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April 13, 2009

 

Greenwood Lake UFSD Needs to Tighten Finances

Due to weak financial controls, the Greenwood Lake UFSD spent nearly $60,000 on services without the benefit of competition, and made over $20,000 in credit card purchases without paperwork explaining why the purchases were necessary, according to an audit released by State Comptroller Thomas P. DiNapoli. The audit, which covered the period July 2007 – October 2008, generally found weaknesses in controls over payroll, purchasing, cash disbursements and budget transfers. Auditors also found that the district funded its Employee Benefit Accrued Liability Reserve account for an unauthorized purpose, and that the district needs to deposit tax collections in a timely manner.

“It’s critically important that school districts make the best use of their tax dollars,” said DiNapoli. “Districts have a responsibility to provide the best services at the best cost and to ensure taxpayers understand that officials are keeping a sharp eye on the bottom line.”

DiNapoli’s audit found that the district:

  • did not certify payrolls as required, and the district’s former payroll clerk had incorrectly assigned 804 payroll check numbers that were not detected. These weaknesses increased the risk that errors, misuse and loss of district assets could occur and go undetected;
  • paid approximately $56,900 to three service providers without obtaining requests for proposals as required by district policy, and did not execute written agreements for these services. The district officials could not be certain it obtained the best value or paid only for agreed-upon services;
  • made approximately $20,200 in credit card purchases without supporting documentation, such as itemized receipts. As a result, the district could not be sure it paid for reasonable and necessary district expenditures;
  • created an environment that increased the risk that inappropriate disbursements would be made and concealed;
  • overspent budget line items to pay for ongoing purchases throughout the year, and district officials relied on excess funds from other budget lines at year-end to cover the overspent budget lines. The board did not review these budget transfers;
  • placed approximately $1.9 million in the Employee Benefits and Accrued Liability Reserve (EBALR) at the end of the 2007-08 fiscal year to fund prior service payments to the New York State and Local Employees’ Retirement System (ERS); and
  • allowed taxes to be collected by the Town of Warwick’s Receiver of Taxes, which delayed the deposit of funds into the district’s bank account. The district could have earned almost $17,000 in interest during the audit period if deposits were made on a timelier basis.

DiNapoli recommended that the district:

  • either segregate the payroll clerk’s duties or ensure that the business administrator sufficiently oversees the payroll clerk;
  • thoroughly review all payrolls and certify them prior to disbursing the payroll;
  • follow board policy and obtain RFPs for professional services, and require written contracts for all professional service providers;
  • adopt a comprehensive credit card policy requiring original receipts and the purpose of purchases;
  • thoroughly review monthly budget status reports and investigate over-expenditures;
  • fund reserves according to statutory requirements; and
  • evaluate potential solutions to alleviate the delay between collection and deposit of tax revenues.

District officials generally agreed with DiNapoli’s recommendations and indicated they planned to take corrective action. Click here for a copy of the audit report.

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 and charter schools by 2010. The State Comptroller’s office has completed 550 school audits and approximately 180 school audits are currently underway.

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