DiNapoli's Office Completes School Audits
New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Bay Shore Union Free School District, Connetquot Central School District, Ellicottville Central School District, Farmingdale Union Free School District, Newark Valley Central School District, North Merrick Union Free School District and West Canada Valley Central School District.
“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.”
Bay Shore Union Free School District – Internal Controls Over Selected Financial Operations (Suffolk County)
The district did not properly establish and account for the employee benefit accrued liability reserve (EBALR) fund. Further, district officials put far more money than necessary into the reserve. As of June 2007, the EBALR had a balance of $20.4 million, while the district reported a long-term liability for accrued compensated absences of only $10.5 million. The audit revealed the district’s total liability representing compensated absences was $6.1 million. In addition, the district’s procurement process was not functioning appropriately.
Connetquot Central School District – Internal Controls Over Financial Operations (Suffolk County)
District officials did not design and implement effective controls over budget preparation and reserves. Consequently, budget appropriations have exceeded expenditures by $17.2 million over the past three fiscal years. The resulting increase in fund balance was partially offset by $8.7 million in transfers to an employee benefit accrued liability reserve (EBALR). The transfers increased the balance in the EBALR to $4.1 million more than necessary to fund obligations. In addition, the spouse of a teacher did not disclose her interest in a contract for the purchase of various supplies totaling $1,535 from the corporation for which she was the chief executive officer. The audit also found that payments to teachers and administrators were not independently reviewed. As a result, two teachers were overpaid by $8,377.
Ellicottville Central School District – Internal Controls Over Selected Financial Operations (Cattaraugus County)
As of June 2006, the district’s unreserved and unappropriated general fund balance totaled $1.67 million, which was well in excess of the 2 percent legal limit. In the next fiscal year, the fund balance was three times the percentage allowed by law. In addition, the district funded reserves, including an employee benefit accrued liability reserve (EBALR), in amounts that are not necessary or reasonable. The excessive unappropriated fund balance and the overfunding of reserves resulted in higher tax rates for district residents.
Farmingdale Union Free School District – Internal Controls Over Selected Financial Operations (Nassau and Suffolk counties)
Auditors found the district’s employee benefit accrued liability reserve (EBALR) had a balance of $11 million, which was more than twice the amount of the related liability. Had the district properly accounted for the excess reserve balance of $6.5 million in the unreserved portion of fund balance, the district could have reduced the real property tax levy by $1.5 to $3 million from 2004 through 2007 or used these funds for other district purposes. The audit also found that the treasurer did not maintain adequate control over her signature disk to prevent unauthorized disbursement of district funds. Lastly, auditors found a board member did not disclose his interest in a telecommunications firm that had a contract with the district.
Newark Valley Central School District – Internal Controls Over Selected District Operations (Broome, Cortland, Tioga and Tompkins counties)
District officials did not adopt comprehensive policies or develop procedures to ensure that required fingerprint-supported criminal background checks were performed for district employees and independent contractors who had direct contact with students. In addition, district officials did not provide adequate oversight of the payroll process during most of our audit period. Finally, the board’s appointment of a Broome-Tioga BOCES employee as its claims auditor was not in accordance with State Education Department regulations.
North Merrick Union Free School District – Internal Controls Over Selected Financial Operations (Nassau County)
District officials established an employee benefit accrued liability reserve (EBALR) in April 2003 using $2.25 million of excess fund balance. No analysis was performed to determine if this was a reasonable amount and as a result, the fund was overfunded by as much as $1.7 million. In addition, the board did not receive timely information for monitoring the district’s fiscal operations. The district also did not solicit competition for 11 professional service providers who were paid a total of approximately $1 million.
West Canada Valley Central School District – Internal Controls Over Selected Financial Activities (Herkimer and Oneida counties)
Auditors found the board and district officials need to take steps to improve the district’s internal control environment. For example, internal controls over cash disbursements and gas and diesel inventories need to be strengthened. Also, the audit found the district’s policies and procedures do not ensure that purchases are made in the most prudent and economical way. Auditors found that 15 out of 18 contracts tested that were not subject to competitive bidding, totaling $107,936, did not have documentation to show that competition was sought by obtaining written or verbal quotes, or requests for proposal.
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 call 518-474-4015.