New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of the Depew Union Free School District, Erie 1 BOCES, Norwood-Norfolk Central School District, Oceanside Union Free School District, Orange-Ulster BOCES, Seaford Union Free School District, Sewanhaka Central High School District and the Thousand Islands Central 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 board and district officials overestimated appropriations in the adopted budgets and allowed unrestricted fund balance to exceed the statutory limit. As of June 30, 2015, unrestricted fund balance totaled $3.8 million and was 9 percent of 2015-16 budgeted appropriations, which exceeded the limit by 5 percentage points. This trend is projected to continue through 2016-17.
As of June 30, 2015, BOCES accumulated $5.6 million of surplus funds in its special aid fund primarily due to recurring operating surpluses realized in its special education summer school and adult education programs. However, BOCES officials did not provide timely refunds of the accumulated funds generated from the summer school program to participating school districts. BOCES also accumulated and retained operating surpluses from adult education programs in 2013-14 ($1.2 million) and 2014-15 ($1.4 million). BOCES officials did not provide auditors with any evidence to indicate that the established fees for the adult education services were reasonable or related to the cost of providing these services.
District officials contracted with St. Lawrence-Lewis BOCES through a cooperative service agreement to audit district claims, and a BOCES employee audited all district claims including those for BOCES-provided services. Because the district is one of BOCES’ component districts, this arrangement was inappropriate because the BOCES claims auditor approved claims submitted by her employer, which compromised the auditor’s objectivity and independence.
District officials did not always adhere to the board-adopted procurement policy with regard to requesting proposals. District officials did not seek competition for seven professional services with payments totaling $760,484 (58 percent of the professional services reviewed). These payments were for special education services ($413,118), claims auditor services ($27,500) and attorney services ($319,866).
BOCES officials did not establish formal fixed asset policies and procedures that provide clear guidance for asset recording and disposal. As a result, BOCES staff did not properly record and account for fixed assets. Auditors also found not all assets (such as computers, machinery and tools) were tagged and that some assets were disposed of without board approval.
District officials generally ensured that the cash receipts process for extra-classroom activities’ funds was administered in accordance with district guidelines. However, the school store faculty advisor routinely retained a portion of cash collected for anticipated club expenditures and deposits submitted to the central treasurer typically lacked detailed documentation of money collected. During 2015-16 the school store deposits were not made in a timely manner.
The board does not have a policy on cash receipts. While district officials presented auditors with a copy of written procedures on handling cash receipts and deposits, the procedures do not address issuing triplicate receipts, recording the date and form of payment, or conducting an independent review of amounts collected and deposited. In addition, the written procedures have not been distributed to the finance clerks or athletic office secretary.
District officials need to improve the purchasing process to ensure that competitive methods are used when procuring goods and services. Although the board adopted a purchasing policy that indicated it should set dollar limits for obtaining written and verbal quotes for purchases that fall below competitive bidding thresholds, the policy did not establish dollar limits, specify the number or type of quotes to be obtained or the required documentation to be maintained. As a result, auditors found no indication that district officials solicited competition for 20 purchases totaling approximately $257,100.
For access to state and local government spending and 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.