The Smithtown Central School District (District) is located in the Town of Smithtown, Suffolk County. The 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’s budgeted expenditures for the 2005-06 fiscal year were $175 million, funded primarily with State aid, real property taxes and grants.

Scope and Objective

The objective of our audit was to examine the District’s internal controls over procurement for the period July 1, 2005 through June 30, 2006. Our audit addressed the following related questions:

• Did the District seek competitive proposals when procuring professional service contracts?
  
  
• Did the Board authorize purchase and public work contracts before services were rendered to the District?

Audit Results

The General Municipal Law requires school districts to establish a process that ensures they obtain qualified, necessary professional services as economically as possible, and to document the basis for the selection of service providers. Since the District’s procurement policies do not establish such a process, or require the use of Requests for Proposals in obtaining professional services, the District paid 12 professional service providers a total of $661,368 during the 2005-06 fiscal year without the benefit of competition.

The Board is also responsible for ensuring that contracts with vendors are properly authorized before services are rendered, goods are procured or payments are made. However, the District’s policies and procedures are silent on who authorizes and signs contracts, which increases the risk of unauthorized services on unapproved contracts. We found that the District’s purchasing agent authorized and the Board Vice President signed a $683,235 contract that the Board did not formally approve until approximately two months later. Because the Board did not establish proper procurement policies and procedures, the District incurred expenses totaling $92,000 for work performed on this contract before the Board formally authorized the services.

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 they had initiated corrective action. OSC comments on the District’s response can be found in Appendix B.