The Lake Placid Central School District (District) is governed by the Board of Education (Board) which comprises seven 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.

The District reported approximately $12.8 million in general fund expenditures during the 2004-05 fiscal year with gross payroll costs totaling approximately $6.5 million and $2.5 million in employee benefits. During the same year the extra-classroom activity fund recorded more than $355,000 in receipts and disbursements. Voters approved a $13.4 million budget for the 2005-2006 fiscal year.

Scope and Objective

The objective of our audit was to determine if the District had established effective internal controls over its budget process, claims process, payroll process, and extra-classroom activity funds for the period July 1, 2004 to June 30, 2006. Our audit addressed the following specific questions:

• Are internal controls over the preparation, approval, adoption and monitoring of the annual budget adequate?


• Are internal controls over the payment of claims appropriately designed and operating effectively?


• Are internal controls over the payroll process appropriately designed and operating effectively?


• Are internal controls over the extra-classroom activity fund appropriately designed and operating effectively?

Audit Results

The District levied taxes in excess of the amount needed to fund the budget approved by District voters. Although the 2004-05 voter-approved budget appropriations of approximately $12.6 million required a tax levy of $10,285,943, the District actually levied $10,475,943 or $190,000 more than necessary. The Board did not monitor the budget closely during the 2004-05 fiscal year and overspent budget appropriations by more than $240,000.

There were weaknesses in the District’s controls over claims processing. We selected 160 claims and found that all of them had been paid prior to review by the claims auditor. Supporting receipts were not available to verify the appropriateness of credit card purchases.

The District had no written policy covering the processing of payroll that resulted in the payroll clerk developing her own informal procedures. We noted instances where employee time records were incomplete or did not agree with the amount of time paid and leave accruals were not consistent with employee contracts. For example, the Superintendent had 91 days of leave carried forward from 2004-05 to 2005-06 fiscal years when his contract only allows for 30 days to be carried forward. Furthermore, there is inadequate segregation of duties for processing payroll with no separate review performed by someone independent of the payroll preparation process.

The Board had not adopted policies and procedures providing guidance and internal controls as it relates to the extra-classroom activity fund. Payments were made out of the extra-classroom activity fund without adequate documentation, such as itemized receipts or invoices, and $2,900 was spent on purchases made with a pre-paid retail store card.

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.