New Paltz Central School District

Internal Controls Over Selected Financial Activities
Executive Summary

The New Paltz 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 Board designated the Assistant Superintendent for Business as the purchasing agent of the District. Under the general supervision of the Superintendent, the purchasing agent is responsible for administering all purchase activities. The Board’s adopted purchasing policy governs purchasing and related activities. The Superintendent, with the assistance of the purchasing agent, must establish and maintain an internal control structure to ensure that District assets are safeguarded.

Scope and Objectives

The objective of our audit was to determine the adequacy of the District’s internal controls over purchasing, compensated absences and leave time, claims processing and information technology for the period July 1, 2005 - March 14, 2007. Our audit addressed the following related questions:

• Are internal controls over purchasing appropriately designed and operating effectively to adequately safeguard District assets?
• Are internal controls over claims processing appropriately designed and operating effectively to adequately safeguard District assets?
• Are internal controls over compensated absences and leave time appropriately designed and operating effectively to adequately safeguard District assets?
• Are internal controls over information technology appropriately designed to adequately safeguard District assets?

Audit Results

Although the District has established internal controls over purchasing to safeguard against fraud, abuse and professional misconduct, those controls did not always operate effectively. The District did not comply with General Municipal Law or its procurement policy for six of 21 contracts we tested. For example, the District did not competitively bid the purchase of a bucket truck costing $13,200, nor solicit quotes for the construction of an office costing $16,500. As a result, there is no assurance that these items were obtained at the best price.

The District’s claims auditor was not properly auditing claims. Claims that we reviewed were missing necessary documentation but were approved by the claims auditor. We tested 33 charges totaling $5,408 and found that 18 totaling $2,350 were not supported by receipts or itemized lists of items purchased. Reimbursement claims for employee travel and meals lacked proper documentation and itemization, expenses were not approved in advance and one reimbursement was for an improper expense.

Certain payroll controls were weak. As a result, six employees earned over $4,200 of compensatory time off that was not authorized by their contracts. Payments to the Director of Guidance totaling $8,055 and one payment to a librarian totaling $2,297 were not supported by employment contracts or documentation to indicate Board approval. As a result, District officials do not have adequate assurance that all payroll costs are appropriate.

Finally, the District has not developed data backup policies or a disaster recovery plan, and computer access controls for purchase orders and requisitions were weak. Because of weaknesses in backup procedures, the District was not able to recover lost data resulting in significant effort to re-enter data. These weaknesses resulted in an increased risk that errors and/or irregularities could occur and critical information systems or data may not be available for 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 take corrective action. Appendix B includes our comments on issues raised in the District’s response letter.