Meeting of the Board of Regents | September 2010

Report of

REGENTS SUBCOMMITTEE ON AUDITS/BUDGET AND FINANCE

to

The Board of Regents

September 14, 2010

Regent Geraldine Chapey, Chair of the Regents Subcommittee on Audits/Budget and Finance submitted the following report.

Your Regents Subcommittee had its scheduled meeting on September 13, 2010.  Vice-Chair Bendit, Chancellor Tisch, Vice Chancellor Cofield, Regents Cohen, Hopkins, Tallon, Tilles, Phillips, and Young were in attendance.

Items for Discussion

Chair’s Remarks:  Regent Chapey welcomed everyone to the newly constituted Subcommittee on Audits/Budget and Finance. She stated that the joining of the audit subcommittee with responsibilities for budget and finance demonstrates the Departments movement toward reform. It marks elimination of silos and a more systems approach to examining important fiscal issues.  

Analysis of School District Financial Information

In follow up to a discussion at the June Subcommittee meeting, the members were presented with the results of a review of the last three years’ school district financial statements. The Offices of Audit Services, Education Management Services, and District Services are examining the data to identify a more responsive and meaningful way to identify school districts in fiscal difficulties. The members encouraged staff to continue to work on developing a meaningful method of identification of problems and deployment of resources to correct. This process is just beginning and the Subcommittee will be informed as it continues and a final method is identified. 

Presentation of Audits

We reviewed the 27 audits that are being presented to the Subcommittee this month.  Twenty-one of the audits were issued by the Office of the State Comptroller (OSC), five were issued by the Office of Audit Services (OAS), and one was issued by the New York City Office of the Comptroller.  Eleven of the audits were of school districts, three were of the Department processes, six were of BOCES, two were of the Tuition Assistance Program, two were of providers of after school and preschool special education services, and three were of New York City school programs.  

The findings were in the areas of budgeting, procurement, payroll, extraclassroom activity fund, fingerprinting, claims processing, financial reporting, information technology, segregation of duties, and others such as telecommunication, inventory controls and the Tuition Assistance Program.

 

The Department has issued letters to the school districts and BOCES, reminding them of the requirement to submit corrective action plans to the Department and OSC within 90-days of their receipt of the audit report.

The results of audits of four school districts’ use of ARRA funds was summarized for the members, as well as BOCES use of reserve funds, and the Department use of fleet vehicles. A summary of those audits is found below.

Regents Subcommittee on Audits/Budget and Finance


September 2010


Review of Audits Presented

Newly Presented Audits

We reviewed the 27 audits that are being presented to the Subcommittee this month.  Twenty-one of the audits were issued by the Office of the State Comptroller (OSC), five were issued by the Office of Audit Services (OAS), and one was issued by the New York City Office of the Comptroller.  Eleven of the audits were of school districts, three were of the Department processes, six were of BOCES, two were of the Tuition Assistance Program, two were of providers of after school and preschool special education services, and three of New York City school programs.  

The findings were in the areas of budgeting, procurement, payroll, extraclassroom activity fund, fingerprinting, claims processing, financial reporting, information technology, segregation of duties, and others such as telecommunication, inventory controls and the Tuition Assistance Program.

 

The Department has issued letters to the school districts and BOCES, reminding them of the requirement to submit corrective action plans to the Department and OSC within 90-days of their receipt of the audit report.

We have identified three audits areas for highlighting at this meeting. 

• School District ARRA Audits (Brentwood, Connetquot, Saratoga Springs and Syracuse)

Summary of Audits

 OAS issued four additional audits of school districts’ use of ARRA funds and compliance with certain federal requirements. In the four districts we found that expenditures were generally consistent with approved budgets, and there were some minor errors in the reporting of jobs saved. We also found three of the four districts did not have a process for ensuring compliance with federal cash management requirements. However, our testing found that the districts were not earning interest at a level that would require remittance of funds.

Follow up

OAS will follow up on implementaion of recommendations. 

• BOCES Transparency and Appropriateness of Reserve Funds (Capital Region, Erie I, Madison-Oneida,  Nassau, Rockland, Western Suffolk)

            Summary of Audits

OSC conducted a series of audits of the use of reserve funds at BOCES. The audits found that BOCES are reserving funds without clearly reporting to their component and participating districts. Further, the audits found that BOCES are reserving millions of dollars in excessive fund balances, some of which are used inappropriately or maintained in reserves not allowed by law.

            Follow up

The audit will be reviewed by the Office of Education Management Services to determine the impact of proposedlegislation and consider other possibe actions. Corrective action plans will be reviewed to assess compliance with recommendations.

• State Education Department - Control of Fleet Vehicle Usage

No one has the responsibility for maintaining a vehicle inventory and there is no comprehensive vehicle inventory listing for all Department fleet vehicles. The Department also issued three standard fleet management forms for uniform record keeping. The use of the forms, however, is not enforced, and the Policy was not revised to mention the availability of such forms. It was also found that certain Department officials had exclusive use of vehicles without approval required by the Policy. Employees also did not report personal mileage when they should have. Further, certain controls were not properly implemented to promote accountability, security and appropriate vehicle use

            Follow up

            OAS will follow up on implementation of the recommendations.