DiNapoli’s Office Completes School Audits
New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Alexander Central School District, Amherst Central School District, Belfast Central School District, Belleville Henderson Central School District, Carmel Central School District, Cuba-Rushford Central School District, South Jefferson Central School District, South Orangetown Central School District and Westhampton Beach Union Free 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.”
Alexander Central School District – Internal Controls Over the Extra-Classroom Activity Fund (Genesee and Wyoming counties)
The audit found that the district’s internal controls over the extra-classroom activity fund were appropriately designed and were operating effectively. Testing revealed only minor deficiencies, which auditors discussed with district officials to help them improve controls in this area.
Amherst Central School District – Employee Benefit Accrued Liability Reserve (Erie County)
An Employee Benefit Accrued Liability Reserve (EBALR) fund was first reported in the 2002-03 fiscal year; however, a board resolution was not adopted to establish such a reserve. District officials stated that the EBALR was originally created as a method to reduce the district’s unreserved, unappropriated fund balance to within the legal limit. If the District had not established this reserve, the $1.2 million that was transferred to the reserve would have been required to be used to reduce the tax levy. It is apparent that this reserve was not intended to fund employee benefits because it was established in the amount of $1.2 million, or about three times the amount of the reported liability. Instead, the reserve was used to avoid the statutory limit on fund balance that would have required district officials to fund other statutorily authorized reserves or lower property taxes.
Belfast Central School District – Internal Controls Over Selected Financial Operations (Allegany County)
The district improperly compensated two employees by approximately $19,873. Auditors also found that the treasurer improperly calculated health insurance stipends and as a result, six employees were overpaid by a total of $6,292. In addition, two employees were paid a total of $7,489 for health insurance stipends that they were not eligible to receive. Auditors also found that a board member had a prohibited interest in contracts between the district and a grocery store in which the board member had a 50-percent ownership interest.
Belleville Henderson Central School District – Internal Controls Over Selected Financial Activities (Jefferson County)
Auditors found that the district did not adequately segregate the duties over cash disbursements. District officials also did not provide sufficient management oversight of bank reconciliations because they did not review bank statements or cancelled checks to ensure that payments are for valid district purposes. In addition, district officials did not review computer audit logs. Finally, auditors found weaknesses in the district’s recording and maintenance of fuel inventories.
Carmel Central School District – Internal Controls Over Selected Financial Activities (Putnam and Dutchess counties)
Auditors found that the board, as a whole, was not involved in approving contracts for special education service providers. Auditors also found that the district did not establish an internal control system that provides adequate oversight over purchasing and that procedures relating to procurement were not operating effectively. The district did not adhere to General Municipal Law (GML) and its own policy by contracting with two employees for services totaling approximately $34,200.
Cuba-Rushford Central School District – Internal Controls Over Selected Financial Operations (Allegany and Cattaraugus counties)
The unreserved, unappropriated general fund balance in June 2007 was more than $2.6 million, or almost 13 percent, of its $20.1 million budget for 2007-08 (nearly $2 million more than allowed by law). Further, the district had at least $400,000 more than needed in its EBALR fund. Additionally, internal controls over cash receipts were not properly designed or operating effectively. The district did not properly secure cash and checks received in the mail, issue duplicate receipts when cash was received, or have procedures to adequately address the counting of cash. Finally, auditors found that the BOCES employee serving as the district’s internal auditor is not independent in performing the district’s internal audit function because the district makes substantial payments ($3 million in the 2006-07 fiscal year) for BOCES services.
South Jefferson Central School District – Internal Controls Over Selected Financial Activities (Jefferson and Lewis counties)
The deputy treasurer performs the majority of key cash disbursement duties without effective oversight or mitigating controls. In addition, auditors found that the treasurer’s facsimile signature is applied to district checks without his direct supervision, which could result in checks being issued for improper purposes, or in incorrect amounts. Auditors also identified certain control weaknesses in the payroll process that existed during the audit period, which district officials have since corrected.
South Orangetown Central School District – Internal Controls Over Selected Financial Activities (Rockland County)
Auditors' review of the district’s IT system disclosed weaknesses in controls over financial information and student data applications, primarily due to the lack of policies and procedures. Certain business office employees and the business official had user rights that were not consistent with their duties, weakening the segregation of duties within the financial software application. Auditors also identified instances where control weaknesses allowed custodial and maintenance employees to receive overtime pay without the required approval and supporting documentation. Furthermore, district officials did not always follow the district’s policy when procuring professional services. Finally, auditors found the district’s EBALR fund balance is conservative and based on reasonable assumptions regarding possible retirements or separations from district service.
Westhampton Beach Union Free School District – Internal Controls Over Selected Financial Operations (Suffolk County)
District officials did not properly account for the EBALR fund and put more money than necessary into the reserve. In June 2007 the balance had $1,159,462 more than projected liabilities. District officials also did not have adequate controls over changes made to capital projects. As a result, changes to the general construction contract for the high school project, in the amount of $114,502, which were not within the scope of the original contract and work on three change orders totaling $213,618 was started before the board had authorized the changes. Finally, district officials did not provide for an adequate segregation of duties in the treasurer’s office.
Click on the links above for a copy of the audit
If you have any questions or would like a comment from the Comptroller’s office regarding any of the audits above, please contact the Press Office at 518-474-4015 or send an email.