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April 1, 2008

DiNapoli’s Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Cortland City School District, Little Flower Union Free School District, Salamanca City School District, Sodus Central School District and St. Regis Falls Central School District.

“My office’s audits of school districts, charter schools and BOCES help schools improve their financial management practices,” DiNapoli said. “These audits are tools for schools to make sure proper policies and procedures are in place to protect taxpayer dollars and provide students with the best possible education.”

Cortland City School District – Internal Controls Over Selected Financial Operations (Cortland County)
The board and superintendent failed to provide adequate oversight for the purchasing agent and district officials failed to properly control and oversee the use of credit cards. In addition, the board did not audit claims or appoint a claims auditor until May 2007. Further, the board did not provide policies and procedures for, or monitor the work of, the claims auditor. Her appointment also was not in accordance with regulations, resulting in a possible conflict of interest. Finally, the board did not properly segregate cash disbursement duties among staff and the treasurer did not supervise and control the use of her signature.

Little Flower Union Free School District – Financial Condition and Internal Controls Over Selected Financial Activities (Suffolk County)
The district’s general fund unreserved, unappropriated deficit increased from $223,997 as of June 30, 2003, to $870,397 as of June 30, 2006. This deficit increased primarily because district officials failed to: prepare and adopt accurate, realistic and balanced budgets; properly monitor expenditures; and bill tuition on a timely basis. The audit also found the district had a poorly defined contractual relationship with Suffolk County for tuition billings and payments. Further, the board should not have allowed the same CPA firm that it hired to serve as its management consultant and business office accountant to perform the duties of claims auditor. Finally, district officials did not provide for an adequate segregation of duties and internal controls over payroll processing and leave time accruals. As a result, the former business manager was overpaid $16,986 for unused leave time.

Salamanca City School District – Internal Controls Over Selected Financial Operations (Cattaraugus County)
The audit determined the information technology manager changed computer records to decrease the amount of vacation days he had remaining. While this employee did not benefit directly from this action, his ability to make unauthorized changes to his leave records, and possibly others, without detection, was a significant concern to auditors. The audit found that controls and processes generally were not adequate to ensure proper approval of leave time usage and recording of leave time balances. Auditors also reviewed the following benefits: retirement incentives (to be used for health insurance or invested in a tax-sheltered annuity), conversion of unused leave to a health insurance credit, and payments in lieu of health insurance coverage. Generally, auditors found that payments for these purposes were in compliance with contract terms and accurately calculated.

Sodus Central School District – Internal Controls Over Selected Financial Activities (Wayne County)
The audit found that district officials did not segregate the duties of the treasurer or implement other compensating controls. The treasurer was responsible for performing the district’s financial duties with limited oversight.

St. Regis Falls Central School District – Internal Controls Over Selected Financial Activities (St. Lawrence and Franklin counties)
The district did not have adequate written policies and procedures providing guidance and internal controls related to cash transfer transactions. The district treasurer and deputy treasurer, who are BOCES employees, could transfer funds between district bank accounts or to any non-district account without any established approval process for monitoring these types of transactions. Auditors also noted weaknesses in the controls over the maintenance of records for employee leave time (vacation, sick, etc.). The audit found that certain employees’ leave accruals did not conform to the benefits authorized in applicable employee contracts or collective bargaining agreements, resulting in the district having a recorded liability of approximately $24,000 more than the actual liability.

If you have any questions or would like a comment from the Comptroller’s office regarding any of the audits above, please call the Press Office at 518-474-4015.

School District Accountability
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s 834 school districts, Board of Cooperative Educational Services (BOCES) and charter schools by 2010. The State Comptroller’s office has completed 400 school audits and approximately 200 audits are currently underway.

Click here for copies of the audits.



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