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December 29, 2008

DiNapoli’s Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Copenhagen Central School District, East Rockaway Union Free School District, Elwood Union Free School District, Floral Park-Bellerose Union Free School District, Jordan-Elbridge Central School District, Niagara Falls City School District, Port Byron Central School District, Unatego Central School District, Walton Central School District and West Seneca 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.”

Copenhagen Central School District – Internal Controls Over Non-Payroll Cash Disbursements (Jefferson and Lewis counties)
Auditors identified internal control weaknesses in the district’s cash disbursement operations that could lead to errors or irregularities occurring and not being detected. Specifically, auditors found that detailed computerized records for non-payroll cash disbursements were not accurate, the duties of the treasurer were not adequately segregated, and payments were made prior to claims auditing.

East Rockaway Union Free School District – Internal Controls Over Cash Receipts and Disbursements and Information Technology (Nassau County)
The audit found district officials did not properly segregate the treasurer’s duties. In addition, wire transfers were approved after they were made. Auditors also found the account clerk signed 320 extra-classroom activity fund checks totaling $335,880 without authorization to do so. District officials also have not implemented comprehensive information technology policies and procedures.

Elwood Union Free School District – Internal Controls Over Selected Financial Operations (Suffolk County)
The audit found the board did not properly oversee the summer sports program. In 2006, the program had revenues and expenditures totaling $93,782 and $77,898, respectively. However, not all revenues and expenditures were included in the budget. District officials also did not ensure that all fees charged were appropriate. In addition, checks and cash were collected at the home of a district teacher, a record of students participating in the program was not prepared, and no receipts were issued. In 2007, the board allowed an outside organization to run the summer sports program. The Board did not pass a resolution to authorize the program, approve the organization’s use of buildings and grounds or enter into a written agreement with the organization. Auditors also found the district had weak internal controls over the procurement of goods and services.

Floral Park-Bellerose Union Free School District – Internal Controls Over Selected Financial Activities (Nassau County)
The audit found the board did not provide sufficient oversight to ensure that payments were made to the former superintendent in accordance with his employment contracts. The former superintendent received questionable or improper salary and related payments totaling approximately $164,051 from July 1993 through August 2005. These payments included excess salary increases of $40,887; annual overpayments totaling $25,706 for unused vacation days; inaccurate conversion for unused sick days of $18,555; and improper retirement payments of $78,903. Auditors also found that the district did not take adequate action to address the excessive fund balance in the general fund.

Jordan-Elbridge Central School District – Internal Controls Over Selected Financial Operations (Cayuga and Onondaga counties)
District management did not establish adequate internal controls over the district’s cash assets and financial data in the computerized accounting system. The treasurer and assistant superintendent performed several significant cash receipt and disbursement duties without adequate compensating controls or sufficient oversight. Also, the assistant superintendent had full user access rights to the district’s computerized accounting system without any independent review or authorization for the changes he makes within the system.

Niagara Falls City School District – Internal Controls Over Health Insurance (Niagara County)
Auditors found instances where enhanced benefits were provided contrary to contract stipulations, or the basis for the benefits could not be adequately determined by review of the contract provisions. These actions will result in unnecessary and inappropriate payments, which auditors project will total approximately $2 million for the 2007-08 fiscal year. For example, the district would save more than $1.8 million in the 2007-08 fiscal year if officials follow contract provisions and require all retirees age 65 or older to change from their current plan to a supplemental Medicare plan. Auditors also found that: 23 retirees inappropriately received incentive payments totaling $21,250; five retirees received health insurance they were not entitled to, costing $44,339; and seven current or former administrators inappropriately received certain insurance coverage, costing the district $14,440. Finally, auditors found that the district did not adequately monitor or communicate with its third party employee benefits administrator or ensure that there are proper retiree verification procedures. These deficiencies resulted in unnecessary payments totaling approximately $122,000.

Port Byron Central School District – Financial Condition (Cayuga and Wayne counties)
Auditors found that, although the district’s unreserved, unappropriated fund balance during the audit period was within the statutory limit, two of the district’s reserves – the Employee Benefit Accrued Liability Reserve (EBALR) and the Unemployment Insurance Reserve – were overfunded by $1.3 million and almost $214,000, respectively. These unnecessary reserves would have increased the district’s year-end accumulated fund balance to 12 percent of the 2007-08 fiscal year budget, or four times the legal limit of 3 percent. The excess reserve funds of approximately $1.5 million represent moneys that were unnecessarily raised in taxes and could have been used more productively to finance non-recurring expenses or to pay off debt.

Unatego Central School District – Internal Controls Over Selected Financial Activities (Otsego and Delaware counties)
The audit found district officials did not establish adequate purchasing policies and procedures. Informal procedures that required obtaining quotes for purchases below the bidding threshold were not documented and were not followed. Auditors also found that district officials did not establish adequate procedures regarding the proper use of blanket purchase orders. Further, the district did not use the request for proposal process to solicit competition for its annual financial statement audit and contracted with the same audit firm for many years. District officials also did not implement formal policies and procedures relating to its financial software and computers. Finally, the Board did not appoint a claims auditor in accordance with New York State Education Department regulations.

Walton Central School District – Internal Controls Over Selected Financial Activities (Delaware County)
Auditors determined the board did not ensure that its members publicly disclosed the nature and extent of any direct or indirect financial interest in accordance with the Board’s adopted ethics policy. As a result, the board’s vice president had interests in contracts with the district that she did not publicly disclose and the board failed to identify. District officials and employees did not provide adequate controls over purchasing to safeguard district assets. For example, district officials paid ten claims, totaling approximately $583,160, to repair flood-related damages to district property without advertising for bids. District officials also did not provide adequate controls over cafeteria receipts or adequately segregate duties over non-payroll cash disbursements. Lastly, district officials improperly classified an attorney as a district employee.

West Seneca Central School District – Internal Controls Over Selected Financial Operations (Erie County)
The audit found district officials did not provide sufficient guidance to the network coordinator for the management of information technology inventory, or establish policies and procedures regarding the disposal of IT equipment. District officials also did not adopt policies or procedures for purchases that are not required to be bid, or for the authorization and documentation of purchase or service contracts. Further, district officials did not provide reasonable public notice of the sale of district property located at 675 Potters Road. Finally, the board did not provide detailed guidance or prescribed procedures to the claims auditor.

Click on the above links to view the audits.

If you have any questions or would like a comment from the Comptroller’s office regarding any of the audits above, please call the Press Office at 518-474-4015.


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