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August 4, 2009


DiNapoli's Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Abbott Union Free School District, Fulton City School District, LaFargeville Central School District, Norwood-Norfolk Central School District, Panama Central School District and
Rye Neck Union Free 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.”

Abbott Union Free School District – Internal Controls Over Claims Processing and Payroll (Westchester County)
Auditors found the board did not have adequate controls over the district’s claims processing and payroll functions. Consequently, the claims auditor did not report his findings to the board or properly audit claims, overpayments were made to vendors, and employees were paid additional compensation without board authorization. For example, two administrators and one teacher were paid $6,391 in additional compensation without board authorization.

Fulton City School District – Interest in Contracts (Oswego County)
The audit found the district did not have procedures to detect potential conflicts of interest and prevent district officers or employees from entering into prohibited contracts. Auditors also found a music teacher may have a prohibited interest in contracts with the district. The music teacher’s spouse owns a music store that provides musical instruments, supplies and equipment repairs to the district. During the audit period, the district made $17,740 in purchases from the music store. The music teacher helped determine what types of equipment were bought from her husband’s store and signed the claims to provide evidence of the receipt of the goods and services.

LaFargeville Central School District – Financial Condition (Jefferson County)
Auditors found district officials did not use available fund balance as a financing source in each year’s budget, which led to excessive fund balances in the general fund as district officials continued to increase the tax levy. District officials transferred a portion of this excessive fund balance into various reserve funds but auditors found two reserves were overfunded by at least $189,283 collectively. Auditors also determined the unemployment insurance reserve was not formally established; the unemployment insurance and the property loss reserves have had little activity; and a portion of the moneys in the employee benefit accrued liability reserve were set aside to pay ineligible payroll-related costs.

Norwood-Norfolk Central School District – Financial Condition (St. Lawrence County)
The audit found from July 2004 to June 2007 the district’s general fund revenues were overestimated by more than $1.5 million. In addition, the district relied on the appropriation of more than $1.2 million of fund balance from July 2002 to June 2006 to fund expenditures. Therefore, the District’s unreserved fund balance declined from $851,000 in July 2004 to a deficit of $346,000 as of June 2006. By June 2008, the district’s financial condition showed some improvement, but the fund balance amount was still low. Also, the school lunch fund had a fund balance deficit for the last six years, despite the general fund subsidizing the school lunch fund.

Panama Central School District – Internal Controls Over Cash Receipts (Chautauqua County)
Auditors found the internal controls over the cash receipts process were not appropriately designed or operating effectively. The board did not adopt written policies for cash receipts, segregate critical duties so that one individual did not control all phases of a transaction, or properly safeguard district assets. For example, auditors found the after-school program manager and the extra-classroom activity treasurer did not routinely deposit monies received intact. Because of these weaknesses, the risk is increased that cash receipts could be misappropriated without detection.

Rye Neck Union Free School District – Internal Controls Over Criminal Background Checks and Procurement of Professional Services (Westchester County)
The audit found district officials did not establish adequate controls over the performance of criminal background checks. Consequently, background checks were not performed for 17 of 22 independent contractors who had direct contact with students. The independent contractors provided services such as special education services, speech therapy, occupational therapy and psychology. District officials also did not establish adequate controls over the procurement of professional services. As a result, the district retained the services of 23 professional service vendors without requesting competitive proposals or other forms of competition and paid these vendors $461,419 during the audit period.

Click here to view the audits above.

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

Albany Phone: (518) 474-4015 Fax: (518) 473-8940
NYC Phone: (212) 681-4840 Fax: (212) 681-7677