The Commack Union Free School District (District) is governed by the Board of Education (Board) which comprises five elected members. The Board is responsible for the general management and control of the District’s financial and educational affairs. The Superintendent of Schools (Superintendent) is the chief executive officer of the District and is responsible, along with other administrative staff, for the day-to-day management of the District under the direction of the Board.

On an annual basis, the Board appoints a claims auditor who assumes the powers and duties of the Board with regard to approving or denying claims against the District. Responsibilities relating to the District’s finances, and accounting records and reports are largely those of the District’s Assistant Superintendent for Business and the Treasurer. The Board has also appointed a purchasing agent to ensure compliance with all applicable Board and legal requirements as they apply to procurement. In an effort to obtain the best goods and services at the lowest possible price, the District participates in the bidding cooperative of the Eastern Suffolk Board of Cooperative Education Services (BOCES) and makes use of New York State and Suffolk County contracts.

The District’s audited financial statements for the period ending June 30, 2006 report that expenditures totaled $125.2 million.

Scope and Objective

The objective of our audit was to examine the District’s internal controls over financial operations for the period July 1, 2005 to June 30, 2006. Our audit addressed the following related questions:

• Did the Board exercise its oversight responsibilities by properly monitoring disbursements to District administrators?
  
  
• Has the Board established adequate policies and procedures over the procurement of goods and services to ensure that purchases are made in a prudent manner?
  
  
• Has the Board established policies to ensure that computer data is stored in a secure area and that plans are in place to prevent or help address potential disasters to equipment and data?
  

Audit Results

Our audit identified instances where the Board either had not established necessary internal controls, or had implemented controls that were not properly designed or operating effectively. For example, the Board did not properly monitor disbursements to the former Superintendent and former Associate Superintendent for Operations. Both individuals received annual expense allowances of $9,000 each. The Board did not require these individuals to keep records of the expenses, nor did the Board seek reimbursement of any unused portion. Although the former Associate Superintendent for Operations kept detailed records of his expenses, the former Superintendent did not keep detailed records of his expenses. In addition, they were not required to provide explanations as to the business purposes of the expenses.

In addition, the Board did not establish adequate policies and procedures to ensure that purchases were made in a prudent manner. We examined payments to ten vendors totaling $459,663. The purchase orders for seven of these vendors made references to contracts that were either incorrect, or to contracts that were expired or not authorized for use by the District. Also, in violation of General Municipal Law and District policy, six of the seven vendors were paid amounts that exceeded bidding thresholds by a total of $180,613. As a result, the District does not have adequate assurance that these purchases were at the lowest costs. We also found that the Athletic Director purchased goods totaling $6,417 without obtaining required quotes, and one vendor was paid $1,951 more than contracted amounts.

Lastly, the Board did not sufficiently address the safeguarding of computer-generated data. Computer equipment and data were not adequately protected from environmental factors, and the Board did not adopt a formal disaster recovery plan. Therefore, the District’s server equipment is exposed to a greater risk of fire and water damage. Further, in the event of a disaster, District personnel have no guidelines or plan to follow to prevent the loss of equipment and data, and have no data recovery procedures. This could lead to the loss of important financial data and a serious interruption of District operations.

Comments of District Officials

The results of our audit and recommendations have been discussed with District officials and their comments, which appear in Appendix A, have been considered in preparing this report. District officials generally agreed with our recommendations and indicated they planned to initiate corrective action.