Putnam Valley Central School District

Internal Controls Over Selected Financial Activities
EXECUTIVE SUMMARY

The Putnam Valley 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, 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. The Board has also appointed the Assistant Superintendent for Business as 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 Putnam/Northern Westchester Board of Cooperative Education Services (BOCES) and makes use of New York State contracts. The District has appointed a tax collector to bill and collect all school district taxes and report any unpaid taxes to the County.

Scope and Objective

We examined the internal controls over purchasing, reimbursements, and cash receipts for the period July 1, 2005 to March 13, 2007. Our audit addressed the following related questions:

• Were District purchases made according to District policies and procedures and applicable laws?
• Did the District reimburse administrators for expenses that were properly supported and in accordance with District policy?
• Did the District process and deposit cash receipts timely?

Audit Results

Our audit disclosed that while the District has policies and procedures dealing with the tax collection process, reimbursement, and purchasing, they were not designed adequately or working effectively.

District officials did not follow General Municipal Law or their purchasing policy when making purchases. We found the District did not use request for proposals (RFPs) to obtain the services of seven service providers totaling $253,143. They also did not solicit competitive bids for three purchases over the $10,000 bidding threshold. These purchases totaled $37,029. As a result, the District does not have assurance that these goods and services were purchased at the lowest cost.

We also found that the District’s claims auditor has not conducted a thorough audit of claims. The District reimbursed nine administrators $22,199 for attending conferences without proper documentation showing prior authorization was obtained to attend school conferences. We found multiple instances, out of 57 reimbursements reviewed, where administrators were reimbursed for traveling, lodging and meals without adequate support. Also, we noted 16 instances where the District reimbursed administrators for purchasing items such as a television and a refrigerator that should have been purchased through the normal purchasing process. As a result, District officials cannot be certain that all claims submitted for reimbursement are for legitimate District purposes.

In addition, our audit disclosed that the tax collector took between one and 42 days to deposit tax payments. As a result, the District lost approximately $2,260 in interest and District assets were placed at increased risk of loss.

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. Except as specified in Appendix A, District officials generally agreed with our recommendations and indicated that they planned to take corrective action. Appendix B includes our comments on issues raised in the District’s response letter.