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April 20, 2009

DiNapoli’s Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Churchville-Chili Central School District, Fillmore Central School District, Phelps-Clifton Springs Central School District, Southampton Union Free School District, Spencerport Central School District, Susquehanna Valley Central School District and Wayne Central School District.

“My office’s audits of school districts 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.”

Churchville-Chili Central School District – Financial Condition (Monroe County)
Auditors found the district’s total fund balance in its general fund quadrupled over five fiscal years ending in 2007-08 because district officials did not develop realistic budgets but continually overestimated expenditures and underestimated revenues which resulted in operating surpluses. As a result, the district had $20 million in surpluses over the past five years. Auditors estimated that the district routinely generated 14 percent more tax revenues than it needed, on average, for ongoing operations. The district used some of the surplus moneys to fund general fund reserves, which totaled approximately $22 million at the end of the 2007-08 fiscal year and accounted for almost 85 percent of the district’s total general fund balance. Auditors estimated that there is almost $4 million of excess funds in the general fund reserves.

Fillmore Central School District – Internal Controls Over Selected Financial Operations (Allegany and Wyoming counties)
Auditors found the district did not adequately segregate duties over the cash receipts and disbursements processes. The payroll clerk performed incompatible job duties without supervisory review as a compensating control. The payroll clerk controlled every aspect of managing the Extra-Classroom Activity (ECA) funds. Auditors found that approximately $43,000 was not deposited intact, $7,260 in expected receipts was unaccounted for and $21,000 in receipts was not deposited in a timely manner. Approximately $3.7 million in disbursements lacked a warrant certifying the board’s approval for payment. In addition, because the district had poor controls over payroll processing, employees received additional pay totaling $139,058. The district’s unreserved fund balance was about four times the amount allowed by law.

Phelps-Clifton Springs Central School District – Financial Condition and Information Technology (Ontario, Wayne and Seneca counties)
Auditors found district officials routinely overestimated appropriations and underestimated revenues, which caused the district to have surplus unreserved fund balance that was above the amount allowed by law. District officials used operating surpluses to increase various reserve funds, while continuing to increase the property tax levy by approximately 15 percent during the past six years (2002 to 2008). Consequently, the district over-funded the employee benefit accrued liability reserve (EBALR), unemployment insurance reserve fund and the retirement contribution reserve fund by a total of more than $3 million. Auditors also found the district charged unauthorized expenditures to its EBALR fund, transferred excessive moneys to the unemployment insurance reserve fund and did not use the moneys in the EBALR and retirement contribution reserve funds as is legally intended.

Southampton Union Free School District – Internal Controls Over Fuel Inventories (Suffolk County)
Auditors found district officials did not develop comprehensive internal control policies that described for district personnel the duties they must follow, the records they must maintain, and the procedures they must perform to achieve adequate safeguards for the district’s fuel inventories. As a result, fuel inventories were improperly used. District officials informed us that they terminated the employment of the former head mechanic at the end of the 2007-08 fiscal year when they discovered that he misappropriated fuel. The district was unable to determine the amount of fuel that was misappropriated.

Spencerport Central School District – Reserve and Debt Service Funds (Monroe County)
Auditors found the district did not properly maintain reserve funds, appropriate moneys from the debt service fund for the payment of principal and interest, or credit reserve funds with the amount of interest earned. As a result, the district accumulated more than $7.1 million in excess funds. This amount is equivalent to 10.8 percent of the 2008-09 budget.

Susquehanna Valley Central School District – Internal Controls Over Selected Financial Activities (Broome County)
Auditors found the board appointed an employee of BOCES as the district’s claims auditor, which is against the New York State Education Department’s (SED) guidelines. In addition, the board appointed a second BOCES employee to serve as the district’s deputy claims auditor; however, there is no provision in Education Law that permits the Board to appoint more than one claims auditor. Auditors did not find any exceptions with the BOCES’ audit of district claims.

Wayne Central School District – Internal Controls Over Purchasing (Wayne and Monroe counties)
Auditors found that the internal controls over purchasing were appropriately designed and operating effectively. Auditors determined that district officials and employees made purchases in accordance with the district’s purchasing policy, and that all purchases were made for appropriate district purposes.

Click on the links for copies of the audits.

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



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