FOR RELEASE:

Audit: Lax Oversight at Wyandanch School District

Board Takes Action to Strengthen Oversight at Wyandanch After
State Audit Identified Lax Policy Enforcement

The Wyandanch school district said it has strengthened internal controls and policies after a State Comptroller’s audit found board members had outstanding cash advances, district officials were paid and given benefits without proper authorization, and cell phones had excessive overage charges.

The audit, issued by New York State Comptroller Alan G. Hevesi today, covered the period of July 1, 2002 through August 31, 2004. Auditors identified lax policy enforcement that allowed eight former board members and one current member to have outstanding cash advances for travel totaling $6,500 from October 1999 through February 2005. While the district had a policy requiring officials to submit receipts for expenses and repay unused cash, it did not enforce the policy and continued to provide board members with new cash advances even though they had not repaid their previous advances.

The current audit only covered administrative expenses. The Comptroller’s office has begun a second in-depth audit to explore questions raised by a previous federal audit and other issues outside of administrative expenses that were identified during the current audit.

“To ensure that public dollars are being used for legitimate school business, school boards must establish clear, written policies for spending, and the board must adhere to these policies just as they expect staff to do. Unfortunately, this did not always happen at the Wyandanch school district,” Hevesi said. “I am encouraged that the current board has taken positive steps to improve the district’s control environment and urge board members to recognize that the tone they set at the top will greatly affect the entire organization.”

In response to the audit, the district agreed with the audit findings and pledged to fully implement the eight recommendations made by the auditors. The full response is included in the audit.

Other audit findings include:

• Excessive Overage Charges for Cell Phones. The district provided cell phones to all board members, the superintendent and other key officials ― a total of 17 phones were paid for by the district. Of the $40,000 spent on phones, the district paid about $17,000 in overage charges for individuals exceeding the monthly minutes provided in their cell phone plans. More than half of these extra charges may be attributed to Board members. The district did not monitor cell phone use or require officials to reimburse the district for personal calls.
• Salaries and Benefits Paid Without Approval. Three district officials were paid or provided benefits without proper authorization from the board. For instance, the former superintendent received health insurance benefits, totaling about $4,500, from July 2003 through April 2005 even though his employment contract did not stipulate that he was entitled to these benefits after his retirement.
• Inadequate Audits of Expense Claims. Auditors found that after the internal claims auditor resigned in October 2002, the board assumed the duties of the position until it was filled eight months later. During this time, the board did not thoroughly review expense claims to determine if they were necessary or if goods and services had been received; rather the board simply reviewed a report of expense claims and approved them by resolution.
• Lack of Segregation of Duties in Business Office. The district’s system of internal controls did not adequately separate duties to provide checks and balances over financial transactions. The individual who served as the treasurer/accountant prepared deposits, recorded entries in the accounting records, printed and signed checks and performed bank reconciliations.
• Did Not Follow Travel Policies. During the audit period, the district spent about $58,000 on travel expenses for managers and board members. While the district had a policy that required the board to pre-approve conference attendance and training, the board did not have a policy identifying which expenses were eligible for reimbursement or set limits for lodging. For example, if the district had set lodging rates at the federal rate it would have saved about $3,200 during the audit period.
• No Policy for Meals. $19,000 was spent on meals and refreshments at 88 events. Auditors did not identify any concerns with these expenditures but urged the district to adopt a policy governing spending on meals.

Auditors noted that during the audit the district had adopted policies for meals and improved internal controls in the business office. However, auditors urged the district to reconsider its new cell phone policy that requires reimbursement for personal calls but not from board members. Auditors also recommended that the board and district:

• Collect past due cash advances from current and former board members, enforce the district’s policy requiring reconciliation of the advance within 45 days of the travel and require that new cash advances are only given after prior advances are settled.
• Authorize all salaries and benefits in a public meeting and not pay these benefits until proper authorization has occurred.
• Establish maximum rates for lodging.

The Wyandanch School District has approximately 2,100 students, three educational buildings and about 400 employees. Its 2004-05 operating budget was $42 million.

Click here for a copy of the audit.

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