Meeting of the Board of Regents | April 2010
|
|
THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234 |
|
TO: |
Subcommittee on Audits |
|
FROM: |
Theresa E. Savo |
|
SUBJECT: |
Board of Regents Oversight – Financial Accountability |
|
DATE: |
April 1, 2010 |
|
STRATEGIC GOAL: |
Goal 5 |
|
AUTHORIZATION(S): |
|
SUMMARY
Issues for Discussion
The following topics will be discussed with the Members of the Subcommittee on Audits:
- Modification to the Statement on the Governance Role of a Trustee or Board Member (Attachment I)
- Additional Information on Sub-recipient Monitoring
- Completed Audits – Including a Summary of the Department’s Internal Audit Workgroup (Attachment II)
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.
Background Information
1. Modification to the Statement on the Governance Role of a Trustee or Board Member
The Subcommittee will be provided with a draft change to enhance the conflict of interest section of the Statement. (Attachment I)
2. Additional Information on Sub-recipient Monitoring
The Subcommittee will be provided with additional information on issues related to audit findings on sub-recipient monitoring. At the last meeting of the Subcommittee, the members were presented with the results of the New York State single audit. The singe audit contained three findings citing the Department for insufficient sub-recipient monitoring.
3. Completed Audits
The Subcommittee is being presented with 15 audits this month. The audits have been reviewed by the Department’s Internal Audit Workgroup. Their report is attached. (Attachment II)
Audits are provided as follows:
Office of Audit Services
Eden Central School District ARRA
Hamburg Central School District ARRA
Malone Central School District ARRA
Rochester Surround Care Community Corporation
Saranac Central School District ARRA
Office of the State Comptroller
East Aurora Union Free School District
Highland Falls-Fort Montgomery Central School District
Lindenhurst Union Free School District
Ravena-Coeymans-Selkirk Central School District
Roosevelt Union Free School District
Saugerties Central School District
State Education Department - Security Over Online Registration Renewal and
Teacher Certification
State Education Department - Selected Child Nutrition Program Payments
State Education Department - Setting Special Education Itinerant Teacher
Services Rates
Unatego Central School District
Recommendation
For item one (Modification to the Statement on the Governance Role of a Trustee or Board Member), the Subcommittee’s approval is sought to revise the document. For item two (Additional Information on Sub-recipient Monitoring), and item three (Completed Audits), no further action is recommended.
Timetable for Implementation
N/A
The following materials are attached:
- Roadmap
- Modification to the Statement on the Governance Role of a Trustee or Board Member (Attachment I)
- Review of Audits Presented – Department’s Internal Audit Workgroup (Attachment II)
- Summary of Audit Findings (Attachment III)
- Audit Report Abstracts (Attachment IV)
|
REGENTS SUBCOMMITTEE ON AUDITS MEETING ROADMAP
|
Location: TBD |
||
|
TOPIC |
OUTCOME |
WHO |
MINUTES |
|
Opening Remarks |
Chair |
3 |
|
|
Review Agenda |
Information |
Conway |
2 |
|
Modification to the Statement on the Governance Role of a Trustee or Board Member (Attachment I) |
Information - Questions answered |
Counsel and Audit Staff |
5 |
|
Sub-recipient Monitoring |
Questions answered |
Department and Audit Staff |
10 |
|
Completed Audits – Including a Summary of the Department’s Internal Audit Workgroup (Attachment II), Summary of Audit Findings (Attachment III), and Audit Report Abstracts (Attachment IV) |
Questions answered |
Department and OSC Audit Staff |
10 |
Attachment I
Modification to the Statement on the Governance Role of a Trustee or Board Member
Duty of Loyalty/Conflicts of Interest
Trustee/board members owe allegiance to the institution and must act in good faith with the best interest of the institution in mind. The conduct of a trustee/board member must, at all times, further the institution's goals and not the member's personal or business interests. Consequently, trustees/board members should not have any personal or business interest that may conflict with their responsibilities to the institution. A trustee/board member should avoid even the appearance of impropriety when conducting the institution's business. Acts of self-dealing constitute a breach of fiduciary responsibility that could result in personal liability and removal from the board.
The board of trustees/board of education should have a written conflict of interest policy that clearly sets forth the procedures to be followed in instances where a board member's personal or business interests may be advanced by an action of the board, including a provision that the trustee/board member may not participate in any decision to approve any transaction where such conflicting interests may be advanced. The policy should also include a requirement that each trustee/board member provide full, ongoing disclosure to the institution of any interest the trustee/board member and/or his or her family has in any entity that the board transacts business with. The policy should be reviewed and discussed with the institution's attorneys and auditors prior to its adoption.
In addition, there are specific provisions concerning conflicts of interest in Article 18 of the General Municipal Law (applicable to school districts, boards of cooperative educational services [BOCES], county vocational education and extension boards and public libraries), and section 715 of the Not-for-Profit Corporation Law (applicable to education corporations chartered by the Board of Regents). General Municipal Law §806 requires the governing body of each school district to adopt a code of ethics, including standards for officers and employees with respect to disclosure of interest in legislation before the governing body, holding of investments in conflict with official duties, private employment in conflict with official duties, future employment and such other standards relating to the conduct of officers and employees as may be deemed advisable.
A sample conflict of interest policy is available on the Internal Revenue Service website (www.irs.gov ) under Appendix A of the Instructions to IRS Form 1023.
School board members may contact the New York State School Boards Association (NYSSBA) at 1-800-342-3360 or go to the respective NYSSBA websites shown below to access the following sample policies:
2160 School District Officer and Employee Code of Ethics at:
http://www.nyssba.org/index.php?src=gendocs&ref=samplepolicy2160
9120.1 Conflict of Interest at:
http://www.nyssba.org/index.php?src=gendocs&ref=samplepolicy9120.1
Nepotism
Inherent in a trustee’s/board member’s fiduciary duty of loyalty is the responsibility to avoid nepotism in hiring, purchasing and other institutional decisions. Care must be taken at all times to ensure that family and/or personal relationships do not inappropriately influence a trustee’s/board member’s decision-making. Any decisions that are based on personal/family influence rather than the best interests of the institution constitute a breach of fiduciary duty and may result in a trustee’s/board member’s removal from the board. Institutions should adopt and enforce policies prohibiting impermissible nepotism in hiring and other institutional business including provisions for disclosure of such interests and recusal from voting. In the case of school districts, BOCES, and public libraries such policies must be consistent with the provisions in the General Municipal Law, which permit a trustee/board member to vote on employment contracts for spouses, minor children and dependents, and the Education Law which requires a 2/3 vote of a board of education to employ a teacher who is related to a board member by blood or marriage. To ensure legal consistency, anti-nepotism policies and provisions should be reviewed and discussed with the institution’s attorneys and auditors prior to adoption.
Attachment II
Regents Subcommittee on Audits
April 2010
Review of Audits Presented
Department’s Internal Audit Workgroup
Newly Presented Audits
We reviewed the 15 audits that are being presented to the Subcommittee this month. Ten of the audits were issued by the Office of the State Comptroller (OSC) and five were issued by the Office of Audit Services (OAS). Eleven of the audits were of school districts, three were of the Department’s programs and one was of a not-for-profit organization.
The findings were in the areas of procurement, payroll, financial reporting, cash, information technology, claims processing, budgeting, fingerprinting, capital assets, and others such as use of American Recovery and Reinvestment Act funds, the Child Nutrition Program, online registration renewal and teacher certification, reimbursable expenditures, and Special Education Itinerant Teacher services rates.
The Department has issued letters to the auditees, 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 Department’s Internal Audit Workgroup identified categories of findings and audits for further review or follow-up as noted below.
- Use of American Recovery and Reinvestment Act (ARRA) funds (Eden, Hamburg, Malone, and Saranac)
Summary of Audits
Two of the four school districts claimed anticipated expenditures, which are not allowed for ARRA-Education Stabilization Funds. Also, two of the four claimed expenditures were not included in their approved budget. Three districts did not comply with federal requirements regarding payroll certification. All four districts were not aware of federal cash management requirements.
Follow-up Action
None necessary. All four agreed with the findings and recommendations and submitted corrective action plans.
- OSC Follow-up Audits (East Aurora, Highland Falls-Fort Montgomery, Ravena-Coeymans-Selkirk, Saugerties, and Unatego)
Summary of Audits
OSC auditors revisited five districts that had been previously audited to follow-up on the progress of implementing the recommendations. Sixty-one percent of the recommendations have been fully implemented, 22 percent have been partially implemented, 14 percent have not been implemented and the remaining 3 percent are no longer applicable.
Follow-up Action
The Department will assess the significance of the unimplemented recommendations and follow-up where appropriate.
- Lindenhurst Union Free School District
Summary of Audit
Weakness in controls over on-line wire transfers caused an unauthorized transfer of $601,577 from one of the District’s bank accounts to various external bank accounts. Officers at the depository bank recognized the inappropriate transaction and took action to recover the funds; however, only $496,590 was recovered. The District did not investigate. The matter was referred by OSC to the Suffolk County District Attorney’s Office who found no evidence of criminal activity by District officials and employees. The remainder of the amount lost was recovered from the insurance company and the bank.
Follow-up Action
OAS will review the corrective action plan to ensure all recommendations are implemented.
- Roosevelt Union Free School District (Second Quarter Report on the 2009-2010 Budget)
Summary of Audit
The District is on track to exceed its revenue projection and stay within budgeted expenditure limits which could end the year with a $993,000 surplus. However, the District over-expended 42 budget line codes by approximately $1.8 million. Seventy-six special aid fund account codes were over-expended by $2.3 million. Although District officials have expended or earmarked $4.96 million of the Academic Improvement Grant funds received in 2007-08, they have not earmarked and amended their 2009-10 budget to integrate the remaining $1.04 million.
Follow-up Action
Staff from the Office of EMSC will contact the District to follow-up and ask for the corrective action plan.
- State Education Department - Security Over Online Registration Renewal and Teacher Certification
Summary of Audit
The audit found the Department did not sufficiently guard against risks related to improper access to the computer applications which are used to process online payments for registration renewals of licensed professionals and teacher certifications. Specifically, the audit concluded the Department has not met the security requirements for these online applications.
Follow-up Action
The Department is required to submit an update on actions taken to implement recommendation, or, if not implemented, the reason. This report is sent to the Governor and legislative leadership.
- State Education Department - Selected Child Nutrition Program Payments
Summary of Audit
The Department pays schools based on their submission of montlhy claims for meals served. It was found that program payments totaling $124,446 were unsupported or inappropriate. This included $24,408 of reimbursed claims that appear to have been knowingly prepared in error.
Follow-up Action
The Department is required to submit an update on actions taken to implement recommendation, or, if not implemented, the reason. This report is sent to the Governor and legislative leadership.
- State Education Department - Setting Special Education Itinerant Teacher Services Rates
Summary of Audit
The County Health Department and the New York City Department of Education contract with service providers to deliver Special Education Itinerant Teacher (SEIT) services. It was determined that two of the providers inappropriately reported costs totaling $1.4 million. One provider reported $1.3 million in direct care costs that should have been classified as non-direct care costs. The other provider charged $102,000 in bonuses paid to contractors as direct care costs. Such costs are ineligible for reimbursement.
Follow-up Action
The Department is required to submit an update on actions taken to implement recommendation, or, if not implemented, the reason. This report is sent to the Governor and legislative leadership.
|
Audit |
Procurement |
Capital Assets |
Claims Processing |
Payroll |
Cash |
Financial Reporting |
Information Technology |
Budgeting |
Fingerprinting |
Other |
|---|---|---|---|---|---|---|---|---|---|---|
|
Office of Audit Services |
||||||||||
|
* Eden Central School District (footnote 1) |
√ |
|||||||||
|
* Hamburg Central School District (footnote 1) |
√ |
|||||||||
|
* Malone Central School District (footnote 1) |
√ |
|||||||||
|
* Rochester Surround Care Community Corporation (footnote 4) |
√ |
|||||||||
|
* Saranac Central School District (footnote 1) |
√ |
|||||||||
|
Office of the State Comptroller |
||||||||||
|
East Aurora Union Free School District |
√ |
√ |
√ |
|||||||
|
Highland Falls-Fort Montgomery Central School District |
√ |
|||||||||
|
Lindenhurst Union Free School District |
√ |
√ |
√ |
√ |
||||||
|
Ravena-Coeymans-Selkirk Central School District |
√ |
√ |
√ |
√ |
||||||
|
Roosevelt Union Free School District |
√ |
|||||||||
|
Saugerties Central School District |
√ |
√ |
√ |
|||||||
|
* SED-Online Registration Renewal (2008-S-154) (footnote 3) |
√ |
|||||||||
|
* SED-Child Nutrition Program (2007-S-74) (footnote 2) |
√ |
|||||||||
|
* SED-SEIT Rates (2008-S-146) (footnote 5) |
√ |
|||||||||
|
Unatego Central School District |
√ |
√ |
√ |
|||||||
|
April 2010 |
5 |
1 |
2 |
2 |
2 |
2 |
2 |
2 |
1 |
8 |
|
* Other: |
||||
|
ARRA Funds |
|
Reimbursable Expenditures |
|
|
2 |
Child Nutrition Program |
|
Special Education Itinerant Teacher Services Rates |
|
|
Online Registration Renewal and Teacher Certification |
|
||
Summary of Current and Prior Audit Findings
|
May 2007 - December 2008 |
January 2009 |
February 2009 |
March 2009 |
April 2009 |
June 2009 |
September 2009 |
November 2009 |
January 2010 |
March 2010 |
April 2010 |
Running Total |
|
|
Procurement |
163 |
13 |
16 |
7 |
4 |
8 |
26 |
21 |
11 |
34 |
5 |
308 |
|
Capital Assets |
19 |
0 |
0 |
0 |
0 |
0 |
0 |
1 |
0 |
6 |
1 |
27 |
|
Claims Processing |
151 |
3 |
8 |
2 |
1 |
3 |
9 |
9 |
7 |
13 |
2 |
208 |
|
Payroll |
168 |
12 |
11 |
1 |
1 |
4 |
16 |
20 |
10 |
30 |
2 |
275 |
|
Cash |
130 |
5 |
13 |
2 |
1 |
3 |
14 |
17 |
10 |
25 |
2 |
222 |
|
Financial Reporting |
101 |
8 |
11 |
5 |
2 |
7 |
17 |
13 |
15 |
22 |
2 |
203 |
|
Information Technology |
162 |
10 |
12 |
6 |
3 |
5 |
24 |
16 |
13 |
24 |
2 |
277 |
|
Capital Construction |
5 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
5 |
|
Extraclassroom Activity Fund |
16 |
1 |
0 |
0 |
1 |
0 |
3 |
1 |
3 |
3 |
0 |
28 |
|
Segregation of Duties |
65 |
1 |
2 |
1 |
0 |
0 |
6 |
12 |
7 |
6 |
0 |
100 |
|
Budgeting |
19 |
1 |
0 |
1 |
0 |
6 |
1 |
4 |
3 |
0 |
2 |
37 |
|
Conflict of Interest |
21 |
1 |
3 |
0 |
0 |
0 |
5 |
4 |
1 |
3 |
0 |
38 |
|
Fingerprinting |
9 |
2 |
0 |
2 |
0 |
0 |
3 |
1 |
3 |
2 |
1 |
23 |
|
Other |
55 |
23 |
5 |
1 |
3 |
6 |
21 |
27 |
7 |
15 |
8 |
171 |
|
Total |
1,084 |
80 |
81 |
28 |
16 |
42 |
145 |
146 |
90 |
183 |
27 |
1,922 |
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; improper classification of employees; insufficient policies and procedures for the employee retirement system; improper contractual benefit payments; and improper longevity payments to the former superintendent.
Cash – includes poor control of cash, failure to prepare bank reconciliations, and weaknesses in the treasurer’s duties.
Financial Reporting – includes inaccurate accounting statements, such as, an overstated fund balance, fund balance exceeding the legal limit, general fund transfers without voter approval, and improper use of accrued liability reserve funds.
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 change orders.
Extraclassroom Activity Fund – 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.
Budgeting – includes budget reviews required for school districts that have received approval for deficit financing, poor revenue projections and use of fund balance.
Conflict of Interest – includes personal conflicts of board members, district officials, and district employees where they have an interest in a contract, where they have the power, or may appoint someone who has the power to negotiate, authorize, approve, prepare, and make payment or audit bills or claims of the contract.
Fingerprinting – includes failure to fully comply with fingerprinting requirements.
|
Office of Audit Services |
||
|
Audit |
Major Finding(s) |
Recommendation/Response |
|
Eden Central School District District’s Use of American Recovery and Reinvestment Act (ARRA) Funds Awarded for July 1, 2009 - June 30, 2010 ARRA-1109-07 8th Judicial District |
The amount of funds requested at any one time for ARRA Education Stabilization Funds (ESF) may only include actual expenditures to date. The District included in its claim an amount of $80,000 for anticipated expenditures for the following month. For ARRA-IDEA 611, the District’s initial Request for Funds (FS-25) reported actual project cash expenditures of $24,482. The review of documentation supporting the claim identified an expenditure of $2,445 for a 19” LCD with camera that was not included in the budget approved by the Department. Further, the District’s personnel activity reports for employees whose salaries are paid by multiple cost objectives were not prepared at least monthly to coincide with one or more pay periods as required by A-87. The District was unaware of federal cash management requirements, and did not have a process for ensuring compliance which included minimizing time elapsed between receipt and disbursement of funds, and remitting interest earned on federal funds in excess of $100 annually. Based on the analysis of revenue received and expenditures incurred for all federal funds during a 5-month period, it was determined that there were ending deficit balances which have been covered by transfers from the general fund. It was found that the District did not earn interest exceeding $100 during the 5-month period. |
4 recommendations The recommendations stated that the District should submit FS-25 claims consistent with the guidelines issued by the Department, submit claims which only include costs that are approved in the budget, ensure that the personnel activity reports are prepared at least monthly, and finally to address the proper federal requirements. The District agreed with the recommendations and has agreed to implement corrective action. |
|
Hamburg Central School District District's Use of American Recovery and Reinvestment Act (ARRA) Funds Awarded for July 1, 2009 - June 30, 2010 ARRA-1109-05 8th Judicial District
|
The amount of funds requested at any one time for ARRA Education Stabilization Funds (ESF) may only include actual expenditures to date. The amount reported was based on an estimate and not actual expenditures. The amount of the actual expenditures as of October 2009 could not be determined. The District also included $30,148 in costs for custodial staff and $2,464 for maintenance staff in their expenditures. These costs were not included in the approved grant application. The District did not start accounting for ARRA revenues and expenditures separately from other funding until the middle of November. Further, the District had no process in place to certify time and efforts for employees who are paid from federal grants other than ARRA-ESF. The District was unaware of federal cash management requirements, and did not have a process for ensuring compliance which included minimizing time elapsed between receipt and disbursement of funds, and remitting interest earned on federal funds in excess of $100 annually. |
5 recommendations The recommendations stated that the District should only report actual expenditures incurred on the appropriate line of the FS-25 Request for Funds, only include Department approved costs in your ARRA – ESF expenditures, and post all future ARRA expenditures directly to the ARRA account codes. It was also recommended that the District put in place a process to certify time and efforts for employees who are paid from federal grants other than ARRA-ESF, and that the District address certain federal requirements. The District agreed with all of the recommendations, and has indicated that they plan to implement corrective action. |
|
Malone Central School District District's Use of American Recovery and Reinvestment Act (ARRA) Funds Awarded for July 1, 2009 - June 30, 2010 ARRA-1109-09 4th Judicial District
|
The amount of funds requested at any one time for ARRA Education Stabilization Funds (ESF) may only include actual expenditures to date. The District included in its claim an amount of $100,000 for anticipated expenditures. For the reporting period ending September 2009, the District reported 25 jobs saved for ARRA-ESF. Based on the supporting documentation, the District actually funded 24 jobs with ARRA-ESF. The District was unaware of federal cash management requirements, and did not have a process for ensuring compliance which included minimizing time elapsed between receipt and disbursement of funds, and remitting interest earned on federal funds in excess of $100 annually. Based on the analysis of revenue received and expenditures incurred for all federal funds during a 5-month period, it was determined that there were ending deficit balances which have been covered by transfers from the general fund. It was also concluded that the District did not earn interest exceeding $100 during the 5-month period. |
3 recommendations The recommendations stated that the District should submit Request for Funds (FS-25) claims consistent with the guidelines issued by the Department, as well as verify that the number of jobs created/saved reconciles with the supporting documentation prior to submission of quarterly reports. It was additionally recommended that the District address federal requirements. The District agreed with all of the recommendations and will implement corrective action. |
|
Rochester Surround Care Community Corporation For the Period October 1, 2007 through June 30, 2009 SP-0908-2 7th Judicial District |
Rochester Surround Care Community Corporation (RSCC) is a not-for-profit social service organization that promotes youth and financial literacy, nurturing young children, health care, and community safety for residents within a poverty-stricken area of Rochester’s inner city. RSCC partners and coordinates with 21 local agencies that provide the services. For the contract period October 1, 2007 to June 30, 2008, it was found that RSCC had formal agreements with all its partners. It was found that during this contract period, $2.1 million of the $2.4 million claimed by RSCC in its quarterly expenditure report is not reimbursable. For the contract period July 1, 2008 to June 30, 2009, all administrative expenditures, except an erroneous double billing that amounted to $4,385, were found to be documented, supported, and reimbursable. Seven of RSCC’s partners submitted expenditure reports and supporting documentation which substantiates reimbursement of $288,876 of the $400,358 in claimed expenses. The total reimbursable amount for claimed partner expenses for 2008-09 is $183,876. One of the partners had an unspent grant balance of $3,614 that was refunded back to RSCC. RSCC did not account for the refund. RSCC also provided an invoice for reimbursement from an information technology services company totaling $387,000 for the design and development of a database to track the progress of children. The request for proposal was not issued until seven months after work on the database had begun. In addition, the RSCC personnel did not know how to operate this database and had not received training on how to use the system. An expenditure claim was also not submitted associated with this database. The audit recommended that the Department not reimburse RSCC for any portion of the invoice. The audit substantiated $960,947 of total expenditures for the two-year contract period. The Department has paid RSCC $852,942, leaving an unreimbursed balance for payment of $109,005. |
There were no recommendations. |
|
Saranac Central School District District's Use of American Recovery and Reinvestment Act (ARRA) Funds Awarded for the period July 1, 2009 - June 30, 2010 ARRA-1109-08 4th Judicial District
|
It was found that the District’s personnel activity reports for employees whose salaries are paid by multiple cost objectives, were not prepared at least monthly to coincide with one or more pay periods, did not account for the entire activity for which employees were compensated, and in some cases, certification was not after the fact as required by A-87. For the period ending September 2009, the District reported 19.8 jobs saved for ARRA Education Stabilization Funds (ESF). Based on the supporting documentation, the District actually funded 21.3 jobs with ARRA-ESF. The District was unaware of federal cash management requirements, and did not have a process for ensuring compliance which included minimizing time elapsed between receipt and disbursement of funds, and remitting interest earned on federal funds in excess of $100 annually. Analysis of revenue received and expenditures incurred for all federal funds during a 5-month period showed ending deficit balances which have been covered by transfers from the general fund, and it was concluded that the District did not earn interest exceeding $100 during the 5-month period. |
3 recommendations The recommendations stated that the District should ensure that personnel activity reports for specific employees are prepared at least monthly to coincide with one or more pay periods, account for the entire activity for which employees are compensated, and certifications are prepared after the fact. It is also recommended that the District verify that the number of jobs created/saved reconciles with supporting documentation prior to submission of reports, and that they address specific federal requirements. The District agreed with the recommendations, and has indicated that they will implement corrective action as soon as possible. |
|
Office of the State Comptroller |
||
|
Audit |
Major Finding(s) |
Recommendation/Response |
|
East Aurora Union Free School District Selected Financial Activities Follow Up 2006M-183-F 8th Judicial District
|
An audit was conducted by the State Comptroller’s office to assess the financial operations of the District. A report was issued in December 2008 identifying opportunities for District management’s review and consideration. The District was revisited in September 2009 to review the progress of the District in implementing the recommendations. It was found that the District has made significant progress in implementing corrective action. Of the 15 recommendations issued, 11 recommendations were fully implemented, 2 recommendations were partially implemented, and 2 recommendations were not implemented. |
The recommendations that were only partially implemented were those pertaining to calculated fuel usage, and the recovery of improper separation payments made to former employees. The recommendations that were not implemented at all were those that regarded the Adult Education Program and its annual expenses, and labor agreement terms. The remainder of the recommendations have been fully implemented. |
|
Highland Falls-Fort Montgomery Central School District Internal Controls Over Selected Financial Activities Follow Up 2008M-91-F 9th Judicial District
|
An audit was conducted by the State Comptroller’s office to assess the financial operations of the District. A report was issued in December 2008 identifying opportunities for District management’s review and consideration. The District was revisited in September 2009 to review the progress of the District in implementing the recommendations. It was found that the District has made significant progress in implementing corrective action. Of the 18 audit recommendations, 14 recommendations were implemented, 1 recommendation was partially implemented, 1 recommendation was not implemented and 2 recommendations were no longer applicable. |
The recommendation that was only partially implemented was that pertaining to compliance with Education Law requiring a fingerprint driven background check of all prospective employees and contractors. The remainder of the recommendations were either fully implemented, or no longer applicable. |
|
Lindenhurst Union Free School District Internal Controls Over Selected Financial Operations 2009M-155 10th Judicial District
|
In July 2007, someone improperly transferred $600,000 from a District bank account to various external bank accounts. Officers at the depository bank recognized the inappropriate nature of these transactions and took action to recover the funds, however, only $496,590 of the $601,577 was recovered. The District received a check for $102,487 from their insurance company, and $2,500 from the bank. The unauthorized wire transfers were not investigated. Controls over on-line wire transfers have since been improved, however, the controls continue to be poor and the District is still susceptible to unauthorized transfers. The board of education appointed a claims auditor to audit District claims, however, it was found that only the claims paid from the general fund were being audited prior to payment. Payments made totaling $9.4 million were not subject to audit prior to payment. Twenty-four claims paid from the school lunch fund were reviewed, and there were concerns found with ten of the payments, totaling $42,091. Further, the District’s purchasing policy does not require officials to solicit competitive proposals, such as requests for proposals (RFP), prior to issuing a contract with a professional service provider. Payments made to eight professional service providers, totaling $900,000, were procured without soliciting RFPs. Finally, the proper policies and procedures to protect financial data were not in place, and user access rights are not properly established. |
10 recommendations The report’s recommendations focused on strengthening the policies and procedures regarding bank transfers, the audit of claims, the competitive bidding process, RFPs, the protection of financial data and user access rights. The District agreed with the recommendations and has indicated that they plan to implement corrective action. |
|
Ravena-Coeymans- Selkirk Central School District Internal Controls Over Financial Activities Follow Up 2007M-71-F 3rd Judicial District
|
An audit was conducted by the State Comptroller’s office to assess the financial operations of the District. A report was issued in July 2007 identifying opportunities for District management’s review and consideration. The District was revisited in October 2009 to review the progress of the District in implementing the recommendations. It was found that the District has made progress in implementing the recommendations. Of the 15 recommendations issued, eight recommendations were fully implemented, five recommendations were partially implemented, and two recommendations were not implemented. |
The recommendations that were only partially implemented were those pertaining to the calculation of paid benefits, the adoption of a comprehensive payroll policy, the proper authorization of leave time, the review of time sheets, purchasing policies, and competitive bidding. The recommendations that have not been implemented were those with regard to the segregation of duties over the payroll process, and the security over the treasurer’s signature disk. |
|
Roosevelt Union Free School District Second Quarter Report on the 2009-10 Budget 2010M-007 10th Judicial District
|
In March 2007, an audit of the Roosevelt Union Free School District was conducted by the State Comptroller’s office to ensure the District would not over-expend its 2007-08 budget. The Comptroller’s Office continued their fiscal monitoring by conducting another report for the 2009-10 second quarter results of operations. The District appropriated $2.5 million from its fund balance in order to reduce the amount of property taxes for the 2009-10 year. Based on the analysis of the District’s general fund revenues and expenditures reported as of December 31, 2009, it was determined that the District is on track to exceed its revenue projection and to stay within the budgeted expenditure limits. If this trend were to continue, the District could end the year with a surplus of $993,000 or $3.4 million more than the planned operating deficit of $2.5 million. It was also found that 42 account codes appear to be over-expended by approximately $1.8 million. District officials have also over-expended 76 special aid fund account codes by approximately $2.3 million. Further, District officials have either expended or earmarked for a specific purpose, $4.96 million of academic improvement grant (AIG) funds received in 2007-08. However, they have not earmarked and amended their 2009-10 budget to integrate the remaining $1.04 million. |
2 recommendations The recommendations stated that the District should make necessary budgetary transfers of appropriations to accounts that are over-expended. In the future, appropriations should be available before funds are encumbered or expended. It is also recommended that District officials should continue to ensure that AIG funds are used for their intended purposes. The District agreed with the recommendations and have indicated that they will take corrective action. |
|
Saugerties Central School District Internal Controls Over Selected Financial Activities Follow Up 2006M-105-F 3rd Judicial District
|
An audit was conducted by the State Comptroller’s office to assess the financial operations of the District. A report was issued in December 2006 identifying opportunities for District management’s review and consideration. The District was revisited in October 2009 to review the progress of the District in implementing the recommendations. It was found that the District has taken partial corrective action in the more than three year period since the release of the first report. Of the nine recommendations issued, four recommendations were fully implemented, one recommendation was partially implemented, and four recommendations were not implemented. |
The recommendations that were not implemented were those pertaining to competitive bidding requirements and requests for proposals, obtaining reimbursement from the superintendent’s travel reimbursement, monitoring the District’s budget, and physical inventories. The recommendation that was only partially implemented regarded the usage and control of District-issued cell phones and credit cards. The remainder of the recommendations have been fully implemented. |
|
State Education Department - Security Over Online Registration Renewal and Teacher Certification 2008-S-154
|
The audit found the Department did not sufficiently guard against risks related to improper access to the computer applications which are used to process online payments for registration renewals of licensed professionals and teacher certifications. Specifically the audit concluded the Department has not met the security requirements for these online applications. |
1 recommendation The recommendation stated that the Department managers should provide proper security over the sensitive data in the Registration Renewal and Teacher Certification applications. The Department agreed with the recommendation and has agreed to implement corrective action. |
|
State Education Department - Selected Child Nutrition Program Payments 2007-S-74
|
The federal Child Nutrition Program offers cash assistance so schools can provide nutritious meals to children. In New York, the Program is administered by the Department. Entities known as “Authorities” represent one or more schools providing meals under this program. Under this arrangement, the Department pays authorities based on their submission of monthly claims for meals served at schools they represent. It was found that program payments totaling $124,446 were unsupported or inappropriate. This included $24,408 of reimbursed claims that appear to have been knowingly prepared in error. The audit findings were based on examination of $421,403 of program claims paid by the Department to three Authorities for nine private schools represented in New York City. |
4 recommendations It is recommended that the Department pursue recovery of the $124,446 and enhance its follow up efforts when it detects problems with Authority practices and procedures for claiming expenses, as well as to assure that claims paid are supported by valid income eligibility, and that there is follow-up on authorities where Department reviews have identified Program deficiencies to ensure that corrective action is taken. Finally, it is recommended that the Department audit the remaining six Authorities that also received grant funds. The Department agreed with the recommendations and have indicated that they will implement corrective action. |
|
State Education Department - Setting Special Education Itinerant Teacher Services Rates 2008-S-146
|
The State Education Law governs services by Special Education Itinerant Teachers (SEITs) for preschool children with disabilities, and each school district assesses the child’s need for special educational services. If it is determined that the child should be instructed by a SEIT, county health departments and the New York City Department of Education contract with service providers to deliver the SEIT services. For the school year ending June 30, 2007, municipalities spent about $148 million to provide SEIT services ($88 million in State funds). This was an increase of $94 million (about 174 percent) over the amount spend on SEIT for the year ended June 30, 2001. It was determined that two of the providers inappropriately reported costs totaling $1.4 million. One provider reported $1.3 million in direct care costs that should have been classified as non-direct care costs. The other provider charged $102,000 in bonuses paid to contractors as direct care costs. Such costs are ineligible for reimbursement. In addition, it was found that four of the providers reviewed did not report for rate setting purposes, a total of 22,635 sessions for the year end June 30, 2006. The amounts in question ranged from 723 sessions for one provider to 14,077 for the provider with the most under-reported sessions. As a result, the Department set excessive reimbursement rates for them. As a result of the understated session reporting, it is estimated these providers received up to $985,000 more in annual payments than they were entitled to. |
3 recommendations It was recommended that the Department adjust the consolidated fiscal report information and corresponding session rates for the two providers who errantly reported direct costs, as well as for the four SEIT providers who underreported sessions. It was also recommended that the Department review formal guidance relating to SEIT session reporting for billing purposes, and to promptly follow-up with a SEIT provider whenever the CPA issues anything other than an unqualified opinion. The Department agreed with the recommendations and will implement corrective action. |
|
Unatego Central School District Internal Controls Over Selected Financial Activities Follow Up 2008M-152-F 6th Judicial District |
An audit was conducted by the State Comptroller’s office to assess the financial operations of the District. A report was issued in December 2008 identifying opportunities for District management’s review and consideration. The District was revisited in September 2009 to review the progress of the District in implementing the recommendations. It was found that the District has made considerable progress in implementing corrective action. Of the 12 recommendations issued, five were fully implemented, six were partially implemented, and one was not implemented. |
The recommendations that were only partially implemented are the ones pertaining to the development of stronger internal controls and financial operations, the purchasing agent’s duties, blanket purchases, network access controls, physical controls, and a disaster recovery plan. The recommendation that was not implemented at all, was the recommendation regarding the appointment of a claims auditor. The remainder of the recommendations have been fully implemented. |