DiNapoli: Kipp Implements Additional Internal Controls
as a Result of Audit
School Paid for Staff Retreats to the Caribbean
Kipp Academy Charter School in the Bronx paid $67,951 for staff trips to the Dominican Republic and the Bahamas, according to an audit released today by State Comptroller Thomas P. DiNapoli. While the school had an operating surplus in 2006, the audit also found several deficiencies in the school’s internal controls.
“Having surplus funds is no excuse to spend taxpayer dollars on trips to the Caribbean,” DiNapoli said. “Money intended for education should be spent on education. Staff retreats are an important tool that can lead to enhanced educational settings for students. But there are lots of places for retreats right here in New York State that are closer to the Bronx than the Bahamas.”
Auditors discovered the school paid $67,951 to send 21 staff members to the Dominican Republic in June 2005 for five days and 49 staff members to the Bahamas in June 2006 for five days. Auditors could not determine if the trips were educational in nature because there was little documentation supporting this claim and no documentation of Board’s approval for the trips. The trips cost about $1,119 and $907 per person respectively and included airfare, hotel, meals and other amenities such as alcoholic beverages.
Under the state law that authorized the creation of charter schools, all funds provided to charter schools by the state should be reasonable, necessary and directly related to school operations. School officials contend that donated funds were used to finance the trips. However, auditors could not determine if this was the case because donated funds were not accounted for separately from state aid.
The audit found the school had accumulated a $4.1 million operating surplus as of June 30, 2006 but also identified several weaknesses in its internal controls including:
- lack of documentation of criminal background checks for seven employees at the school;
- an unclear policy regarding the competitive bidding process that resulted in the awarding of four contracts totaling in $181,584 without the benefit of competition;
- no written policies and procedures to determine and approve salary increases;
- missing or incomplete overtime records;
- no system to track employees’ sick or personal leave accruals; and
- no written policies and procedures or Board approval for employee bonus and stipend pay.
The audit recommends that school officials:
- develop a system to separately account for state and donated funds;
- fully document the educational nature of off-site staff retreats and conferences;
- obtain written Board approval for staff retreats and conferences;
- ensure all new employees have the required criminal background check;
- include in procurement guidelines the dollar levels that require competitive bidding;
- maintain accurate records of employees’ leave accruals.
While school officials implemented several of the audit’s recommendations to strengthen internal controls and hired a human resources manager, school officials indicated they intended to plan future staff retreats overseas but would better document the educational purposes of the trips.
School District Accountability
In order to improve accountability of the state’s schools, State Comptroller Thomas P. DiNapoli’s office will audit all of New York’s 832 school districts, Board of Cooperative Educational Services (BOCES) and charter schools by 2010. The State Comptroller’s office has completed more than 310 school audits and approximately 220 audits are currently underway.
Click here for a copy of the audit.