DiNapoli’s Office Completes School Audits
New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Avoca Central School District, Briarcliff Manor Union Free School District, Byron-Bergen Central School District, Eastchester Union Free School District, Herkimer Central School District, Manchester-Shortsville Central School District, New Rochelle City School District, Oppenheim-Ephratah Central School District, Plattsburgh City School District and Westfield Academy and Central School District.
“My office’s audits of school districts, charter schools 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.”
Avoca Central School District - Safeguarding Cash Assets and Information Technology (Steuben County)
The board and district did not establish proper internal controls to ensure that cash assets were safeguarded. The treasurer did not directly oversee the use of her signature disk at all times, and the disk was not password-protected. The payroll clerk and accounts payable clerk both used the treasurer’s signature disk to sign district checks without the treasurer’s direct oversight. Online banking transactions made by the treasurer were not independently reviewed or confirmed by another district employee. In addition, the board did not effectively address the safeguarding of the district’s information technology assets, including computer data, equipment and media.
Briarcliff Manor Union Free School District - Internal Controls Over Cash Receipts and Disbursements (Westchester County)
District officials created and encumbered $2 million in purchase orders, in June 2007, for which no actual commitments existed at the time of encumbrance. As a result, the reserve for encumbrance account was overstated and the unreserved, unappropriated fund balance in the general fund was understated by $2 million. After adjusting for the amount encumbered, the unreserved, unappropriated fund balance retained in the general fund for the 2007-08 fiscal year was more than twice the amount allowed by Law. In addition, the district did not consistently document quotes for public works contracts.
Byron-Bergen Central School District - Internal Controls Over Cash Receipts and Disbursements (Genesee and Monroe counties)
Internal controls over cash receipts and disbursements were not appropriately designed or operating effectively. The board had not adopted written policies for cash receipts and disbursements, segregated critical duties so that no individual controls all phases of a transaction, or properly safeguarded district.
Eastchester Union Free School District - Internal Controls Over Purchasing (Westchester County)
District officials used the district’s previous procurement policy, which required the superintendent or his/her designee and the board to approve purchases that were not required to be bid. However, the board adopted a new policy on November 27, 2007 whose provision for obtaining professional services is contrary to the objective of the Law. The new policy states, “…the purchasing agent will not be required to secure alternative proposals or quotations for professional services and/or consultants.” The new policy permits the purchasing agent to procure professional services for any amount without board approval and without seeking competition. The new policy could create a situation whereby professional services could be procured without the board’s knowledge and in a manner that may not be in the best interest of taxpayers.
Herkimer Central School District - Internal Controls Over Selected Financial Operations (Herkimer County)
The audit found that controls over the computerized financial system, cash disbursements and payroll were not designed appropriately. For example, computer access rights were not appropriately assigned and the treasurer’s duties were not properly segregated. In addition, the payroll clerk had full access rights to the payroll system, including preparing and processing the payroll and the ability to create, delete or change employee records. Also, the board had not developed claims audit procedures to ensure that the claims auditor reviewed all claims thoroughly before the claims were approved for payment.
Manchester-Shortsville Central School District - Internal Controls Over Computerized Business Management System (Ontario County)
The treasurer used a computerized electronic signature stamp to sign checks and to place approving signatures on purchase orders. The treasurer should have been required to enter her password in order to place her signature stamp on the checks as they are printed. However, district officials had not set specific user rights and system access levels to activate this control feature. In addition, district officials had not established procedures for the administration of the system, including setting the approval levels necessary for adding users, establishing users’ access rights or periodically reviewing access rights. Finally, the district’s financial accounting system did not have the capability of producing desired monitoring reports, such as audit logs, change reports or exception reports.
New Rochelle City School District - Internal Controls Over Selected Financial Activities (Westchester County)
The district’s procurement policies and procedures did not contain sufficient guidance on the procurement of professional services, sole source purchases and emergency purchases. As a result, district officials paid $508,883 for professional service contracts for legal services and culinary classes, and $28,748 for learning materials without soliciting competitive proposals or quotations. In addition, the board had not adopted a written job description, policies, or procedures to provide specific instructions and communicate its expectations to the claims auditor. As a result, the district’s claims auditor was not aware that she was required to report to the board and therefore, had not reported to the board any time during her four-year tenure.
Oppenheim Ephratah Central School District - Internal Controls Over Payroll (Fulton and Herkimer counties)
The audit determined that, except for a few minor issues that were discussed with district officials, internal controls over payroll and personnel services were properly designed and working effectively.
Plattsburgh City School District - Internal Controls Over Extra-classroom Activity Funds and Information Technology (Clinton County)
Although the board established a policy to govern the operations of the extra-classroom activity fund and appointed both a middle and high school central treasurer, the board had not appointed a faculty auditor and fund monies were not maintained according to policy. Auditors testing disclosed that district extra-classroom activity fund officials did not deposit 18 cash receipts totaling $29,553 for 11 days or more after receipt and that two receipts were missing. In addition, internal controls over the information technology system were not appropriately designed and operating effectively. Passwords were not complex, there was no requirement to change them periodically and they were not always stored in an encrypted format. Auditors also found that several users had greater access than necessary and the ability to be involved in multiple aspects of financial transactions. Finally, district officials did not control physical access to the IT system or have a formal disaster plan in place.
Westfield Academy and Central School District - Internal Controls Over Selected Financial Activities (Chautauqua County)
The district had not taken adequate action to address the excessive fund balance in the general fund or to monitor revenues and expenditures. As of June 30, 2007, the unreserved general fund balance totaled $2.4 million—eight times more than the amount allowed by law. District officials did not appropriate any fund balance to reduce the tax levy. Further, the board, without proper authority, created a workers compensation reserve fund to which it transferred $845,000. In addition, internal controls over cash disbursements were not adequate. District officials were not following important aspects of the procurement policy approval process and disbursements totaling $2.1 million were not audited. Finally, the district did not develop appropriate policies and procedures for trust and agency funds or payroll and leave time.
To view the audits, click on the above links.
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.