FOR RELEASE:

DiNapoli: Better Internal Controls Could Have Prevented Unauthorized Health Insurance Payments by Fredonia CSD

Deficiencies in internal controls at Fredonia Central School District allowed two former superintendents to receive more than $92,425 in improper health insurance coverage and led to numerous payroll errors, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“It is imperative that school officials exercise tight control over spending, especially in times of economic downturns,” DiNapoli said. “It remains crucial that school districts establish the proper internal controls to make sure taxpayer money is not being wasted.”

The board did not authorize the health insurance coverage for either of the former superintendents. The district’s business administrator/treasurer informed auditors that he was told by his predecessor that lifetime health insurance benefits were to be provided to the two superintendents. However, there was no documentation to support that assertion. Both of the former superintendents agreed to repay the district.

In addition, the audit also found the current superintendent did not certify payrolls as required by the board and the business administrator/treasurer did not provide adequate oversight of the payroll clerk’s duties.

In reviewing the district’s payroll practices, auditors found district managers had not pre-approved any of the overtime hours recorded on the timesheets auditors reviewed.

Auditors also found that two former employees were paid a total of $10,876 without documentation of board authorization and two new employees were being paid a combined amount of $1,231 more than the board had approved.

Auditors also learned that the board was aware of nine non-resident students with outstanding tuition balances totaling $8,918, but the board took no documented action to enforce payment.

The audit identifies 21 recommendations for school officials including:

• have the claims auditor report directly to the board;
• seek to recover improperly paid health insurance premiums;
• properly certify payrolls;
• ensure that managers pre-approve overtime hours for employees; and
• ensure that no one person can perform all aspects of the payroll process.

District officials generally agreed with the audit’s recommendations and have either initiated or plan to address the problems. The district’s full response is included in the audit.

School District Accountability
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s 834 school districts, Boards of Cooperative Educational Services (BOCES) and charter schools by 2010. The State Comptroller’s office has completed 400 school audits and approximately 200 school audits are currently underway.

Click here to view the audit.

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