally, the District’s unreserved, unappropriated fund balance in June 2008 was over $1 million, which exceeded the amount necessary by law. The District also overestimated appropriations by $2.1 million during the 2007-08 and 2008-09 fiscal years. The board also lacks sufficiently detailed interim reports to properly monitor the District’s fund balance.

 

Further, the District’s audit committee did not help the board  prepare corrective action plans related to independent audit findings, nor did the committee monitor corrective action. As a result, the audit reports’ findings were not corrected.

 

10 recommendations

 

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

 

The District specifically agreed with the recommendations pertaining to the purchasing policy and reviewing all policies and associated procedures; the fund balance and a voter-approved reserve; expenditures; budget preparation; and the audit committee. The District has agreed to implement corrective action to address the findings.