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November 12, 2009

 

DiNapoli: Improvements Made at Syracuse City SD After Audit Finds Account Records Off By $1.24 Million

Syracuse City School District took several actions to increase oversight of its financial operations after auditors from the State Comptroller's office found poor fiscal monitoring led to: $1.24 million in financial records errors; $19,500 in improper payments to employees; and $107,000 being placed in unauthorized school bank accounts, according to an audit released today by State Comptroller Thomas P. DiNapoli.

"Now more than ever, we have to protect taxpayer dollars," DiNapoli said. "In the Syracuse City School District, that protection wasn't very strong. But the district stepped up in response to our audit and has taken immediate action. My office's audits can help school districts serve taxpayers and students better. District officials embraced this concept and got started on improvements right away. This is the kind of response we want from our audits. Taxpayers shouldn't have to worry how their tax dollars are being spent. School district officials in Syracuse have taken steps to eliminate that worry."

The audit found the district's recordkeeping for its accounts receivable, or money owed to the district, was so poor that district officials had no way of ensuring that all the money due to the district was actually received. Auditors determined the accounts receivable were overstated by $1.24 million, which represented 40 percent of outstanding accounts. In response to the audit's findings, the district implemented a centralized accounts receivable system and started management review of accounts receivable reports.

Auditors also discovered that errors routinely occur in the district's payroll process and go undetected. As a result, the district improperly paid $19,500 in compensation and benefits to employees. Some of these payments were miscalculated, lacked board approval or did not have adequate documentation. In addition, the district allowed a principal to roll over 50 sick days from a previous job, which could result in $10,625 in extra cash payments to the principal. The district has recouped much of the overpayments and created a payroll supervisor position to provide greater oversight of the payroll process.

DiNapoli's audit also found the district had weak controls to monitor its individual school bank accounts and extra-classroom activity accounts (ECA), which recorded more than $1.5 million in activity in 2006-07. Each individual school maintained a school account for funds the schools raised through various fundraising activities. The district did not have the authority to create these accounts, which held approximately $107,000. In addition, the ECA and school accounts paid $27,100 without proper documentation to support the payments. The district has hired a full-time employee to better monitor the ECA accounts.

DiNapoli's audit also found the district:

  • did not comply with the City of Syracuse or the district's purchasing policies when it awarded 10 contracts totaling $1.25 million;
  • did not properly segregate payroll and cash handling duties or ensure that there were proper checks and balances in place to reduce the risk for errors, abuse or misuse of funds; and
  • incorrectly reported part-time employees as full-time employees to the New York State and Local Retirement System.

DiNapoli's office recommends that district officials:

  • have someone independent of accounts receivable cash handling and recordkeeping reconcile the account;
  • use software for accounts receivable that allows for better and more accurate recordkeeping;
  • require supervisory approval for adjustments to accounts receivable records and review change reports;
  • develop enforcement procedures for outstanding billed invoices;
  • segregate payroll duties and cash handling duties to reduce the risk of errors or irregularities;
  • discontinue using school accounts and ensure that payments from ECA accounts have proper documentation; and
  • ensure that district employees involved in making purchases for the district comply with procurement policies.

The district generally agreed with the audit's findings and has begun to initiate corrective action in several areas.

"In order to protect the public's money and ensure transparency, this was an important process," said Daniel G. Lowengard Superintendent of Schools at Syracuse City School District. "Comptroller DiNapoli and his team have provided us with a road map to increase our accountability and efficiency. Much work has already been done but there is still more to do. We are moving forward in the right direction."

The district's full response is included in the audit. To view the audit, visit: http://www.osc.state.ny.us/localgov/audits/schools/2009/syracuse.pdf

School District Accountability
In order to improve accountability of the state's schools, DiNapoli's office will audit all of New York's school districts and Boards of Cooperative Educational Services by 2010. The State Comptroller's office has completed 685 school audits and approximately 45 school audits are currently underway.

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