New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of the Long Beach City School District, Lynbrook Union Free School District, North Collins Central School District, North Salem Central School District, Southampton Union Free School District and the Valley Stream Thirteen Union Free School District.
State Comptroller DiNapoli has made it a priority to audit school district, BOCES and charter school finances and operations to ensure money is being spent appropriately and effectively. The Comptroller’s audits are designed to help schools improve their financial management practices and ensure proper policies and procedures are in place to protect taxpayer dollars from waste, fraud and abuse. New York’s school districts annually spend approximately $60 billion in federal, state and local funds.
For additional background or a comment on a specific audit, please contact Brian Butry at 518-474-4015 or email: [email protected].
The district did not establish formal, written cash receipt policies and procedures. Auditors found that cash receipts are kept in an unlocked and unattended cabinet. The cabinet used to store the district’s cash receipts is not locked during business hours. Because the cabinet is located in a corridor outside the treasurer’s and clerks’ offices, neither party has a direct line of sight to the cabinet and, therefore, cannot monitor the cabinet. In addition, the clerks do not always log cash receipts into the cash receipts log when it is received. Twelve cash receipts totaling $7,975 were deposited before a clerk recorded receiving the cash in the district’s cash receipts log.
The board did not adopt a cash receipts policy and district officials did not adequately segregate the director’s duties or implement compensating controls such as providing supervisory reviews of the director’s activities. Furthermore, district officials did not ensure that pre-numbered receipts were issued for funds received for the driver’s education program or that the funds were collected by district officials or employees and deposited in a timely manner. As a result, there is an increased risk that money collected for special programs may be lost or misused.
From fiscal years 2012-13 through 2014-15, the district overestimated appropriations in the adopted budget by approximately 12 percent each year. The district has also appropriated approximately $1.5 million of fund balance and reserves annually as a financing source in the annual budget, which was not fully used. This practice allowed the district to circumvent the 4 percent statutory limit imposed on the level of unrestricted fund balance. When adding back the unused appropriated fund balance, recalculated unrestricted fund balance for each year ranged from $1.4 million (9 percent of the ensuing year’s appropriations) to $1.6 million (10 percent of the ensuing year’s appropriations), exceeding the allowable limit. Although recalculated fund balance levels consistently exceeded the limit district officials continued to raise the tax levy every year over the last four years.
District officials did not ensure that time, attendance and leave accrual records were accurate, complete and properly approved. The board did not establish policies and formal written procedures over payroll timekeeping. As a result, time sheets were incomplete and employees were credited with incorrect leave accruals. Three employees were erroneously paid a total of $900 for unused personal days. However, they also received credit for the unused personal days, which were converted to sick leave valued at $1,649. In addition, district officials did not segregate duties in the time and attendance software, and there were no compensating controls in place.
During the audit period, the district processed 107 special education claims from eight vendors, totaling $570,289. Auditors examined 12 special education claims containing 115 invoices and totaling $198,788 to determine whether rates charged and services rendered agreed with applicable contracts, invoices were adequately itemized and properly supported and found only minor discrepancies.
District officials did not always obtain competitive quotes and adhere to bidding requirements when procuring goods and services. Auditors sampled 30 vendors who were paid approximately $2.2 million between July 1, 2014 and December 31, 2015 and found that district officials did not have documentation to support payments totaling $757,700 made to two vendors for transportation, and they did not have documentation to support sole source payments totaling $53,000 to two vendors for textbooks. While the board adopted policies and procedures that provided guidance for purchases that do not require competitive bidding, district officials did not follow the policy and use competitive quotes to procure goods and services from 14 vendors paid a total of $116,626.
For access to state and local government spending and nearly 50,000 state contracts, visit OpenBookNY. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.