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December 22, 2009

DiNapoli’s Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Auburn Enlarged City School District, Cobleskill-Richmondville Central School District, Delaware-Chenango-Madison-Otsego Board of Cooperative Educational Services, Erie 1 Board of Cooperative Educational Services and Oceanside 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.”

Auburn Enlarged City SD – Internal Controls Over Selected Financial Activities (Cayuga County)
Auditors found the board and district officials did not establish policies for maintaining leave records and confidential employee information and lacked controls over payroll and personal services, which cost the district and taxpayers more than $59,000 in fiscal year 2008-09. The board and district officials used the Employee Benefits Accrued Liability Reserve to pay for retiree health insurance, which is an improper use of the reserve. They did not use available EBALR funds to pay for compensated absences and overfunded the EBALR. As a result, auditors found that more than $2 million of excess taxpayer dollars were kept in the reserve.

Cobleskill-Richmondville CSD – Internal Controls Over Selected Financial Operations (Otsego, Montgomery and Schoharie counties)
The audit found the district improperly paid approximately $27,500 in health insurance and prescription plan premiums and reimbursements of Medicare Part B premiums for deceased individuals or their spouses. Auditors also found a lack of segregation of duties in the business office. District officials did not ensure that the claims auditor audited and approved all claims prior to payment. The board did not establish comprehensive polices to effectively safeguard computerized data and assets. Finally, the district established a recycling paper program in June 2008 through the use of a vendor, deriving significant environmental benefits, as well as some additional financial benefits.

Delaware-Chenango-Madison-Otsego BOCES – Internal Controls Over Financial Operations and Employee Background Checks (Chenango, Delaware, Madison and Otsego counties)
Auditors found BOCES officials also did not comply with Education Law requiring prior criminal background checks for prospective employees expected to have contact with children. Only 22 of the 149 applicable employees auditors tested were properly cleared. Auditors also found the BOCES board established an accrued liability fund for non-permissible purposes (Other Post-Employment Benefits, or OPEB). The monies in this fund, which totaled $3.5 million in June 2008, should have been apportioned to the school districts. The CTE Director did not ensure that occupational center staff: maintained sufficient records for adult education and CTE programs; properly used duplicate press-numbered receipts and; deposited moneys in a timely manner. Additionally, BOCES’ business manager did not ensure that the payroll clerk’s duties were adequately segregated. Finally, the board and school lunch manager did not ensure that cafeteria transactions were authorized and computerized data was safeguarded, and did not investigate cash register discrepancies.

Erie 1 BOCES – Internal Controls Over Technology Equipment (Erie County)
Auditors reviewed BOCES’ accepted practices for inventory maintenance, and discussed the procedures with technology coordinators from 11 school districts who leased BOCES equipment, to determine if the districts were following these accepted practices. BOCES failed to formally adopt policies and procedures or implement and monitor its unofficial procedures to identify and track individual BOCES-owned equipment that was located in various school districts. Although BOCES had a procedure to update equipment records following periodic physical inventories, districts were not conducting the inventories as expected. Districts were not disposing of equipment in accordance with BOCES requirements or adhering to BOCES insurance requirements. In addition, management failed to report on findings associated with the review that the BOCES claims auditor oversaw, which included testing a sample of district inventories.

Oceanside UFSD – Internal Controls Over Selected Financial Operations (Nassau County)
The audit found district officials did not ensure that: the Department of Community Activities’ (DOCA) programs were included in the annual budget and reported accurately; the functions of collecting, recording and depositing cash were segregated and that; DOCA claims were properly authorized. In addition, auditors found district officials did not always adhere to the district’s purchasing policy with regard to seeking competitors for professional services. Finally, district officials did not always enforce the board-adopted fuel credit card policy. They did not require employees to submit supporting documentation and did not have adequate procedures to monitor fuel use, such as maintaining vehicle logs and analyzing vehicle miles per gallon to determine if fuel purchases were reasonable.

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

School District Accountability
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s school districts and Boards of Cooperative Educational Services by 2010. The State Comptroller’s office has completed 700 school audits and approximately 30 school audits are currently underway.


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