The Jefferson Central 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 for the day-to-day management of the District under the direction of the Board.

The Board is responsible for properly managing District operations to ensure that District assets are properly safeguarded from unauthorized use or disposition and are accounted for properly. Proper oversight and management reasonably assures that compensation- related payments are authorized and supported, purchases represent proper charges against the District and are audited and approved prior to payment being made, and that cash receipts and disbursements are accurately recorded and supported.

In October 2005, the current Superintendent and the Board contacted the Office of the State Comptroller and the New York State Teachers’ Retirement System to request an investigation of the former Superintendent, concerning changes made to his employment contracts. The former Superintendent served as Superintendent from January 1, 1985 until August 31, 2005, when he retired.

Scope and Objective

The objective of our audit was to determine if District officials were properly managing District operations to safeguard District assets for the period July 1, 2005 through August 28, 2006. In addition, we extended our scope back to January 1985 to examine various payroll-related transactions involving the former Superintendent. Our audit addressed the following related questions:

• Were changes made to the former Superintendent’s employment contracts that resulted in him receiving payments to which he was not entitled?
  
  
• Are District purchases and the resulting claims properly approved, processed and audited?
  
  
• Are the District’s internal controls over cash receipts and disbursements appropriately designed and operating effectively?
  

Audit Results

The former Superintendent was improperly paid $88,502 for unauthorized salary, vacation and separation pay and reimbursements for administrative expenses. In addition, we question the propriety of additional reimbursement, vacation and separation payments made to the former Superintendent totaling $18,687. Because his employment contracts were not properly authorized, signed and secured, changes were made to his employment contracts. In addition, the former Superintendent was able to request and approve payments he was not entitled to because he served as the District’s purchasing agent and because the claims auditor was not auditing claims. We were informed by the Board that they “trusted” that the Superintendent was appropriately performing his duties and therefore, did not provide oversight of his work.

District purchases and the resulting claims were not properly approved, processed and audited. We found that the claims auditor did not audit any District claims. During our testing, we could not locate six claim packages totaling $6,167 and four claim packages totaling $1,503 lacked complete supporting documentation. Lastly, we found that the purchasing agent did not sign 16 purchase orders, totaling $8,446, indicating that he had approved the purchases.

Internal controls over cash receipts and disbursements were not appropriately designed. We found that the Treasurer made errors when preparing deposits and did not deposit moneys timely. Additionally, she did not provide bank statements to Otsego Northern Catskill Board of Cooperative Educational Services staff so that bank reconciliations could be performed in a timely manner, nor did she supervise and control the use of her facsimile signature.

Comments of District Officials and Corrective Action

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.