DiNapoli's Office Completes School Audits
New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Minisink Valley Central School District, Royalton-Hartland Central School District, Schroon Lake Central School District, Shenendehowa Central School District, West Islip Union Free School District, and Whitesville Central 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.”
Minisink Valley Central School District - Internal Controls Over Budget Estimates (Orange County)
The district consistently overestimated appropriations for payroll and personnel services and employee benefits. During a six-year period, appropriations for payroll and employee benefits exceeded expenditures by a total of $31.1 million. In preparing budgets, district officials calculated the costs of employee payroll and benefits based on the current year’s budget without comparing budgeted estimates to actual expenditures. As a result, district appropriations for payroll and benefits were overestimated by $17.7 million and $13.4 million, respectively, for the audit period. District budgets indicated that the fund balance was appropriated to reduce the amount of the real property tax levy in amounts ranging from $5.5 to $7 million. However, because of the consistent overestimates of salary and benefit costs, the fund balance was actually used to fund district operations in only one of the six years. Furthermore, tax increases between June 30, 2003 and June 30, 2008, ranged from five to 12 percent, annually.
Royalton-Hartland Central School District - Internal Controls Over Student Transportation Services (Niagara, Genesee, and Orleans counties)
The district did not monitor transportation services or the fuel delivered to the transportation vendor’s facility. District officials did not compare the information on the monthly invoices submitted by the transportation vendor to the daily vehicle inspection reports to determine if the amounts billed were accurate. In addition, the vendor used the district-contracted buses to transport district students and students from neighboring districts on shared bus routes to the same academic locations outside of the district. The vendor billed all the districts for these shared bus routes. However, the district incurred the cost of the fuel used on the eight shared bus routes. The cost was not charged to any of the other four districts and there was nothing in the contract to indicate that the district will be reimbursed or otherwise credited for the fuel used on the shared bus routes.
Schroon Lake Central School District - Internal Controls Over Financial Operations (Essex and Warren counties)
The district did not have policies and procedures to provide guidance to district employees when handling cash disbursements, processing payroll, or performing bank reconciliations. As a result, the treasurer performed virtually all duties with regard to these key functions, which created a situation where the treasurer was performing incompatible duties. In addition, district officials did not review her work. Because the treasurer could initiate transactions, make accounting entries, and perform bank reconciliations, there was a risk that inappropriate transactions could be initiated and hidden. Also, because the treasurer performed all payroll processing duties, she had the ability to enter a non-existent employee into the payroll, certify the payroll payments to this non-existent employee, and then cash the related payroll checks.
Shenendehowa Central School District - Internal Controls Over Purchasing (Saratoga County)
The district’s internal controls over purchasing had been adequately designed and were operating effectively. Auditors examined 206 purchases made throughout the audit period, totaling $5,443,330, to determine whether they were made in accordance with the district’s purchasing policy. Required purchase orders were adequately approved and initiated by the submission of a requisition form, and all purchases were made for appropriate district purposes.
West Islip Union Free School District - Internal Controls Over Selected Financial Activities (Suffolk County)
District officials failed to design procedures to facilitate compliance with the district’s code of ethics, which resulted in the board president and a board member having interests that were not publicly disclosed. Additionally, the district paid the assistant superintendent for business a total of $6,276 for waiving the right to participate in the district’s medical insurance plan. However, her employment contract did not contain a provision for this benefit. As a result, the district may have incurred unnecessary expenses. Finally, district officials have not developed comprehensive policies and procedures to protect critical electronic data.
Whitesville Central School District - Internal Controls Over Selected Financial Operations (Allegany and Steuben counties)
District officials did not adequately address the excessive general fund balance, even though their external auditors brought this matter to their attention for the last three fiscal years. Further, two reserve funds were used to lower the excessive general fund balance at the recommendation of the district’s external auditors. OSC auditors questioned the propriety of $305,000 of these reserve funds. If these moneys had been reported as general fund unreserved balance, and if the board had complied with the statutory limits for the amount of unreserved fund balance that may be retained at year-end, real property tax increases from 2002-03 to 2006-07, totaling $331,100, may have been unnecessary. Additionally, the board and district officials have not properly segregated incompatible duties in the business office. As a result, the treasurer paid the superintendent $4,500 in salary that was not provided for in his contract and the district clerk/secretary received 18 compensatory days off, valued at $6,770, during each of the last four years. Internal controls over information technology assets were not appropriately designed or operating effectively. Finally, the BOCES employee serving as internal auditor was not independent in performing the internal audit function.
Click here to view the audits above. If you have any questions or would like a comment from the Comptroller’s office, please call 518-474-4015.