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October 27, 2009



DiNapoli’s Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Chester Union Free School District – Internal Controls Over Selected Financial Activities (Orange County); Ellenville Central School District – Fund Balance and Internal Controls Over Selected Financial Activities (Ulster County); and Potsdam School District – Financial Condition (St. Lawrence 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.”

Chester Union Free School District – Internal Controls Over Selected Financial Activities: DiNapoli’s auditors found that the District retained $389,065 of fund balance in excess of the amount allowed by law in the 2007-08 fiscal year budget. By not appropriating more year-end fund balance to reduce the property tax levy, district officials retained more fund balance than the law allows. Additionally, the district had $906,401 in deposits during September 2008 that exceeded the FDIC protection limit and, thus, was not insured. The purchasing agent also did not ensure purchases met district policy. Finally, district officials did not adequately design user access controls to protect the district’s information technology (IT) system against unauthorized access.

Ellenville Central School District – Fund Balance and Internal Controls Over Selected Financial Activities: The district’s general fund liabilities, reserve for encumbrances and fund balance were not properly reported, which resulted in the understatement of the general fund’s fund balance by more than $8.2 million. The district reported an unreserved, unappropriated general fund balance by June 30, 2008 of $2,138,859 (4.95 percent of 2008-09 appropriations), which exceeded the 4 percent allowed by law. Auditors’ review of the general fund’s reported accrued liabilities, reserves and fund balance and the reported fund balances of the district’s other funds disclosed unsupported and improper accrued liabilities and reservations of fund balance. If these accruals and reservations of fund balances were properly made and reported, the general fund unreserved, unappropriated fund balance would have been as much as $10,390,028 or 24 percent of 2008-09 general fund appropriations. Finally, there were weaknesses in the district’s information technology controls relating to policies and procedures, third-party access and disaster recovery planning.

Potsdam Central School District – Financial Condition: District officials consistently underestimated revenues during the audit period, which resulted in excess fund balance. The district’s unreserved, unappropriated fund balance exceeded the statutory limits for the 2003-04 through 2007-08 fiscal years. The unreserved, unappropriated fund balance in the general fund by June 2008 totaled $1,223,133, which represented 4.7 percent of the $26.1 million budgeted appropriations for fiscal year 2008-09. The district had also retained funds in excess of what it was legally allowed to retain for each of the previous four years. The unreserved, unappropriated fund balance exceeded the legal limit ranging from $490,228 as of June 2004 to $176,844 as of June 2008.

Click on the above links or visit: www.osc.state.ny.us/localgov/audits/index.htm 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, contact the Press Office at 518-474-4015.

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