The Three Village 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 former Superintendent, John Sonendecker, pled guilty on February 7, 2005 to grand larceny for using a District credit card for personal expenses. As part of his plea-bargain agreement, the former Superintendent agreed to repay $43,880 to the District, perform 840 hours of community service and serve five years of probation.

Scope and Objectives

The objective of our audit was to examine the internal controls over certain financial operations, purchasing, payroll and capital assets for the period of July 1, 2003 to June 30, 2005 and the internal controls over administrative expenses for the period of July 1, 2002 to June 30, 2005.¹ Our audit addressed the following related questions:

• Did the Board implement adequate internal control policies and procedures to protect and account for District assets?
  
  
• Did the Board exercise its oversight responsibilities to ensure that its policies and procedures were properly implemented?

Our audit also examined various taxpayer complaints received by our Office.

Audit Results

We found many instances where the Board had either not established critical internal controls or controls that had been implemented were improperly designed or operating ineffectively. We identified questionable expenses, such as:

• Upon his retirement, without providing any public information on the action they were taking, or providing any justification for the action, the Board approved life-time health insurance benefits for the former Director of Plant and Facilities that he was not entitled to under the existing collective bargaining agreement. This benefit was not extended to any other administrator.
  
  
• The District expended $165,320 for meals and refreshments at 975 meetings or events. For all but 12 of these meetings or events, we could not determine who was in attendance. In addition, none of the documentation for the 975 meetings or events contained rationale as to why meals or refreshments were necessary.
  
  
• District administrators charged excess travel costs. For example, the District paid a total of $1,382 in unnecessary expenditures incurred by two former administrators who arrived at a conference site three days prior to the start of the conference. District officials were also reimbursed $1,467 for meals that were not supported by itemized bills.
  
  
• The District paid a total of approximately $1,600 for nine cell phones that were not used at all during our audit period.

Overtime payments totaling $20,320 were either not substantiated by attendance records or employees miscalculated the number of overtime hours they had worked.

We identified several weaknesses in District financial operations. We identified control weaknesses over cash collections that totaled approximately $3 million in tuition and registration fees for programs for students and community residents.

The internal controls related to claims processing and procurement were not operating effectively. For example, we identified over $74,000 in contracts that were not publicly advertised for bid in accordance with law and District policy. The District also did not have written contracts with 11 of the 19 professionals we tested. Of the eight professionals, who did have contracts with the District, one of the contracts was awarded without the benefit of competitive proposals. Additionally, certain District officers and employees did not disclose their interest in contracts with the District.

The District’s internal controls relating to capital assets did not establish policies and procedures to ensure that capital assets are accurately recorded and properly accounted for. Also, there were no records to indicate that the District had received money from the sale of ten items approved for disposal by the Board between February 2003 and March 2005.

Comments of District Officials

The results of our audit and recommendations have been discussed with District officials and their comments, which appear in Appendix B have been considered in preparing this report. District officials indicated they planned to initiate corrective action.

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¹In July 2003, the former Superintendent, John Sonendecker, resigned amid criticism for charging personal expenses on his District credit card. The District engaged an accounting and consulting firm to perform a forensic analysis of the former Superintendent’s credit card account for the period of June 30, 2000 to August 2003. The results of the forensic audit were publicized and used by the Suffolk County District Attorney’s Office. Therefore, the credit charges, totaling approximately $44,000, were not included in the scope of this audit.