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June 18, 2008

DiNapoli’s Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Eldred Central School District, Elizabethtown-Lewis Central School District, Genesee Valley Central School District, Greenville Central School District, Margaretville Central School District, Medina Central School District, Millbrook Central School District, North Rose-Wolcott Central School District, Sandy Creek Central School District and Springs Union Free 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.”

Eldred Central School District – Internal Controls Over Cash Disbursements and Security of Computerized Data (Sullivan and Orange counties)
Auditors found district officials did not effectively assess risks inherent in the treasurer’s duties to ensure that district assets are safeguarded. The treasurer had complete control over cash disbursements, the ability to sign checks, initiate wire transfers, make journal entries and reconcile district bank accounts. While audit testing did not reveal any material discrepancies, district officials must segregate key financial duties, or at least increase oversight of the treasurer’s functions. Additionally, the board did not adopt formal policies and procedures to adequately protect district systems and data.

Elizabethtown-Lewis Central School District – Internal Controls Over Selected Financial Activities (Essex County)
The audit found the district did not adequately segregate duties over cash receipts and disbursements in the business office. In addition, the claims auditor did not approve all claims before the district paid them. The audit found that the superintendent and business manager had full administrative access to the financial accounting system, which is beyond what is necessary for them to perform their job functions. The district also did not have adequate written policies and procedures over its IT system. Finally, the district’s policy governing the operations of the extra-classroom activity fund is inadequate.

Genesee Valley Central School District – Internal Controls Over Selected Financial Activities (Allegany County)
Auditors found a BOCES employee that served as the internal auditor was not independent in performing the district’s internal audit function. The district’s Acceptable Use Policy and corresponding “Employee Computer Use Agreement” did not clearly indicate whether they apply to other users of the district’s network, such as BOCES employees. Further, the district did not establish the level of access rights appropriate for each employee or group of employees. Finally, internal controls over extra classroom activity cash receipts were not designed appropriately or operating effectively to adequately safeguard cash assets.

Greenville Central School District – Internal Controls Over Selected Financial Activities (Greene, Albany and Schoharie counties)
The audit found internal controls over the claims processing function were adequate and operating effectively. However, from July 1, 2006 to October 23, 2006 the board was responsible for the audit and approval of claims. During this period, the board did not perform a proper audit of the individual claims as required by law. In addition, the Questar III employee serving as the internal auditor was not independent in performing the internal audit function. Finally, the audit found weaknesses in the internal controls over information technology.

Margaretville Central School District – Internal Controls Over Selected Financial Activities (Delaware, Greene and Ulster counties)
Auditors found the board did not ensure that the duties related to the district’s cash receipts and disbursements were properly segregated. District officials did not ensure compliance with the district’s procurement policy. The district’s superintendent, as purchasing agent, approved purchases without first soliciting or ensuring that district staff solicited the required competition. Auditors found that, although the board had established policies and procedures defining the duties of the claims auditor, district officials did not properly monitor the claims auditor’s work. Additionally, district officials did not develop policies and procedures to ensure that cafeteria moneys were properly recorded, accounted for and deposited intact. The board did not establish internal control policies and procedures to sufficiently safeguard the district’s computerized data and other information technology resources. Lastly, auditors noted weaknesses in internal controls over the district’s process for classifying workers whom the district enrolls in the Employees Retirement System.

Medina Central School District – Internal Controls Over Selected Financial Activities (Orleans, Genesee and Niagara counties)
The audit found the district’s policies and procedures for purchases that are subject to competitive bidding requirements lack the detail necessary to guide district officials in implementation. The district did not formally advertise for bids for seven purchases totaling approximately $246,000, including approximately $116,300 for diesel fuel, $46,500 for a utility vehicle and $42,700 for computer equipment, software and related services. There was no documentation to indicate that multiple vendors were considered, or to justify the failure of district officials to solicit competition. In addition, the district’s Transportation Department did not have adequate procedures in place to monitor the use of the district’s eight fuel credit cards.

Millbrook Central School District – Internal Controls Over Cash Receipts and Disbursements and Information Technology (Dutchess County)
The audit found weaknesses in internal controls over cash receipts and disbursements. The treasurer’s duties were not adequately segregated. The district’s controls over wire transfers were inadequate because the treasurer could transfer funds based on only verbal authorization by the business administrator. A review of controls over the audit and approval of claims found that 22 of 50 disbursements reviewed, totaling approximately $151,000, were made before the claims auditor properly audited the corresponding claims.

North Rose-Wolcott Central School District – Internal Controls Over Selected Financial Transactions (Wayne County)
Auditors found payroll duties were not properly segregated and compensating controls were inadequate. The payroll supervisor had the ability to create new employee records, update employee information, input/update salary detail, process payroll, and print and distribute payroll checks for the district. In addition, the district did not adequately segregate the duties of the treasurer. Finally, management did not protect district assets by ensuring that the administration of the computerized financial management system was properly assigned to someone outside of the business office.

Sandy Creek Central School District – Internal Controls Over Selected Financial Activities (Oswego, Lewis and Jefferson counties)
The audit disclosed internal control weaknesses resulting from inadequate segregation of key cash disbursement and accounting duties, as well as purchasing, receiving and accounts payable duties. The board did not perform a proper audit of claims. Finally, weaknesses existed within the district’s system of internal controls over purchasing practices. Three purchases did not comply with competitive bidding requirements.

Springs Union Free School District – Internal Controls Over Selected Financial Operations (Suffolk County)
The audit found the claims auditor did not conduct a thorough and deliberate audit of all claims, review and certify warrants, and failed to report directly to the board. The audit reviewed 100 claims and found the business official independently paid 16 claims totaling $42,655 without a purchase order or review/approval from the claims auditor. The business official controlled all aspects of these purchases, bypassing all internal controls established by the district. Furthermore, the district’s business official, who also acted as the treasurer, had administrative access rights to the computerized financial system. Finally, auditors found a lack of segregation of duties over payroll.

Click on the links to view the audits and budget reviews above.

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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