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December 27, 2007


DiNapoli’s Office Doubles School Audits Completed in 2007
First Audits of Charter Schools Conducted

Internal Controls and Out-of-Contract Payments are Common Problems

State Comptroller Thomas P. DiNapoli’s office completed 226 school audits in 2007, more than double the amount completed in the previous year, according to his office’s 2007 Annual Report on the School District Accountability Initiative released today. Nine of these audits focused on charter schools, the first audits of their kind.

“Our auditors are working to make sure school districts are using sound financial management practices,” DiNapoli said. “Our audits are a resource for school officials to ensure they’re spending taxpayer dollars prudently. Education is a major expense for taxpayers and a major investment for New York. It’s imperative that school officials receive the guidance they need to manage and spend tax dollars responsibly. That’s what our audits do.”

Common Themes
The report summarizes the findings of school audits completed this year and identifies systemic problems found in schools. These problems include:

  • inappropriate payments to school officials when they leave a district (found in 10 percent of audits) or for personal services that they are not entitled to in their contracts (24 percent);
  • deficiencies in the claims audit process to ensure expenses are appropriate (48 percent);
  • weaknesses in the security of the districts’ IT systems (41 percent); and
  • unhealthy financial conditions with inadequate budgets (6 percent).

For example, in an audit of the Hopevale Union Free School District (Erie County), auditors found the district’s former business manager took $108,650 from the district by issuing himself unauthorized vendor and payroll checks, improperly increasing his salary and using district funds to pay his personal income taxes.

When auditing the Newfane Central School District (Niagara County), auditors learned district officials and employees used eight laptop computers to visit internet sites for pornography, online dating, shopping, travel, banking, games and music.

Charter Schools
This is the first year DiNapoli’s office audited charter schools. The 2005 legislation regarding the fiscal audits of schools requires the Comptroller’s office to audit every school district, BOCES and charter school by March 31, 2010. Like traditional school audits, charter school audits follow generally accepted government auditing standards (GAGAS) as stipulated by the Comptroller General of United States. The nine charter school audits completed in 2007 included schools in New York City and upstate New York. In 2007, 97 charter schools were in operation.

An audit of the KIPP Academy Charter School (Bronx) found the school paid for the teaching staff to go on two five-day trips to the Caribbean at the end of the school years. School personnel stayed at an all-inclusive resort that provided meals and alcoholic beverages.

Roosevelt School District
In an unprecedented move, DiNapoli’s office also began a real-time audit of the Roosevelt Union Free School District (Nassau County) to determine if the district is staying within its 2007-08 budget. DiNapoli’s office reviewed the district’s 2007-08 budget and found the district had budgeted expenditures significantly less than what the district spent in prior years. The audit on the district’s first quarter spending found the district was within its spending limit but identified several areas of concern that, if unaddressed by district officials, could lead to overspending. DiNapoli visited the district this month and met with the district’s superintendent to get an update on the progress being made by the district.

Resources for Local Officials
In an effort to help school districts better fulfill their responsibilities, DiNapoli’s office offers training across the state on a variety of topics including: accounting methods; making sure information technology is secure; state regulations; and roles and responsibilities of board members. This year DiNapoli’s office launched a low-cost online training program in addition to training held by phone and in person.

DiNapoli’s office also publishes a series of how-to guides to assist local governments and school officials prudently manage and spend taxpayer dollars. These guides are available on the State Comptroller's website at: www.osc.state.ny.us/localgov/pubs/index.htm.

Emerging Issues in 2008
DiNapoli’s office identified several emerging issues that it will focus on in 2008. Auditors will increase the number of charter school audits conducted throughout the year. In addition, auditors will closely review the internal audit function within school districts. Auditors will look to see if the internal audit process effectively assists the school’s governing board in limiting risk for inaccuracies or misuse of funds. Also in 2008, DiNapoli’s office will formally review corrective action plans submitted by school districts in response to recommendations in the audits. Once reviewed, auditors will advise school districts of any concerns with their plans.

The State Comptroller’s office completed 334 school audits since 2005 and has approximately 200 audits currently underway.

Click here for a copy of the report.

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