Meeting of the Board of Regents | February 2008

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:

January 24, 2008

STRATEGIC GOAL:

Goal 5

AUTHORIZATION(S):

REGENTS SUBCOMMITTEE ON AUDITS

MEETING ROADMAP

Date:  February 2008

Time:  TBD

Location:  TBD

TOPIC

OUTCOME

WHO

MINUTES

Opening Remarks

Chair

3

Review Agenda/Minutes (Attachment I)

Approval

Conway

2

Audit Trend – Claims Processing (Attachment II)

Information

OAS Staff

20

Completed Audits – Including a Summary of the Department’s Internal Audit Workgroup (Attachment III), Summary of Audit Findings (Attachment IV), and Audit Report Abstracts (Attachment V)

Questions answered

OSC and Department Audit Staff

15

Executive Session

Information

Department Staff

20

Office of the State Comptroller

Arkport Central School District

√

√

Ausable Valley Central School District

√

√

East Williston Union Free School District

√

√

Fishers Island Union Free School District

√

Fonda-Fultonville Central School District

Freeport Union Free School District

Frontier Central School District

√

Harborfields Central School District

√

√

Hunter-Tannersville Central School District

√

√

Iroquois Central School District

√

Liberty Central School District

√

√

Menands Union Free School District

√

√

√

√

√

√

Moravia Central School District

√

Mount Vernon City School District

√

√

√

Nanuet Union Free School District

√

√

√

Naples Central School District

√

√

√

New Paltz Central School District

√

√

√

√

Orchard Park Central School District

√

√

√

√

√

Oyster Bay - East Norwich Central School District

√

√

Portville Central School District

√

√

√

Putnam Valley Central School District

√

√

√

Rockville Centre Union Free School District

√

√

Rotterdam-Mohonasen Central School District

√

√

√

√

South Colonie Central School District

√

√

√

South Kortright Central School District

√

√

√

Watervliet City School District

√

√

√

√

√

Watkins Glen Central School District

√

√

White Plains City School District

√

√

February Total

12

13

12

8

4

17

1

1

1

May 2007

June 2007

July 2007

October 2007

December 2007

January 2008

February 2008

Running Total

Procurement

9

11

12

20

12

11

12

87

Capital Assets

10

1

2

4

0

0

0

17

Claims Processing

13

3

12

17

17

18

13

93

Payroll

12

3

11

20

18

14

12

90

Cash

6

2

8

15

14

15

8

68

Financial Reporting

12

3

2

16

6

11

4

54

Information Technology

10

10

9

14

15

15

17

90

Capital Construction

2

1

1

0

0

1

0

5

Extraclassroom Activity Fund

1

1

0

1

1

2

1

7

Segregation of Duties

0

0

3

0

15

19

0

37

Budgeting

2

3

0

1

1

0

1

8

Conflict of Interest

0

0

0

4

3

3

0

10

Other

0

2

0

0

0

1

1

4

Total

77

40

60

112

102

110

69

570

Office of the State Comptroller

Audit

Major Finding(s)

Recommendation/Response

Arkport


Central School District


- Internal Controls Over Selected Financial Operations

2007M-252

7th Judicial District

Payroll clerk duties are not properly segregated because the payroll clerk’s responsibilities include adding, deleting, and modifying employee information, adding and changing pay rates and salaries, printing payroll checks with the treasurer’s signature, as well as distributing checks.

The board has not effectively addressed the safeguarding of computer data by failing to adopt policies and procedures to address the use of passwords for the financial software. The board must also implement a disaster recovery plan, in order to protect important data.

5


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding payroll segregation of duties, and information technology.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Ausable


Valley Central School District


- Internal Controls Over Selected Financial Activities

2007M-257

4th Judicial District

*Fiscal concern district

Twenty cash receipts of the extraclassroom activity funds for the 2005-06 fiscal year were examined, and 100 percent of them were not deposited in a timely manner. Also, District officials were unable to produce student activity deposit forms for the 2006-07 fiscal year. As a result, no tests could be conducted pertaining to the timeliness of cash receipt deposits. The audit did not find that activity fund monies had been used innapropriately.

IT controls pertaining to passwords, access, and disaster recovery need to be strengthened.

10


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding extraclassroom activity funds and information technology.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

East Williston Union Free School District - Internal Controls Over Procurement and Information Technology

2007M-253

10th Judicial District

The District paid six professionals a total of $494,610 without soliciting competitive proposals. The District also made payments to three professionals, totaling $107,094, for services not specified in the contract. In addition, District officials also paid three other professionals $93,788 without receiving sufficiently itemized invoices.

The District also paid 11 vendors a total of $173,324 without soliciting competitive bids or quotations.

Lastly, passwords are not changed periodically, and computer hardware is not protected from unauthorized access.

10


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding procurement and information technology.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action.

Fishers Island Union Free School District - Audit of Claims

2007M-254

10th Judicial District

The board did not audit claims or appoint a claims auditor from July 1, 2006 through September 20, 2006. As a result, 225 claims ($357,000) were not audited.

Additionally, 7 claims and 13 credit card charges ($2,980) did not contain original itemized receipts.

2


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the audit of claims.

District officials generally agreed with the recommendations and have indicated that they plain to initiate corrective action.

Fonda-Fultonville


Central School District


- Internal Controls Over Payroll

2007M-255

7th Judicial District

The 2006-07 salaries of 20 employees were reviewed in order to ensure that payments were calculated correctly, and verified that the leave time records for 15 employees were accurate. No deficiencies were found.

0


recommendation

The report focused on strengthening policies and procedures pertaining to internal controls over payroll.

There are no recommendations.

Freeport


Union Free School District - Separation Payments

2007M-265

10th Judicial District

The payments made to 20 employees ($400,900) were reviewed to determine if District officials made payments in compliance with the terms of the relevant agreements. The District’s system for verifying and approving separation payments was found to be appropriately designed and operating effectively.

0


recommendation

The report focused on strengthening the policies and procedures regarding separation payments.

There were no recommendations.

Frontier


Central School District


- Internal Controls Over Personal Service Compensation and Benefits

2007M-128

8th Judicial District

There were weaknesses found in the internal controls over separation compensation of 7 out of 15 employees, resulting in overpayments of $10,864.

The board did not authorize or review a “merit pay” salary increase for a former superintendent, which caused the District to overpay him by $3,111. The District paid the interim superintendent at a weekly rate even when he did not work the minimum number of days per week stipulated in his contract. This resulted in an overpayment of $2,725. The District also paid $1,932 to a former assistant superintendent for unused sick leave that he had not earned. The board also paid an employee $2,222 for unused leave time.

The District purchased split-dollar life insurance policies for $50,000 more for each policy than was required by employment contracts.

8


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding separation and salary payments and split-dollar life insurance policies.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action.

Harborfields


Central School District


- Internal Controls Over Payroll and Information Technology

2007M-231

10th Judicial District

The District overpaid four former administrators $83,342 for unused vacation and sick leave that was not provided in their employment agreements, or by board resolutions. Additionally, two employees were paid a total of $1,095 for days to which they were not entitled.

There were also weaknesses relating to computer operations. Four users of the financial software had full access to the District’s financial applications and data. Backup tapes were also not stored off-site, which increases the risk that a disaster could destroy important financial data.

7


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding separation payments, leave accruals and information technology.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action for all recommendations.

Hunter-Tannersville


Central School District


- Internal Controls Over Claims Processing and Information Technology

2007M-246

3rd Judicial District

The claims auditor does not report directly to the board, as required. Instead, the claims auditor reports to the business manager. There were also deficiencies in the claims audit process. Of the 26 claims that were tested, 8 claims totaling $10,329 were not properly supported.

IT controls were also improperly designed because the District does not have physical safeguards over its computer equipment and does not store backup computer data at a secure off-site location.

6


recommendations

The report's recommendations focused primarily on strengthening the policies and procedures regarding claims processing and information technology.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Iroquois


Central School District


- Internal Controls Over Purchasing

2007M-248

8th Judicial District

Twenty-five purchases ranging in cost from $1,780 to $114,675 were tested to determine if the District complied with the provisions of its purchasing policy. Of the 25 tested, 13 of them lacked proper documentation.

The purchase of tires and two-way radios were purchased through State contract, however, the supporting documentation did not specify which State contract was used.

The District also paid significantly more for certain items than it would have had they been purchased through readily available alternative sources.

4


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding purchasing.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Liberty


Central School District


- Information Technology and Claims Auditor

2007M-271

3rd Judicial District

The claims auditor had user access rights to the financial software system, including the ability to add and update vendors and print checks. The board did not establish plans to protect IT equipment and data from potential disasters.  The board also had not adopted a formal disaster recovery plan.

3


recommendations

The report's recommendations focused primarily on strengthening policies and procedures regarding information technology and claims processing.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Menands Union Free School District - Internal Controls Over Selected Financial Activities

2007M-218

3rd Judicial District

Eight out of 28 copies of deposit slips, provided by the cafeteria cashier, did not agree with the bank deposit slip copies. In two of the eight deposits, the treasurer submitted two personal checks for cash. For 82 deposits examined, there were 15 cases where the treasurer did not deposit monies until more than 100 days after receipt and did not deposit 10 others until more than 150 days after receipt.

The board is also not auditing claims, but is relying on an employee in the business office to audit District claims. Thirty purchases packets (totaling $92,005) were reviewed, and it was found that the District paid 14 claims even though one or more items of required documentation were incomplete or missing.

Additionally, the District made payments ($582,403) for employee compensation, $136,211 for health and dental benefits, and provided leave benefits ($36,228) that were not properly supported by contract provisions or a board resolution.

Finally, the BOCES employee serving as the District’s internal auditor is not independent in performing the internal audit function.

14


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding cash and disbursements, purchasing and claims processing, payroll, information technology and internal auditor.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Moravia


Central School District


- Internal Controls Over the Computerized Business Management System

2007M-264

7th Judicial District

The District uses a computerized electronic signature stamp to sign checks and to place approving signatures on purchase orders. The password for the treasurer’s signature is known by both the payroll clerk and the accounts payable clerk. Additionally, the payroll clerk holds the incompatible position of system administrator, and 5 out of 13 system users have inappropriate levels of access to the general financial system module.

5


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the computerized business management system.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Mount Vernon


City School District


- Internal Controls Over Purchasing, Cash Disbursements and Claims Processing

2007M-153

9th Judicial District

*Fiscal stress district

The purchasing agent did not use required competitive bidding to make purchases totaling $1,119,742. The staff also made purchases of $120,519 without first seeking prior approval.

District officials made year-end budget transfers for the 2003-04, 2004-05, 2005-06 fiscal years totaling $9,531,266, $2,297,480 and $1,310,000, respectively without board pre-approval.

The District also paid vendors without supporting documentation as required by District policy. Payments were made to 175 vendors that totaled $3,123,581, and 34 vendor payments, totaling $363,433, did not include receiving reports.

The District treasurer also issued hand-written checks in excess of one quarter of a billion dollars. These checks included approximately $281 million in payroll related items including checks to transfer funds into payroll accounts. Checks were found in amounts as high as $3.9 million which only required the treasurer’s signature and are not approved by the claims auditor prior to payment.

There was also a lack of segregation of duties for the treasury and internal audit functions.

7


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding purchasing, cash disbursements and claims processing.

District officials generally agreed with the recommendations and indicated that they plan to initiate corrective action.

Nanuet Union Free School District - Internal Controls Over Payroll and Selected Financial Activities

2007M-223

9th Judicial District

Timesheets were examined, and there were excessive amounts of overtime claimed by employees. Two employees claimed 89½ and 90½ hours overtime in one week and another employee claimed to have worked 17½ consecutive hours. One employee also received $78,346 in overtime pay during the two-year audit period which amounted to 144 percent of his annual salary. There was also an overpayment of $13,593 to facilities workers.

The superintendent also did not certify the payroll as required by District policy and the duties of the senior payroll clerk were not properly segregated.

The District did not use the RFP process to solicit competition, as required by District policy for services of more than $20,000.

The assistant superintendent made budget transfers of $2,368,701 at the end of the 2005-06 fiscal year without board pre-approval. District officials repeated this practice at the end of the 2006-07 fiscal year, transferring $1,093,500 to rectify deficit balances on budgetary line items incurred throughout the preceding year.

Lastly, there was inadequate segregation of duties related to the cash receipts and disbursements responsibilities of the treasurer.

14


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding payroll, budgetary controls and cash receipts and disbursements.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Naples


Central School District


- Internal Controls Over Selected Financial Activities

2007M-208

7th Judicial District

District officials did not effectively assign responsibilities to the treasurer/payroll clerk to ensure there was a proper segregation of duties and did not establish sufficient compensating controls.

Professional services were also not always procured in conformance with General Municipal Law. Payments for accounting services exceeded contracted amounts by $20,275 and payments for legal services exceeded agreed upon amounts by a minimum of $2,680.

Internal controls to protect fuel inventories against fraud, abuse or misuse were also not adequate. District personnel are not accurately reconciling measurements of deliveries, usage and inventories on hand to calculate losses or gains of fuel.

The board also has not established policies and procedures to sufficiently address the safeguarding of computerized data and assets.

10


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding treasurer’s office operations, professional service contracts, internal control over fuel inventories and information technology.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

New Paltz Central School District - Internal Controls Over Selected Financial Activities

2007M-216

3rd Judicial District

The District did not competitively bid the purchase of a bucket truck costing $13,200, nor solicit quotes for the construction of an office costing $16,500.

The District's claims auditor was not properly auditing claims. Those claims that were reviewed were missing necessary documentation, but were still approved by the claims auditor. The superintendent should reimburse the District for spousal expenses.

Certain payroll controls were weak, and as a result, six employees earned over $4,200 of compensatory time off that was not authorized by their contracts.

The District also had not developed a backup policy or disaster recovery plan.

11


recommendations

The report's recommendations focused primarily on strengthening the policies and procedures regarding purchasing, claims processing, compensated absences and leave time and information technology.

District officials generally agreed with the recommendations, and have indicated that they plan to initiate corrective action.

Orchard


Park Central School District


- Internal Controls Over Selected Financial Activities

2007M-111

8th Judicial District

District employees were improperly paid separation benefits and special assignment pay totaling $265,104. The personnel office also did not have timesheets to support 2004-05 payroll payments to the treasurer, the District clerk/secretary to the superintendent and eight support staff, totaling $376,572.

The board had also not developed adequate procedures to govern its Flexible Fringe Benefits Program, which provides a Health Reimbursement Arrangement (HRA). The District allowed reimbursement for ineligible expenses, and did not verify that submitted expenses are supported by documentation, such as receipts from providers. The District also allowed certain former administrators to divert income to their HRA accounts, on a pre-tax basis to avoid jeopardizing their pension income from the New York State Teacher’s Retirement System, or to avoid taxes.

Additionally, District officials failed to obtain quotations when procuring insurance. Members of the Insurance Advisory Committee also shared fees and commissions arising from the District’s renewal of certain insurance policies. This resulted in the District making payments for coverage, totaling more than $1.3 million to the firm of one of the members of the committee, and from the amount paid to that firm, the other members received fees or commissions totaling $45,371.

There were also discrepancies involving segregation of duties in claims processing which resulted in $117,785 in payments with no evidence of claims auditor review or approval.

Lastly, there was no authorization indicating approval by the assistant superintendent of business for any of the outgoing wire transfers that were audited, totaling more than $1.4 million.

23


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding control environment, employee compensation and benefits, the Flexible Fringe Benefits Program, insurance procurement, claims processing, and wire transfers.

District officials generally agreed with the recommendations and have indicated that they plan to initiate correction action.

Note: There has been changes in District administrative positions and the current board is comprised of new membership.

Oyster Bay - East Norwich Central School District - Internal Controls Over Financial Operations

2007M-221

10th Judicial District

Sixty-six purchase orders ($886,420) were identified, that were created and encumbered in February and March 2006, for which no actual commitments existed. This appears to have been an attempt to hide excessive fund balances.

The District has also failed to establish policies and procedures to safeguard computer data. The assistant superintendent is able to create a new user, update the user’s access rights, and perform other administrative functions.

3


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding encumbrances and computer data safeguards. 

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Portville


Central School District


- Internal Controls Over Selected Financial Activities

2007M-247

8th Judicial District

Users of the District’s computerized financial system were able to change the access rights of other District users, as well as change District accounting data, without supervisory approval. The District has also failed to implement a formal disaster recovery program for its information technology systems.

The District is not properly administering the claims processing function.  Fifty claims were reviewed ($188,532), and one or more exceptions were found in 35 claims ($130,727). Exceptions included purchase orders dated after the date of purchases, insufficient itemization and lack of proper receipt confirmation.

The BOCES employee serving as the internal auditor is not independent in performing the internal audit function.

10


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding computerized data, claims processing, and the internal audit function.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Putnam


Valley Central School District


- Internal Controls Over Selected Financial Activities

2007M-206

9th Judicial District

District officials did not follow General Municipal Law or their purchasing policy while making purchases. The District did not use request for proposals (RFP’s) to obtain the services of seven service providers totaling $253,143. They also did not solicit competitive bids for three purchases over the $10,000 bidding threshold. These purchases totaled $37,029.

The District’s claims auditor also has not conducted a thorough audit of claims. The District reimbursed nine administrators $22,199 for attending conferences without proper documentation.

Lastly, the tax collector took between 1 and 42 days to deposit tax payments and as a result the District lost $2,260 in interest.

8


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding procurement, claims processing and cash receipts.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Rockville Centre Union Free School District - Controls Over Credit Card Purchases and Computer Data

2007M-219

10th Judicial District

Maintenance workers and night security employees often did not submit gas card receipts to indicate that charges were valid District obligations and District officials did not monitor gasoline usage. Of 407 gas charges, 58 percent lacked receipts. Additionally, six claims were examined (totaling $3,425) and there were no signatures attached to confirm that an official or employee received the goods.

Written policies and procedures regarding the District’s computer data system have also not been implemented.

5


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding credit card purchases and computer data safeguards.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Rotterdam-Mohonasen


Central School District


- Internal Controls Over Selected Financial Activities

2007M-178

3rd Judicial District

There were discrepancies between cafeteria sales recorded and moneys deposited. Net discrepancies over a five-month period totaled over $3,300. Also, other miscellaneous receipts were not deposited in a timely manner. Ten receipts totaling $43,735 were not recorded timely, and 19 receipts totaling $357,493 were not deposited timely. Also, the October 2006 and November 2006 bank reconciliations for the general investment fund were not properly performed.

District personnel failed to obtain quotes for 11 purchases, totaling $28,013. Additionally, 43 of 383 budget accounts tested were over-expended.

The District must also strengthen internal controls related to information technology, including the restoration of backup data, the implementation of a formal disaster recovery plan and effectively restricting system and physical access.

Lastly, the Capital Region BOCES employee serving as the internal auditor is not independent. In 2005-06 the District spent $2.6 million on general fund services provided by the Capital Region BOCES. The failure of the District to establish an effective internal audit function may result in the evaluation of significant District services or programs by someone who is not independent of those services/programs.

14


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding cash receipts and disbursements, purchasing and claims processing, information technology and the internal auditor.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

South


Colonie Central School District


- Internal Controls Over Selected Financial Activities

2007M-227

3rd Judicial District

*Contract for Excellence district

The District’s computer-generated checks are not issued until after an audit, however the sample of hand-drawn checks that were reviewed were issued prior to audit.

Additionally, the BOCES employee serving as the internal auditor is not independent in performing the internal audit function.

Lastly, there were weaknesses in internal controls for information technology related to disaster recovery, backup storage and user rights access.

7


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding claims processing, the internal auditor and computerized data.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

South


Kortright Central School District


- Internal Controls Over Selected Financial Activities

2007M-177

6th Judicial District

The principal’s secretary was appointed as the claims auditor for the 2005-06 and 2006-07 fiscal years, which may be prohibited because the principal’s secretary occasionally reported directly to the superintendent.

The treasurer also has complete control over the payroll process as well as full user access rights to the payroll functions in the financial software.

Lastly, the board has not established comprehensive policies and procedures to sufficiently address the safeguarding of computerized data and assets. District officials have not developed a disaster recovery plan.

4


recommendations

The reports recommendations focused primarily on strengthening the policies and procedures regarding the claims auditor, payroll, and computerized data and assets.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Watervliet


City School District


- Financial Condition and Internal Controls Over Selected Financial Activities

2007M-213

3rd Judicial District

*Fiscal stress district

*Contract for Excellence district

The District’s general fund unreserved balance deteriorated from a positive balance of over $993,000 on June 30, 2004, to a fund deficit of over $1.4 million on June 30, 2006. The District incurred a general fund operating deficit of over $1.6 million for the fiscal year ended June 30, 2006, and an operating deficit of over $487,000 for the preceding fiscal year. As a result, the District issued Revenue Anticipation Notes (RANs) for $2.35 million. The plans to repay the RANs within the timeframe are not sufficient.

There were also internal control weaknesses over payroll, cash disbursements, and purchasing.

The former superintendent’s severance payment may have been overstated by as much as $20,000 in excess of what was allowed in her employment contract. During the last two years of her tenure, she charged 26 days to conference attendance, to which there was no documentation to support that.

The business manager’s responsibilities include several duties that are incompatible. He is responsible for auditing each claim and for approving each purchase. These functions are incompatible with his other duties as business manager.

The board has also failed to appoint a claims auditor and does not audit vendor claims themselves, as required by State Education Law.

Lastly, the District has not consistently complied with competitive bidding laws or their own procurement policy.

18


recommendations

The report’s recommendations focused primarily on strengthening policies and procedures regarding financial condition, leave time, cash disbursements, purchasing and computerized data.

District officials generally agreed with the recommendations and have indicated that they plan to initiate corrective action.

Watkins


Glen Central School District


– Payments to the Former Superintendent and the Procurement Process

2007M-142

7th Judicial District

The District overpaid the former superintendent $14,208 for unused leave balances. The former superintendent also received a $470 reimbursement for Internet service at her personal residence despite the fact that none of her employment contracts contained a provision for such a reimbursement.

The claims auditor did not properly audit 55 of the 137 claims  reviewed (40 percent). Further, thirty-seven checks ($7,755) were issued to purchase supplies. The claims auditor approved the payment prior to the actual purchase of goods, and did not verify that the receipts agreed with the purchase orders.

Additionally, it was found that individuals continually override budgetary controls, generating purchase orders even though sufficient appropriations were not available. Lastly, budget transfers totaled in excess of $1 million, of which 70 were line item transfers in excess of $5,000.

12


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding payments to the former superintendent and the procurement process.

District officials generally agreed with the recommendations and have agreed to initiate corrective action.

White Plains


City School District


- Internal Controls Over Payroll and Claims Auditing

2007M-273

9th Judicial District

*Contract for Excellence district

Nineteen out of 32 payroll warrants, totaling $51,855,691 were not certified as required by Education Law and none had a date to indicate when they had been reviewed. Additionally, the Facilities and Operations Department incurred $614,837 of overtime without maintaining adequate documentation of overtime usage.

The District also did not comply with Education Law when it appointed two claims auditors, one of whom, the deputy claims auditor, is not independent of the business functions of the District.

5


recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding payroll and claims auditing.

District officials generally agreed with the recommendations and have indicated that they plain to initiate corrective action.