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December 14, 2007

DiNapoli: Better Oversight Would Have Prevented
Mount Vernon Schools From Breaching
Competitive Bidding Requirements

Inadequate oversight allowed a school official at Mount Vernon Central School District to make $1.1 million in purchases without the benefit of competition and allowed him to purchase $1,087 in gas on district credit cards for personal use, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“Competitive bidding laws are designed to prevent schools from paying too much for goods and services,” DiNapoli said. “When school districts do not follow competitive bidding requirements, they may be missing out on the best deal for taxpayers. Mount Vernon must also ensure that there are proper internal controls in place so that every payment the school makes is properly scrutinized.”

State law requires purchase contracts for materials, equipment and supplies that are greater than $10,000 and public work contracts greater than $20,000 be awarded through a competitive bidding process including publicly advertising to solicit bids for goods and services.

Auditors found the district’s purchasing agent did not adhere to these bidding requirements in 26 instances for purchases totaling more than $1.1 million. These purchases included $302,332 for technology products and services; $127,186 for office supplies; $67,302 for sound and video equipment; and $55,637 for paper supplies. By circumventing required competitive bidding procedures, the district may have paid more for goods and services than necessary.

Auditors learned the purchasing agent used a district gas credit card for personal use. Over a three-month period, the purchasing agent charged $1,067 in gas before a clerk at the district discovered the misuse. The district’s claims auditor failed to detect the purchases because the district’s claims auditing process was not effective. The audit also found the purchasing agent and staff circumvented the district’s purchasing policy by issuing purchase orders for $120,519 in goods after the items had already been purchased.

The audit also found the district’s treasurer issued hand-drawn checks in excess of $250 million. Hand-drawn checks should only be used in limited situations. Auditors identified routine payments were made with hand-drawn checks including $183,222 to four vendors for capital projects; $80,500 to Westchester County for bus passes; $14,029 to a vendor for recycling; and $15,203 to a company to install phone equipment and a public address system.

In addition, auditors discovered the board did not develop a budget transfer policy and transfers were made by principals, the purchasing agent and the assistant superintendent for business. In accordance with State Education Department regulations, the board may authorize the superintendent to make budget transfers within certain guidelines. The lack of a clear transfer policy puts the district at risk for financial distress.

DiNapoli’s audit recommends that the board and district officials:

  • ensure that all items that exceed the bidding thresholds are competitively bid;
  • limit issuing purchase orders after the items have been purchased to emergency situations;
  • require board approval for all budget transfers in the absence of a specific board policy;
  • ensure the claims auditor properly audits all claims; and
  • minimize the use of hand-drawn checks to emergency situations only.

The audit of Mount Vernon Central School District was completed at the request of Westchester County District Attorney Janet DiFiore. DiNapoli’s office shared the audit’s findings with DiFiore’s office.

The district generally agreed with the audit’s findings and has begun implementing corrective actions. The district’s full response is included in the audit.

School District Accountability
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s 832 school districts, Board of Cooperative Educational Services (BOCES) and charter schools by 2010. Auditors review the school districts’ internal controls and make recommendations on how internal controls can be improved. The State Comptroller’s office has completed 320 school audits and approximately 220 audits are currently underway.

Click here for a copy of the audit.



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