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March 28, 2008



DiNapoli: Hamburg CSD Erred In Transfer of $83,000

Poor Purchasing Practices Cited

The Hamburg Central School District improperly transferred $83,000 in trust funds designated for student scholarships to the not-for-profit Hamburg School Foundation, according to an audit New York State Comptroller Thomas P. DiNapoli released today. The audit also found that the district should improve internal controls over its purchasing practices.

“Effective internal controls and oversight practices are essential to ensuring the proper use of tax dollars. Our audit discovered room for improvement at the Hamburg school district,” DiNapoli said. “District officials have ended some troubling practices and have pledged to do better going forward. District taxpayers deserve no less.”

DiNapoli’s audit found the district improperly transferred $83,000 of gift funds from a private trust to the Hamburg School Foundation, a non-profit organization that provides funds for student scholarships. The foundation then deposited the money in a mutual fund. Mutual funds are not a legally permissible investment for district assets and the district board lacked the authority to transfer those funds, according to the audit which covered July 2006 through January 2008.

DiNapoli’s audit also determined:

  • the district business administrator was not properly authorizing purchase orders;
  • the district business administrator improperly used blank purchase orders, which circumvented normal purchasing controls;
  • the district’s claims and purchase order procedures lacked sufficient oversight and control; and,
  • the district failed to consistently require competitive quotes for goods and services purchased through blanket purchase orders.

The audit recommends that district officials:

  • ensure the district’s purchase order system complies with board adopted policy;
  • develop written policies and procedures for the appropriate use of blanket purchase orders;
  • ensure that claims for payment are properly itemized, processed in compliance with district policies, and that original documentation is included prior to approval of such claims; and,
  • enforce and monitor compliance with district policy regarding price quotes and competitive bidding.

DiNapoli noted that the district generally agreed with the audit’s findings, and that the board has corrected the improper funds’ transfer. Additionally, the district has severed its ties to the foundation and is acting swiftly to improve its internal controls.

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, Board of Cooperative Educational Services (BOCES) and charter schools by 2010. Auditors review the school districts’ internal controls and make recommendations on how internal controls can be improved. The State Comptroller’s office has completed 390 school audits and approximately 200 school audits are currently underway.

Click here for a copy of the audit.

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