Office
of the State Comptroller |
Audit |
Major
Finding |
Recommendations/Response |
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East Bronx Day Care
Center
Report
2003-S-22
12th Judicial
District |
$948,536
adjustment
This audit examined the costs and
enrollment information reported by the East Bronx Day Care Center (Center)
for its Pre-School Center Based program and the Pre-School Integrated
program.
The audit found the Executive
Director's salary was not appropriately charged and disallowed a portion
of the salary. Other staff salaries were similarly disallowed.
The audit also disallowed various other
than personal service costs that were either ineligible for reimbursement
or inadequately documented. Some examples are $54,820 paid to a financial
consultant, $4,679 for a Christmas dinner cruise, fines, flowers, and
unsupported auto lease expenses.
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The report recommends the Department
review the adjustments, recompute the rate, and take appropriate action to
recover any overpayments.
Department officials agree with the
recommendation.
The Department’s Rate Setting Unit is
reviewing the audit in order to adjust the tuition rate and assess the
effect on subsequent years’ tuition
rates.
The report recommends the Center
document, at least annually, the methodology used to allocate
administrative costs and ensure this method is used when preparing the
CFR.
Center
officials did not respond to the report. |
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Manhattan Center for Early Learning
Compliance with Reimbursable Cost Manual for Year Ended June 30,
2002
Report
2004-S-14
1st Judicial
District |
$617,109
adjustments
The report examined the reported cost
and enrollment for two programs, a full-day Pre-School Center Based and a
half-day Pre-School Center Based.
The audit found errors in the data
reported to the Department resulting in adjustments totaling $617,109. The
adjustments were in both personal service costs reported, as well as other
than personal service cost.
The School inaccurately allocated
salary costs for some staff, included employees working on a fee-based
program in the costs and included some inappropriate salary costs.
The School included personal apartment
rental expenses, travel expenses unrelated to the programs, and
advertising expenses unrelated to the program. The School also claimed
some undocumented costs. |
4
recommendations
1 to the
Department
The report recommends the Department
recover the adjusted program costs.
Department officials agree with the
recommendation. The Rate Setting Unit will make the appropriate
adjustments.
The report recommends the School
establish an appropriate salary allocation methodology and ensure costs
are eligible and correctly reported.
The recommendations to the School are
to establish a methodology to appropriately allocate salary costs, ensure
all costs are correctly reported on the CFR as either direct or indirect
care, and ensure that all other than personal service costs are eligible
and adequately documented.
School officials disagree with the
recommendations and believe the allocation methodology used complies with
the Reimbursable Cost Manual and that the disallowances are greatly
overstated. |
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The Archives Partnership Trust Internal
Controls over Financial Operations
Report
2005-S-24 |
$0
adjustment
The audit found that the Trust has
internal controls in place to provide adequate assurance that it achieved
its goals and objectives.
The Trust could improve controls by
adding guidelines on the need for collateral, standards for
diversification of investments, and the qualifications of investment
bankers, brokers, agents, dealers, and other investment advisors. Two of
the Trust's corporate bonds did not have a rating of A or better as
required by guidelines, and the Trust uses an Investment Committee
resolution rather than written instructions prior to investing as required
by the guidelines.
The Trust did not always follow its
procurement guidelines. A $65,000 contract was awarded without using
competitive procure-ment procedures and there was no documentation to
support the basis for contractor
selection.
The Trust did not conduct physical
inventories and four items of equipment were not on the SED inventory
lists. |
7
recommendations
The report recommends the Trust enhance
its investment guidelines, assess any investments not currently permitted,
and comply with guidelines which require signed written instructions. The
report also recommends that procurement guidelines be followed, searches
be conducted for minority and women owned businesses when seeking vendors,
and be documented. Finally, the report recommends the enhancement of
equipment inventory controls.
Trust officials fully agree with six of
the recommendations. They partially agree with the need to require written
instructions to enter into a transaction. The Trust will have the Board
consider amending its by-laws to allow making investment decisions on its
own motion with a super-majority of the Committee and comply with or
change its Investment Guidelines.
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Lawrence Union Free School District -
Independent Audit Services
Report
2005M-29
10th Judicial
District |
$0
adjustment
The audit found that the
District’s written purchasing policy and regulation applicable to
procuring professional services is not adequate. Requests for proposals
(RFPs) were not available to show that the contract for audit services had
been awarded to the firm that submitted the lowest
proposal.
The
audit also found the
annual audit of the District did not meet several professional standards
for such an audit. For example, the CPA firm did not fully comply with
auditing standard requirements relating to the consideration of
fraud.
There
was no indication that the CPA firm had formulated an audit response to
the risk of District management overriding controls. The CPA firm did not
comply with the second standard of field work which states that a
sufficient understanding of internal control is to be obtained to plan the
audit and to determine the nature, timing, and extent of tests to be
performed. The report specifically cites a lack of understanding of
information technology controls.
Finally,
the CPA firm’s audit programs and work papers supporting testing of
expenditures and fixed assets were not properly designed and executed to
enable the CPA firm to obtain sufficient and competent evidential matter
on District expenditures. |
5
recommendations
The recommendations are for the Board
to provide more specific guidance on soliciting and reviewing RFPs for
professional services, issue a RFP at least every five years, and maintain
documentation of the process. The report also recommends District
officials and Board members educate themselves on the scope and
limitations of the annual independent audit. Finally, the report
recommends the Board establish a committee to provide timely oversight of
audits, participate in the selection of auditors, ensure the audits are
performed in accordance with government auditing standards, review the
District's financial statements, and monitor District corrective action
plans.
District officials did not directly
respond to the report. The District’s CPA firm responded. There is
significant disagreement over many of the findings in the
report. |
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Buffalo City School District – Free and
Reduced-Price Lunch Program Data Collection and
Reporting
Report
2005M-42
8th Judicial
District |
$0
Adjustment
The audit found weaknesses in internal
controls over the free and reduced-price lunch data collection and
reporting process and the lack of monitoring of the program by District
officials. The audit reports
that the District received approximately $780,000 less in Extraordinary
Need Aid (ENA) than the District should have received. Furthermore,
failure to take corrective action could result in the District not
receiving approximately $2.2 million in ENA in the current fiscal year.
Although the District has established
policies and proce-dures for data collection and reporting, they are not
consistently applied throughout the District. The District does not have
adequate policies concerning the reporting of its student population that
moves between schools.
Communication between the various
departments involved in the free and reduced-price lunch program is
woefully inadequate. Further, there were no indications that the various
departments worked in a cohesive manner to create an efficient and
effective process. |
9
Recommendations
The report recommends the District
recover any ENA that may be available, annually verify the accuracy of
BEDS data, establish and communicate policies concerning application
counts, and periodically monitor the data collection and reporting
process.
The report also recommends that
managers understand the requirements and importance of the data collection
and reporting process, the various offices work together to improve
communications and controls, consideration be given to implementing a
districtwide database to assist cafeteria managers in assessing
eligibility, and District officials work with the NYS Office of Temporary
and Disability Assistance regarding direct certifications.
District officials generally agreed
with the recommendations. |
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East Islip Union Free School
District
Report
S8-5-45
10th judicial
district |
The
audit found the District is generally managing administrative expenses
well, but paid some managers extra without proper Board authorization and
lacked formal policies governing spending. In addition, the District's CPA
firm inappropriately served as its internal and external auditor at the
same time.
The
audit also found credit card charges were managed relatively well, travel
policies were in place, cell phone usage was monitored, and meal costs
were managed.
The
audit reported that the CPA firm served as the internal claims auditor and
the external auditor which is a violation of the generally accepted
government auditing standards (GAGAS). In effect, the CPA firm was
auditing its own work, which is an impairment of independence. The
District took steps to fix the problem and engaged a different CPA firm to
serve as internal auditor in January 2005.
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The audit recommended the District not
engage the same CPA firm to serve as both the Internal Claims Auditor and
external auditor, authorize
all compensation for employees prior to payment, adopt written policies
for meals and district credit card usage, and establish reasonable rates
for lodging when District officials travel.
District officials generally agreed
with the recommendations.
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Windham-Ashland-Jewett Central School
District – Financial Accounting
Operations
Report
2005M-55
3rd Judicial
District |
The report found that the District’s procurement
policy did not address the need to solicit requests for proposals for
professional services as required by General Municipal Law and the
District’s Policy Manual. The District neglected to obtain requests for
proposals for auditing services and architectural and engineering
services.
The
District also failed to obtain written or verbal quotes in 16 of 17
transactions tested and overspent budgetary accounts in 20 instances.
The
Board had not established written procedures for the audit of claims and
had not stated the responsibilities of the Internal Claims Auditor. In 19
of the 49 claims tested there were no supporting requisitions, 7 of 60
claims tested were not supported by purchase orders and 22 of 57 paid
claims tested did not have supporting documentation signed by a District
officer or employee acknowledging receipt of the goods or
services.
The Board had not issued a
comprehensive written investment policy. The Business Manager bypassed the
Internal Claims Auditor by submitting claims not audited, and the District
did not maintain a capital assets
inventory. |
7
recommendations
The report recommends that the Board
ensure compliance with District procurement policy, establish adequate
control over budget transfers, ensure claims are properly processed and,
along with the Superintendent, establish proce-dures to properly monitor
the budget.
The report also recommends the Board
adopt a written investment policy, ensure no claims are paid out without
the review and approval of the Internal claims Auditor, and ensure
compliance with District policy on capital
assets.
District officials generally agree with
the recommendations and have taken actions to implement them.
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Manhasset Union Free School District –
Internal Controls
Report
2005M-33
10th judicial
district |
$0
adjustment
The report found instances where the
Board had either not established critical internal controls or controls
were improperly designed or operating ineffectively. There are several
significant control weaknesses related to computer operations including
lack of written procedures, weak or non-existent controls over access and
nothing to prohibit altering previously entered
information.
Certain duties of several employees in
the Treasurer's office were not properly segregated, some accounting
transactions were not individually approved or reviewed, journal entries
were made by the District’s independent auditors, and cafeteria receipts
were deposited by a contractor.
The audit also found security over cash
was weak, a second signature was sometimes not obtained, bonding insurance
was inadequate, and the District Treasurer's signature can be produced by
the computer system.
The audit also found instances where
the District Treasurer signed the claims warrant. The "claims package"
assembled for the Internal Claims Auditor included signed checks. The
Board's policy for travel and meal expense reimbursement is vague and
non-specific. Finally the audit found the Capital Assets Accounting policy
was not strictly adhered to.
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28
recommendations
The report recommends the District
conduct a comprehensive review of computer operations, address CPA firms
responsibility for understanding information technology systems in any
future contracts, formally approve and document changes made to the
accounting data, only generate checks from the computer system, and
consecutively number cash receipts. The Board should review duties within
the Treasurer's office and institute controls to ensure segregation of
duties.
The report also recommends that only
District staff make deposits and journal entries, bank signature cards are
up-to-date, the amount of bonding insurance be increased, improving
controls over the Treasurer's signature, not preparing checks until
audited by the Internal Claims Auditor, retaining all canceled and voided
checks, eliminating the use of blank check stock, accurately maintaining
accounting records, maintaining core financial reports, and periodically
reconciling cash.
The report recommends the Board
consider establishing maximum per diem rates for lodging and meals,
address the issue of providing food at District meetings, review the use
of master purchase orders and, ensure all purchases are supported by a
purchase order. The report recommends the Treasurer not pay a claim unless
approved by the Internal Claims Auditor.
The report also recommends maintaining
a control account for fixed assets and periodically reconciling it with
supporting records, maintaining a consumable goods inventory, conducting
periodic physical inventories, and ensuring inventory tags are issued in
sequential order.
Finally, the report recommends the
Board review its policies and ensure they accurately reflect the Board's
intentions.
District officials generally agree with
the recommendations and indicated they intend to take corrective
actions.
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Manhasset Union Free School District -
Independent Audit Services
10th Judicial
District |
$0
adjustment
The
District did not comply with its own policies to obtain requests for
proposals for professional audit services. Instead, the District
contracted with the same CPA firm each year, for more than ten years,
without seeking competitive offers from other
firms.
The
annual audit of the District did not meet many of the required
professional standards for such an audit. The audit was significantly
deficient in planning and execution. In addition, the report found that
the CPA firm that performed the audit was not independent. Two partners
each had an ownership interest in a software company that provided
financial accounting software to the
District.
The
report revealed compliance problems with 10 of the 22 (45 percent) 1994
standards for the 2002-03 fiscal year audit and 9 of the 22 (41 percent)
2003 standards for the 2003-04 fiscal year audit. The audit cites numerous
instances where the CPA firm did not meet professional standards when
planning the audits. For example, the audit planning did not assess the
possibility of fraud or illegal acts and plan audit tests
accordingly.
The
CPA firm’s testing was also significantly deficient. For example, although
the CPA firm’s audit program calls for a test of budgetary controls, the
test was not documented. The most fundamental deficiency in the CPA firm’s
audit was in its testing of disbursements. There was no examination of
canceled checks and although many problems were identified in the work
papers there was no additional work undertaken as a result.
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10
recommendations
The report recommends the District
prepare a well-planned written request for proposals, retain any proposals
received, and consider periodically changing audit firms.
The report also recommends the District
improve the quality of audit services by more specifically describing
expectations.
The report recommends the Board ensure
its audit committee has sufficient expertise, define its responsibilities,
and ensure the CPA firm reports directly to the
committee.
The report further recommends the Board
communicate directly with its CPA firm, increase its knowledge and educate
themselves on the scope and limitations of the annual independent audit.
District officials generally agreed
with the recommendations and plan to initiate corrective action.
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State’s
Independent Auditor |
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Audit |
Major
Finding |
Recommendations/Response |
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Audited 2004-05 Financial Statements of
the State of New York |
The independent auditors issued an
unqualified opinion on the 2004-05 financial statements of the State of
New York. This means the
financial statements present fairly, in all material respects, the
financial position of New York State. The information shows total
revenue of $98.7 billion and total expenditures and transfers of $96.6
billion for the State. The
revenues and expenditures of the Department were included within the scope
of this audit. |
The report did not include any
recommendations, but it did note as a significant fact the status of the
Campaign for Fiscal Equity lawsuit. |
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