FOR RELEASE:

Administrative costs at the Riverhead Central School District are generally well managed but internal controls and policies could be improved in some areas, according to an audit released today by New York State Comptroller Alan G. Hevesi. The auditors found no transactions that raised questions of wrongdoing.

School officials said they would address the weaknesses auditors’ identified in the position of internal claims auditor and also in officials’ compliance with travel policies. The auditors also noted that in recent the district has taken action to strengthen its policies for cell phones use and for when and how much it is appropriate to pay for meals.

“I commend the Riverhead School District for keeping administrative expenses in check and for quickly addressing the areas where auditors found room for improvement,” Hevesi said.

As part of the effort to increase oversight over school finances following the fraud at Roslyn, the Comptroller’s Office reviewed the administrative expenses, such as credit card usage and spending for meals and travel, of the Riverhead School District from July 1, 2002 through August 31, 2004. This is the sixth school audit released to date.

The audit found:

• Riverhead’s internal claims auditor did not provide independent oversight over expense claims. She reported to the assistant superintendent for business rather than the board of education. Furthermore, claims were not reviewed for legitimacy, nor were questionable claims referred to the board for review. Instead these claims were sent to the treasurer or accounts payable clerk for resolution, which does not qualify as an independent review of claims. Some claims lacked approval forms and did not have proper receipts attached.
• The District spent $58,000 on approximately 102 cell phones. No policies had been established by the board on which district personnel needed cell phones or how those phones should be used. Auditors found that three phones were not used for three to seven months periods, while the district paid monthly fees of $43 and $68. In addition, the district paid significant overage fees, totaling $896 in one particular month, but only made one attempt to recoup costs from individuals making personal calls on district cell phones.
• $9,800 was charged to two credit cards assigned to the superintendent and assistant superintendent for business. While the district’s expense policy required officials to submit a receipt for each expense claim, auditors found that eight of 19 claims tested did not contain receipts. In October 2004, the district evaluated the benefits and risks of having general purpose credit cards and cancelled them.
• $13,700 was spent on travel and conference expenses. The district has a policy that requires pre-approval for conference attendance, but officials did not always follow it. In addition, school officials did not attach an expense voucher or conference approval form to 27 of 85 travel-related claims that auditors tested. The board also had no policies regarding which travel expenses the district would pay and for how much. For example, the lodging costs paid by the district exceeded the federal per diem rates by amounts ranging from $2 to $78 per night.
• The cost for meals and refreshments at 79 meetings and events totaled $13,630. The board had not adopted a policy on when it is proper to provide meals at school functions and how much is a reasonable amount to pay per person.

Auditors recommended that the board:

• Review the duties of the internal claims auditor to ensure that claims are properly reviewed and that this individual reports directly to it.
• Monitor compliance with new policies and perform a cost-benefit assessment to determine who needs cell phones.
• Require that every claim contain enough supporting documentation to determine if it complies with district policies and are necessary expenses.
• Adopt maximum limits for lodging.
• Develop a policy outlining when it is appropriate to provide meals and refreshments at district meetings.

In a written response to the audit, Paul R. Doyle, the Riverhead superintendent of schools said the board of education plans to fully implement the auditors’ recommendations by July 1, 2005. His full response is included in the audit. The audit also contains responses to taxpayer concerns related to staff salaries, staff settlement agreements, building improvements and vehicle usage that were investigated as part of the audit.

The Riverhead School District has approximately 4,800 students, seven educational buildings and about 900 employees. The District’s 2004-05 operating budget totals about $82 million.

Click here for a copy of the audit.

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