The Niskayuna 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.

Salary and wages, overtime and employee benefit costs comprise the most significant portion of the District’s budget. During the 2005-06 fiscal year, the District paid salaries and wages totaling approximately $32 million.

The Board is responsible for designing internal controls that help safeguard the District’s assets and ensure the prudent and economical use of its monies when procuring goods and services. The Board has appointed a Purchasing Agent who, under the general supervision of the Superintendent, is responsible for administering all purchase activities in compliance with Board adopted policies and departmental procedures. The Board has delegated its responsibility for auditing District claims to a claims auditor.

The Board is also responsible for designing control procedures and accurate records over consumable inventories, such as fuel inventories. An effective internal control system includes maintaining perpetual inventory and usage records and having effective procedures in place to ensure a proper accounting of the District’s fuel supply.

Scope and Objective

The objective of our audit was to determine if the District has properly safeguarded District resources. Our audit addressed the following related questions for the period covering July 1, 2004 through May 9, 2006:

• Are internal controls over payroll and personal services appropriately designed and operating effectively to adequately safeguard District assets?
  
  
• Are internal controls over purchasing and claims processing appropriately designed and operating effectively to adequately safeguard District assets?
  
• Are internal controls over unleaded fuel inventories appropriately designed and operating effectively to adequately safeguard District assets?
  

Audit Results

Controls over payroll and personal services are not adequate to safeguard District assets. The Board and District officials have not established policies or procedures to ensure that all separation and leave payouts are in accordance with individual employment contracts and collective bargaining agreements. We determined that during the 2004-05 and 2005-06 school years, the District paid the Assistant Superintendent for Business, the Assistant Superintendent for Instruction and the Payroll Supervisor a total of $17,112 for vacation days that were not authorized in the individual contracts and collective bargaining agreements.

We found the District has established adequate internal controls over purchasing. Our tests showed these controls are working effectively overall to protect District assets. However, the District has not established adequate internal controls over claims processing. As a result, the District paid claims for items such as travel, food and credit card charges that did not contain adequate supporting documentation or were not itemized sufficiently to determine if the expenses were legitimate, reasonable, and proper District charges. The District is not processing credit card payments properly. The claims auditor does not audit the credit card payments. As a result, the District made these payments with insufficient documentation. In addition, the District failed to get full reimbursement for a retirement dinner held for an out-going member of the Board.

The District does not have adequate internal controls to protect its inventory of unleaded fuel. As a result, the District could not account for over 1,250 gallons of fuel with an approximate value of $2,500 using existing records.

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.