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| CONTACT: | Press
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Immediately November 1, 2005 |
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Audit Finds East Islip Expenses Well-Managed but Cites CPA Firm Conflict, Extra Payments to ManagersThe East Islip school district is generally managing administrative expenses well, but paid some managers extra without proper board authorization and lacked formal policies governing spending, according to an audit released today by New York State Comptroller Alan G. Hevesi. Auditors also found that the district's CPA firm inappropriately served as its internal and external auditor at the same time. “I commend the East Islip school district for keeping administrative expenses in check but urge the district to establish clear policies that everyone has to follow and carefully evaluate its internal control environment,” Hevesi said. “I am concerned that a CPA firm would accept the role of both internal and external auditor and urge it to carefully review auditing standards that require it to be independent.” This audit, covering the period July 1, 2002 through August 31, 2004, is among 26 Long Island school districts under review by Hevesi's office. Audits for 17 districts have now been released. At East Islip, auditors found: • Credit Card Charges Were Managed Relatively Well. The district spent about $27,500 in credit card charges. Although the district did not have a formal credit card policy, officials did submit receipts to support their charges, and the district monitored expenditures to ensure that they were for a legitimate business purposes. The district identified approximately $2,500 in personal charges, mostly for travel for spouses of board members, and obtained reimbursement for the charges. Since 2004, the district has cancelled several credit cards. • Travel Policies Were in Place. The district spent approximately $22,000 on travel and conference expenses. The district had travel policies in place, which it recently updated in 2005, but auditors recommended that the district set limits as to what it would pay for lodging. For instance, the district paid a total of $2,440 above the federal allowance for rooms in San Francisco for a conference that a few board members attended. • Cell Phone Usage Was Monitored and Meal Costs Were Managed. The district spent about $44,000 on cell phone costs. Despite not having a written policy, the district monitored cell usage and sought reimbursement for personal calls made by employees. Similarly, the district did not have a policy governing spending on meals ? about $41,000 was spent on meals and refreshments during the audit period ? but auditors found no expenses that raised questions. The board has since adopted a policy on cell phone usage but has not adopted a meal policy. • CPA Firm Did Not Comply With Auditing Standards. State auditors found that the same CPA firm, Coughlin, Foundotos, Cullen and Danowski, served as the internal claims auditor and the external auditor from July 1, 2000 through December 31, 2004, which is a violation of the generally accepted government auditing standards (GAGAS) that require auditors to be independent. In this instance, the CPA firm as the internal claims auditor was responsible for auditing claims and directing the district treasurer to pay them, as well as auditing those same transactions as the district's external auditor. As a result, the CPA firm was auditing its own work, which is an impairment of independence. The district took steps to fix the problem and engaged a different CPA firm to serve as internal auditor in January 2005. However, the district used Coughlin, Foundotos to perform the annual audit for the 2004-05 fiscal year even though the firm served as its internal claims auditor for half of that year. • Managers Were Paid Without Proper Authorization. The district compensated some managers for working overtime or on special assignments without proper authorization from the board of education. For example, the director of special education was paid $28,106 over her regular salary and the business and finance administrator was paid $10,000 above his salary, both without board approval. Additionally, the board did not publicly approve documents that outlined the benefits provided to managers. The board retroactively approved some of these payments. Auditors recommended the district:
The response of the district to the audit, as well as state auditors responses to taxpayer complaints, are included in the audit. The East Islip school district's operating budget in 2004-05 was $77 million. It has 5,400 students, approximately 700 employees and seven educational buildings. Click here for a copy of the audit. ###
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