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June 2, 2009

 

DiNapoli's Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Bath Central School District – Internal Controls Over Payroll Processing (Steuben County); Hamilton Central School District –Internal Controls Over Selected Financial Activities (Madison County); Milford Central School District – Information Technology (Otsego County); North Salem Central School District – Internal Controls Over Selected Financial Operations (Westchester County); Rensselaer-Columbia-Greene BOCES – Internal Controls Over Selected Financial Operations; and Rye City School District – Internal Controls Over Payroll and Purchasing (Westchester County).

“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.”

Bath Central School District – Internal Controls Over Payroll Processing (Steuben County)
Internal controls over the district’s payroll processing were not appropriately designed because the payroll clerk performed virtually every phase of the payroll process. Auditors also found that the accounts payable clerk had user rights to the payroll module in the district’s computerized financial system. This employee did not have any payroll responsibilities and did not need access to the payroll module in order to perform her job duties. The audit did not identify any material deficiencies. However, to prevent manipulation of payroll records in the future, district officials need to strengthen internal controls over the payroll process.

Hamilton Central School District –Internal Controls Over Selected Financial Activities (Madison County)
An examination of 27 former employees and their eligible dependents receiving post-employment health benefits revealed that the district did not have the necessary records to support over $25,000 paid annually for six individuals, 22 percent of those tested. For instance, the district did not have personnel folders or other employment records for three individuals receiving post-employment health insurance benefits. The district’s share of insurance premiums for these individuals totaled $9,979 annually, as of March 2008. Auditors also found that although the treasurer’s cash disbursement duties for manual checks and wire transfers were not properly segregated, management had provided for routine, independent reviews of related treasurer transactions by a BOCES CBO employee. These compensating control procedures adequately mitigate the risk of undetected errors
or improprieties.

Milford Central School District – Information Technology (Otsego County)
The board had not effectively addressed the safeguarding of computerized data and assets by establishing adequate policies and procedures and monitoring their implementation. Specifically, the district had not adopted comprehensive policies and procedures relating to user access rights, passwords, computer usage, and access controls over the treasurer’s computerized signature disk. The board also had not developed a formal disaster recovery plan or physically secured its computer assets. Although auditors did not identify any significant occurrences of unauthorized activity, the IT weaknesses identified increased the risk that sensitive or critical data could be lost or compromised, or that systems could be damaged or disrupted.

North Salem Central School District – Internal Controls Over Selected Financial Operations (Westchester County)
District officials paid three vendors $186,901 without soliciting competitive bids and paid $144,269 to two professional service providers without seeking competitive proposals or quotations. District officials also contracted with a vendor to provide technology-related professional services for $204,000. They made additional equipment purchases totaling $75,802 from the vendor not covered under the agreement which were not competitively bid. In addition, due to the failure to maintain asset disposition records for laptops, district officials were unable to locate three of 10 laptops with a combined value of $3,646. Finally, auditors found that controls over the district’s check-signing process and access to the computerized financial system were not adequate.

Rensselaer-Columbia-Greene BOCES – Internal Controls Over Selected Financial Operations
BOCES officials had not established policies and procedures to adequately safeguard the IT system’s equipment and data. Auditors found that BOCES had not developed a disaster recovery plan. In addition, BOCES did not control local administrator rights, review financial management system audit logs, or have adequate physical security over its IT assets. Finally, auditors examined a sample of 142 claims totaling $786,238 and, except for minor deficiencies auditors discussed with BOCES officials, the claims contained sufficient documentation to support that they were valid and necessary BOCES expenditures.

Rye City School District – Internal Controls Over Payroll and Purchasing (Westchester County)
The board had not adopted an overtime policy, and the director of Buildings and Grounds had not established written procedures that provided adequate oversight of overtime work for his department. Because of the district’s poor recordkeeping, district officials did not have adequate assurance that the total amount of overtime paid was accurate and necessary. In fact, auditors found questionable overtime payments totaling $2,899 that the district made to a head custodian. Additionally, the district awarded 13 professional service contracts totaling approximately $960,000 during the audit period without using a request for proposals (RFP) process or other forms of competition. Finally, the district entered into six purchase and public works contracts totaling $250,040 without using competitive bidding, as required by state General Municipal Law (GML).

Click here to view the audits above. If you have any questions or would like a comment from the Comptroller’s office regarding any of the audits above, please cal 518-474-4015.


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