Meeting of the Board of Regents | July 2007
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THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234 |
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TO: |
Subcommittee on Audits
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FROM: |
Theresa E. Savo
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SUBJECT: |
Board of Regents Oversight – Financial Accountability
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DATE: |
July 11, 2007
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STRATEGIC GOAL: |
Goal 5
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AUTHORIZATION(S): |
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Executive Summary
Issues for Discussion
Two items are presented for discussion with the Members of the Subcommittee on Audits including:
- Annual Report on the Activities of the Regents Subcommittee on Audits
- Completed Audits
Reason(s) for Consideration
Update on Activities
Proposed Handling
Discussion and Guidance
Procedural History
The information is provided to assist the Subcommittee in carrying out its oversight responsibilities related to audits of financial and reporting practices; performance audits or reviews; ethical conduct issues arising from audits; internal controls; and compliance with laws, regulations, and policies.
Background Information
1. Annual Report on the Activities of the Regents Subcommittee on Audits – Department staff will provide an overview of the key activities of the Subcommittee during the 2006-2007 year. These activities assist the Board of Regents in carrying out its oversight responsibilities.
2. Completed Audits
Reports are provided as follows:
Office of Audit Services
Harriet Tubman Charter School
Office of the State Comptroller
Addison Central School District
Afton Central School District
Beaver River Central School District
Bethlehem Central School District
Brockport Central School District
Edmeston Central School District
Georgetown – South Otselic Central School District
Harrison Central School District
Haverstraw-Stony Point Central School District
Homer Central School District
Hoosic Valley Central School District
Horseheads Central School District
Mechanicville City School District
Newburgh Enlarged City School District
North Babylon Union Free School District
Northville Central School District
Roscoe Central School District
Roxbury Central School District
Scio Central School District
Springville-Griffith Institute Central School District
Recommendation
For item one (Annual Report on the Activities of the Regents Subcommittee on Audits), it is recommended that the summary of the activities of the Subcommittee be presented to the Full Board. For item two (Completed Audits), the advice and guidance of the Members of the Subcommittee is sought.
Timetable for Implementation
N/A
The following materials are attached:
- Roadmap
- Minutes of the June Meeting (Attachment I)
- Annual Report on the Activities of the Regents Subcommittee on Audits (Attachment II)
- Summary of Findings (Attachment III)
- Audit Report Abstracts (Attachment IV)
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REGENTS SUBCOMMITTEE ON AUDITS
MEETING ROADMAP
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Location: TBD
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TOPIC |
OUTCOME |
WHO |
MINUTES |
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Opening Remarks |
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Chair |
2 |
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Review Agenda/Minutes (Attachment I) |
Approval |
Conway |
5 |
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Follow-up on Previous Meetings |
Information |
Conway |
5 |
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Annual Report on the Activities of the Regents Subcommittee on Audits (Attachment II) |
Information |
Conway |
15 |
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Audit Report Abstracts (Attachment IV) |
Questions Addressed |
SED and OSC Staff |
15 |
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Next Session |
Preview |
Staff |
3 |
June 25, 2007
Subcommittee Members in Attendance:
Regent Geraldine D. Chapey, Chair
Regent Joseph Bowman Jr.
Other Members of the Board of Regents in Attendance:
Regent Roger B. Tilles
Discussion Items
Regent Chapey opened the meeting by welcoming everyone and described a new process for reviewing the results of audit reports. This process includes the involvement of audit staff as well as senior staff from the Office of Operations and Management Services, Counsel’s Office, and the Office for Education – P-16.
Regent Chapey also pointed out that the Department is moving forward as a service organization. She stated that the New York City Department of Education is heading in a similar direction with Chancellor Joel Klein reorganizing his Department into learning support teams.
Follow-up items
As a follow-up from the previous meeting, the Members were informed that the Office for Higher Education is discussing the qualifications of leadership positions in school districts. This issue will be discussed at a future Higher Education Committee meeting.
The Members were also provided with a printout of colleges and universities by judicial districts. Regent Bowman said that we should look into sharing reports with all the administrators and key people in the Higher Education institutions.
Other Issues
Regent Tilles inquired about the monitoring responsibility of the Department related to the new Student Lending Accountability, Transparency and Enforcement (SLATE) Act. He asked who will have this specific responsibility and how many people are estimated to be involved in this monitoring. The Deputy Commissioner for Operations and Management Services, Theresa Savo, responded that the funding needed (but not provided) for this responsibility is approximately $800,000 and will involve approximately 6 staff. The Department’s acting Counsel, Erin O’Grady-Parent, said that the Attorney General’s Office will provide assistance to SED in wording the regulations.
Regent Tilles raised concerns related to testing in Uniondale and Yonkers and said that this has to be brought up to the EMSC Committee.
Associate Commissioner Jean Stevens and Assistant Commissioner David Abrams spoke about testing. They indicated that there are routine procedures done when the integrity of testing is compromised. David Abrams said the Yonkers’ case is specific to certain school buildings, while Uniondale is comprehensive and relates to grades K-12. He also stated that their office has involved the Office of District Superintendents to address this problem. Erin O’Grady-Parent said that the case has been referred to the Attorney General’s Office.
Agenda items
Internal Control Process and Certification
Audit staff informed the Members that the Commissioner has signed the Internal Control Certification and it has been submitted to the Division of the Budget. A brief overview of the Department’s internal control process was provided. The Department process uses a self-assessment by program managers whereby they:
-Identify goals and objectives.
-Identify risks of not accomplishing goals and objectives and the likelihood that something will go wrong and prevent accomplishing the same.
-Identify and assess the internal control procedures in place.
-Identify the high risks and determine if changes are needed to be made to the internal control procedures.
Audits
The Regents commented on the new presentation of findings and expressed their appreciation for it. Regent Bowman asked what we could do with the recurring findings.
Staff from the Office of the State Comptroller (OSC) stated that at a recent NYS Association of School Business Officials (ASBO) conference, a presentation was made that discussed the emerging theme from OSC audit findings. OSC also included this in their annual report to the Legislature. Regent Bowman requested the report.
Regent Tilles indicated that he is concerned about the findings in the Roslyn audit report and asked what we are doing as a follow-up. Staff stated that they will follow up and report back at the next meeting.
Regent Tilles also asked for clarification on the follow-up audit on Reimbursement to Nonpublic Schools for State Mandated Services regarding the Comprehensive Attendance Policy. P-16 staff informed the Members that subsequent to the follow-up audit, the legislature has approved funding and schools will start getting the aid.
Regent Bowman asked whether problems and issues at the district could be identified without an audit. Charles Szuberla, Coordinator of the Office of Educational Management Services, answered that as the technology gets better we can flag the districts with recurring findings. He also stated that the system needs to be more robust. Academic and fiscal issues should both be examined. He cited as an example the 175 hours of required training for school district officials has no specific area of focus. He also stated that we need a clear expectation of what is required of the Department. As part of improving the system, we need to make the information available not only to the expert, but also to the public at large.
Regent Bowman asked for a copy of the curriculum used to train school board members. Staff stated this will be provided at the next meeting.
OSC staff discussed the audit report on the Security of Regents Examinations. The report evaluated 235 schools, of which 41 were not fully complying with the requirements for the storage and unsealing of the examination materials. It was found that 16 of those schools were storing their examination materials in unapproved locations, some of which were clearly not secure, and 11 schools had opened sealed packages of examination materials before the allowed time. Although the requirements were spelled out in the 59-page Administrators Manual, some district personnel interviewed during the audit were not aware of these requirements. It was suggested to highlight the priority items and summarize it in a shorter document.
Jean Stevens said that they are coordinating with the District Superintendents to offer an Assessment Seminar which will include the topic of testing security.
Attachment II
Report on the Regents Subcommittee on Audits
2006-2007
In accordance with its written charge, the Regents Subcommittee on Audits (Subcommittee) assisted the Board of Regents in carrying out its oversight responsibilities for audits, ethical issues arising from audits, internal controls, and compliance with laws and regulations. The Subcommittee, which consists of five independent members, met eight times during the year. A summary of key items presented at the meetings follows.
- The need for internal controls and fiscal accountability dominated the discussions in the Subcommittee meetings.
- Members were informed of the various types of audits that are presented to the Subcommittee. During this year, the Subcommittee has received audits conducted by the Office of Audit Services, Office of the State Comptroller, the United States Department of Education Office of Inspector General, and a report issued by a Suffolk County Grand Jury.
- A total of 211 audit reports were presented to the Subcommittee members for their review and comments. These reports on school districts, BOCES, and Department programs identified 1,374 recommendations for improvements. In almost all cases, the auditees agreed to implement the recommendations.
- An entire meeting was devoted to meeting with Roosevelt School District Officials to discuss the specific issues related to the discovery of a significant budget deficit.
- A partner from the accounting firm of Toski, Schaefer and Company presented information on the results of the Single Audit of federal funds that are received by the Department. There were five findings that related to the State Education Department.
- In response to concerns with governance expressed by Members of the Subcommittee, Department staff updated the Statement on the Governance Role of a Trustee or Board Member. The revised version includes updates addressing conflict of interest concerns as well as other internal control updates. The Members were provided with an opportunity to comment on proposed revisions. A final version was presented and has subsequently been distributed to the field.
- In response to input from the Members of the Subcommittee, the Department has developed a process to review each of the audits presented for possible action or further follow-up. The review involves staff from Counsel’s Office, the Office of Operations and Management Services and the Office for Education - P-16.
- The Members were briefed on the annual internal control certification process; the process is used by Department offices to assess their internal controls and prepare plans to strengthen the internal control process in the future.
- Staff briefed the Members on activities related to the Violent and Disruptive Incident Reporting System. The Department provided training to over 1,500 school district personnel from over 600 districts and will visit an additional 75 schools prior to the end of the school year.
- Staff briefed the Members on the process used to monitor the financial condition of school districts.
Through these activities, the Subcommittee helped set the “tone at the top” for quality financial reporting, effective internal controls, safeguarding assets, compliance with laws and regulations, effective use of resources, and accomplishment of goals and objectives.
July 2007 Regents Audit Subcommittee Meeting
Summary of Audit Findings
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Audit |
Procurement |
Capital Assets |
Claims Processing |
Payroll |
Cash |
Financial Reporting |
Information Technology |
Capital Construction |
Extra Classroom Activity Fund |
Segregation of Duties |
Other |
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Office of Audit Services (OAS) |
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Harriet Tubman Charter School |
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√ |
√ |
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Office of the State Comptroller (OSC) |
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Addison Central School District |
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√ |
√ |
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√ |
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Afton Central School District |
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√ |
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√ |
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Beaver River Central School District |
√ |
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√ |
√ |
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Bethlehem Central School District |
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√ |
√ |
√ |
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√ |
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Brockport Central School District |
√ |
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√ |
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Edmeston Central School District |
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√ |
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√ |
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√ |
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Georgetown-South Otselic Central School District |
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√ |
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Harrison Central School District |
√ |
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√ |
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Haverstraw-Stony Point Central School District |
√ |
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√ |
√ |
√ |
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√ |
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√ |
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Homer Central School District |
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√ |
√ |
√ |
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July 2007 Regents Audit Subcommittee Meeting Summary of Audit Findings
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Audit |
Procurement |
Capital Assets |
Claims Processing |
Payroll |
Cash |
Financial Reporting |
Information Technology |
Capital Construction |
Extra Classroom Activity Fund |
Segregation of Duties |
Other |
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Hoosic Valley Central School District |
√ |
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√ |
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Horseheads Central School District |
√ |
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√ |
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√ |
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Mechanicville City School District |
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√ |
√ |
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Newburgh Enlarged City School District |
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√ |
√ |
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North Babylon Union Free School District |
√ |
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√ |
√ |
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√ |
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Northville Central School District |
√ |
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√ |
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Roscoe Central School District |
√ |
√ |
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√ |
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√ |
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√ |
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Roxbury Central School District |
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√ |
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√ |
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Scio Central School District |
√ |
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√ |
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Springville-Griffith Institute Central School District |
√ |
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√ |
√ |
√ |
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July Total |
12 |
2 |
12 |
11 |
8 |
2 |
9 |
1 |
0 |
3 |
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June Total: |
11 |
1 |
3 |
3 |
2 |
3 |
10 |
1 |
1 |
0 |
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Grand Total: |
23 |
3 |
15 |
14 |
10 |
5 |
19 |
2 |
1 |
3 |
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July 2007 Regents Audit Subcommittee Meeting
Summary of Audit Findings
Definitions of Categories
Procurement – includes findings related to lack of a contract, failure to competitively bid, failure to use purchase orders, lack of segregation of duties, no approval of the purchase and a lack of documentation.
Capital Assets – includes failure to have a manager responsible, lack of policy, and inappropriate disposal.
Claims Processing – includes claims being paid without adequate documentation, failure to audit the claim, an untrained claims auditor, and a claims auditor that lacks independence.
Payroll – includes a lack of segregation of duties in the payroll process, no policy and procedures and inappropriate payments to district administrators including leave accruals and health benefits.
Cash – includes poor control of cash and failure to prepare bank reconciliations.
Financial Reporting – includes inaccurate accounting statements, such as, an overstated fund balance, fund balance exceeding the legal limit, and general fund transfers without voter approval.
Information Technology – includes lack of a disaster recovery plan, failure to back up information, inappropriate or undocumented user rights, inappropriate or missing password protection, and no policy and procedures.
Capital Construction – includes a lack of detailed accounting records related to a capital project, undocumented expenses, inappropriate and unapproved charge orders.
Extra Classroom Activity Funds – includes poor accounting over funds and no documentation of expenses.
Segregation of Duties – includes weakness in control caused by individuals having responsibility for incompatible functions.
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Office of Audit Services |
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Audit |
Major Finding(s) |
Recommendation/Response |
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Harriet CH-0106-1
12th
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$0 adjustment
There is an increasing negative fund balance in the School’s general fund. As of June 30, 2004, the fund balance in the general fund was a negative $250,371. As of June 30, 2005, this amount had increased to a negative $757,888. As of June 20, 2006, it grew to a negative $971,772.
Additionally, the school maintained a Petty Cash Fund of $1,000. In a 15-month period, over $20,000 in checks were written to reimburse the fund, and receipts were not available. Bank reconciliations were also not prepared, reviewed, or presented to the Board of Trustees. Checks were written to the Executive Director and the Director of Operations, and signed by these two individuals.
Two credit cards issued to the Executive Director and the Director of Operations were used to charge over $75,000 between July 2004 and May 2006. There was no review or approval process for charges and no receipts available.
Lastly, the School’s Director of Operations is responsible for many functions such as handling cash receipts and the preparation of financial statements, thus raising the question of whether or not there is proper segregation of duties. |
82
The report’s recommendations focused primarily on strengthening policies and procedures regarding budgeting; payroll and personnel; cash management; and procurement.
The District officials generally agreed with the recommendations, and have indicated that they will initiate corrective action as soon as possible. Several of the concerns have already been amended.
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Office of the State Comptroller |
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Audit |
Major Finding(s) |
Recommendation/Response |
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Addison Internal Controls Over Selected Financial Operations 2007M-89
7th
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$0 adjustment
The computerized financial system controls were not appropriately designed or operating effectively. As a result, assets were not properly safeguarded.
Additionally, several users of the financial accounting software have access rights that exceed the requirements of their duties. The treasurer’s electronic signature is also not password protected.
Lastly, the District expended approximately $11,600 on student incentives with practically no internal controls over the incentives. |
5
The report’s recommendations focused primarily on strengthening policies and procedures regarding information technology and claims processing.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible. |
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Afton Internal Controls Over the Claims Auditor, Computerized Data and Capital Assets 2007M-56
6th
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$0 adjustment
It was found that the Board did not appoint a claims auditor in accordance with SED regulations. They hired a Board member as the claims auditor, but upon realizing that it is against regulations, they rescinded the appointment. The Board appointed a BOCES employee as a replacement which is also against SED regulations.
The Board also has not established the proper policies to sufficiently address the safeguarding of computer assets and data. Additionally, computer equipment is not physically secure, and the Board has not developed a formal disaster recovery plan. |
6
The report’s recommendations focused primarily on strengthening policies and procedures regarding the claims auditor, computerized data, and assets.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible. |
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Beaver River Internal Controls Over Selected Financial Activities 2007M-103
5th
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$0 adjustment
Employee leave was improperly carried over from the preceding year, or it was paid out even though it was not authorized by contract, or Board policy. Three employees were also paid $7,990 for unused vacation leave, which they were not entitled to.
The Board has also not adopted a procurement policy as required to address purchases made. No records were found on purchases totaling $32,000, thus allowing the possibility that the District may have incurred higher costs than necessary.
There were also weaknesses in internal controls over District claims, specifically with travel reimbursement and credit card claims. Seven claims totaling $1,100 did not have proper itemization of claimed mileage. Eight additional purchases ($2,500) were not properly supported by a receipt or an invoice. |
7
The report’s recommendations focused primarily on strengthening policies and procedures regarding separation payments, the procurement system and claims processing.
District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible. |
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Bethlehem Internal Controls Over Selected Financial Operations 2007M-91
3rd
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$0 adjustment
The Capital Region BOCES employee serving as the internal auditor is not independent in performing the internal audit function.
There were also internal control weaknesses that District officials should correct to enhance the effectiveness of controls in the area of the computerized financial system, cash disbursements, and payroll.
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7
The report’s recommendations focused primarily on strengthening policies and procedures regarding the internal audit function, the computerized financial system, and cash disbursements.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible. |
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Brockport Internal Controls Over Credit Card Purchases 2007M-63 4th Judicial District
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$0 adjustment
The District has 72 store-specific credit cards, with 10 vendors located within the District, and 5 bank credit cards. Out of the 746 purchase orders for credit card purchases, 148 credit card purchase orders ($20,201) were dated after the claim date, and therefore, were confirming purchase orders. There was no documentation that any of these charges were for emergency purposes. Twenty-five credit card purchases exceeded their purchase orders by a total of $4,200.
Forty-three expenditures did not have attached receipts. Also, the internal control procedures were not operating effectively and there was a failure to require original supporting documentation. |
4 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding credit card purchases.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.
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Edmeston Internal Controls Over Selected Financial Activities 2007M-59 6th Judicial District
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$0 adjustment
The Board did not appoint a claims auditor in accordance with SED regulations. In addition, the claims auditor did not conduct a thorough evaluation of all claims processed and did not certify warrants.
The cafeteria manager did not ensure that monies were recorded and accounted for, and as a result many were not properly entered into the computerized cash register system. Daily transactions were also not periodically reviewed.
Internal control policies were not sufficiently established and as a result, the safeguarding of computerized data and assets could not be addressed. User access policies have not been adopted and there were no log-in restrictions. Two District employees used district-owned laptop computers for personal reasons. Lastly, a disaster recovery plan was not in place. |
10 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding claims processing, cafeteria receipts, and computer data safeguards.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.
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Georgetown-South Internal Controls Over Computer Hardware and Data 2007M-23 6th Judicial District
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$0 adjustment
It was found that the Board has not established internal control policies and procedures to sufficiently address the safeguarding of computer data. Equipment and data are not protected from environmental factors, and the District did not have a formal disaster plan.
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1 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding computer hardware and data.
The District officials generally agreed with the recommendations, and indicated that they plan to initiate corrective action as soon as possible. |
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Harrison Internal Controls Over Purchasing and Payroll 2007M-99 9th Judicial District
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$0 adjustment
Thirteen out of 32 vendors were tested to determine if the purchasing agent adhered to the District’s procurement policy when purchasing goods and services. The agent did not seek competitive bids for 4 out of the 13 purchases totaling $138,334, as required by District policy.
Additionally, 39 employees’ records had miscalculated leave accruals. Their sick and personal leave accruals were doubled in error.
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2 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding internal controls over purchasing and payroll processing.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action shortly. |
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Haverstraw-Stony Internal Controls Over Selected Financial and Capital Project Activities 2007M-38 9th Judicial District
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$0 adjustment
District officials made professional service reimbursements as part of a shared legal services contract with two towns totaling $64,003 without supporting documentation. As a result, District officials could not have obtained reasonable assurance that they were legitimate. Public work contracts (totaling $524,535) were also approved without soliciting bids.
Additionally, the District did not properly manage the Grade 8-9 Center Capital Project. The treasurer also performs numerous duties such as maintaining manual cash receipt and disbursement records and making deposits. This clearly demonstrates a lack of segregation of duties.
The District also did not implement internal controls to ensure that payroll processes were properly executed. Fourteen employees were paid a total of $343,244 for overtime, but the related time cards did not show the actual hours worked. Lastly, the treasurer does not supervise the usage of the signature plate used to sign payroll checks. |
8 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding purchasing, claims, and payroll processing, as well as the Grade 8-9 Center Capital Project.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible.
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Homer Internal Controls Over Financial Operations 2007M-62 6th Judicial District
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$0 adjustment
Three out of four employees in the business office perform incompatible duties, including the treasurer and the accounts payable clerk. The areas of incompatibility include cash, claims processing, and payroll.
Additionally, the audit and approval process for manual checks was not designed properly. The Board failed to establish policies or procedures for manual checks. The treasurer also does not maintain control over the usage of her electronic signature, thus allowing another individual access. |
5 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding segregation of duties and claims audit.
The District officials generally agreed with the recommendations, and have agreed to implement corrective action as soon as possible. |
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Hoosic Payroll and Professional Services 2007M-25 3rd Judicial District
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$0 adjustment
The Superintendent, certain administrators, and other staff members received benefits in excess of authorized amounts. Clerical errors caused incorrect payments to several employees, including $2,417 of overpayments to a building principal. The District also paid $41,000 to a number of employees in stipends and bonuses that were not officially approved.
In addition, payroll transactions were not always supported by proper documentation. The District’s procurement also did not always conform to Board policy. Competitive proposals were also not always solicited. |
7 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding payroll and professional services. It recommends consulting with the District’s attorney regarding overpayments to employees.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action shortly. |
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Horseheads Internal Controls Over Selected Financial Activities 2007M-40 6th Judicial District
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$0 adjustment
The District did not have adequate internal controls in place over the rental of a school building. The Board also did not have policies and procedures in place to ensure that rental payments were equivalent to the fair market rental value. The cost of maintaining the Broad Street School exceeded rental revenues by $15,000 during the year.
The District also exceeded amounts allowed by the District’s travel policy by about $1,000. Additionally, the Board did not require the claims auditor to audit claims prior to payment.
Finally, access controls and audit logs were inadequate. |
7 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding the rental of a school, claims for travel expenses, the claims auditor, and computer application controls.
District officials generally agreed with the recommendations, and indicated that they plan to initiate corrective action as soon as possible. |
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Mechanicville Internal Controls Over Payroll Procedures and Cash Transactions at the Elementary School 2007M-72 4th Judicial District
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$0 adjustment
Many employees were not required to maintain timesheets. The work hours reported to the payroll office (by the transportation office) exceeded the hours recorded by employees on bus reports maintained in the bus garage 61 percent of the time.
The District also did not have adequate policies and procedures in place to control cash receipts and disbursements recorded at the elementary school office totaling over $30,000. There was also not adequate documentation or justification of disbursements. |
3 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding payroll processing and elementary school cash transactions.
The District officials generally agreed with the recommendations, and have initiated corrective action. |
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Newburgh Internal Controls Over Cash Receipts and Leave Accruals 2007M-100 9th Judicial District
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$0 adjustment
The tax collector did not deposit $29.6 million of the $50.5 million collected in a timely manor. As a result, the District potentially lost $42,900 in revenue.
Although the Board adopted a resolution that established a $10 fee for all written certifications of tax searches, the tax collector was only charging title search companies for certifications. Title search fees were not being charged and collected from homeowners, mortgage companies, lawyers or banks. As a result, the District lost at least $24,000 in revenue.
Additionally, 30 of about 400 employees did not sign the sign-in sheets or call the sick line, for a combined total of 51 days. No excused absences were recorded or salary reductions were made. These 51 days amounted to about $12,000. |
7 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding cash receipts and leave accruals.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action shortly.
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North Babylon Union Free School District Financial Condition and Internal Controls 2007M-44 10th Judicial District
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$0 adjustment
The District’s unreserved fund balance is more than twice the amount allowed by law. This was largely due to the fact that the officials did not properly record $2.8 million in State aid.
There were also weaknesses found in District financial operations and internal controls. Additionally, $364,000 in contracts were not publicly advertised, and 8 contracts were awarded without the benefit of competition.
Weaknesses in internal controls were also ruled in the maintenance of payroll and personnel files, including an independent verification of payroll.
Finally, 14 claims totaling $123,316 were dated later than the related invoices, while $509,357 in payments were not audited prior to payment. |
14 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding financial condition, procurement, claims processing, payroll, and personnel.
The District officials generally agreed with the recommendations, and have indicated that they plan to take corrective action. |
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Northville Internal Controls Over Computer Data and Procurement Procedures 2007M-79 4th Judicial District
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$0 adjustment
The Board has not established effective internal controls to protect its computer systems from data loss or unauthorized use. Passwords also do not inhibit unauthorized access because they are very basic and users do not have to change them. No disaster recovery plan has been implemented.
The District does not adhere to the Board’s procurement policy that requires obtaining quotes for purchases. $23,536 in purchases was reviewed and there was no evidence that the District had attempted to obtain quotes for any of them. |
7 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding computer data and procurement procedures.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action shortly. |
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Roscoe Internal Controls Over Financial Operations 2007M-94 3rd Judicial District
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$0 adjustment
The District’s former Superintendent cashed out the fringe benefit allocation on a federal grant for two years, totaling $13,500 to which he was not entitled because the District paid his health insurance in full. He was potentially being overpaid $2,754. The District was also inappropriately charged $4,563 worth of expenditures to the grant.
It was also discovered, that the former Superintendent entered the District into a contract to obtain professional services with a company that employs his son. This contract was chosen without Board approval.
The District also made errors in calculating the former Superintendent’s annual salary. He received $10,457 in additional salary to which he was not entitled.
The District business manager prepares journal entries, completes bank reconciliations, creates purchase orders, and acts as the District’s system administrator. This allows her full access to the financial management system and allows her to create user accounts and monitor activity.
Finally, the report identified weaknesses in control over capital assets. |
14 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding administration of a federal grant, payroll, and capital assets.
The District officials generally agreed with the recommendations, and indicated that they plan to initiate corrective action as soon as possible.
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Roxbury Selected Financial Activities 2007M-83 6th Judicial District
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$0 adjustment
District officials did not segregate the duties of the treasurer. There is no one that reviews the treasurer’s work, including approving journal entries and bank transfers. The accounts payable clerk also has access to cash disbursement records.
Additionally, District officials did not adopt policies and procedures to protect the District IT system and critical data from unauthorized access. The treasurer had administrator rights to the District’s financial data system, and the accounts payable clerk was using the treasurer’s user account. Lastly, the Board has not adopted a formal disaster recovery program. |
8 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding information technology and the treasurer’s office.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action soon. |
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Scio Internal Controls Over Procurement and Claims Processing 2007M-67 8th Judicial District
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$0 adjustment
It was found that the District is not following their written procedures for purchases in terms of competitive bidding. There was also no evidence of obtaining quotes on 53 purchases. Seventy-four claims were reviewed and all had one or more exceptions. A few of the main concerns were a lack of an original invoice, insufficient itemization, and lack of departmental approval. Additionally, there was a lack of assurance that claims were all actual and necessary.
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4 recommendations
The report’s recommendations focused primarily on strengthening polices and procedures regarding claims processing.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible. |
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Springville-Griffith Claims Processing, Purchasing and Employee Separation Payments 2007M-53 8th Judicial District
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$0 adjustment
Claims audit processes established by the Board were inadequate. A claims auditor was not appointed until January 2006, and has still not established comprehensive policies regarding the expenses the District will pay for and how they should be documented. Of the 95 claims we examined, 43 claims ($171,724) were not properly approved, documented, and/or itemized.
The District also awarded contracts totaling $29,528 without seeking quotations from vendors to ensure the District received the best price. Staff was also allowed to collect money from students to pay for musical instruments without properly ensuring that the funds were properly collected and deposited.
The District also overpaid separation payments ($2,562) as a result of employee benefits being incorrectly calculated. |
6 recommendations
The report’s recommendations focused primarily on strengthening policies and procedures regarding claims processing, purchasing practices, and employee separation payments.
The District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action as soon as possible. |