Report of Regents Audits/Budget and Finance Committee to The Board of Regents

The Regents Committee on Audits/Budget and Finance met as scheduled yesterday afternoon, November 18, 2013. Regents Chapey, Dawson, Bendit, Phillips, Tallon, Young, Rosa, Tilles, Brown and Norwood were in attendance.

Items for Discussion

Completed Audits

The Committee was presented with four audits this month.  One of the audits was issued by the Office of Audit Services and the remaining three were issued by the Office of the State Comptroller (OSC).  Three of the audits were of school districts and one was of a grant contract.

The findings were in the areas of financial reporting, budgeting, payroll, and expenditure documentation.

Audit Follow-up

The Committee was also provided an overview of the efforts the Department makes to ensure that audit findings are addressed and submitted corrective action plans are adhered to.   The Office of Audit Services (OAS) maintains a database dedicated to the review of corrective action plans (CAPs) submitted by school districts, BOCES, charter schools and other organizations in response to completed audits. OAS reviews the CAPs and identifies potential audits for follow-up based on the following criteria:

• The audit disallowance is more than $10M.
• Data reliability audit shows significant inaccuracy (i.e., more than 50% of the data reported is unsupported by district records).
• Significant control deficiencies related to financial practices (i.e., lack of segregation of duties and board oversight resulting in the misuse of funds).
• Final audit reports and CAPs are shared with applicable Department program areas for future action as needed, including request for follow-up.

OAS prepares and submits an annual Audit Plan for Audits/Budget and Finance Committee review. Based on the number of planned audits, availability of staff resources, and identified audits necessitating a follow-up review, OAS conducts follow-up audits accordingly. In 2012, OAS conducted two follow-up audits.

Race to the Top Monitoring Update

Our Chief Financial Officer provided the Members with a draft report from one of the RTTT grant recipients.  The report highlights the type of information collected through the survey tool the Department uses to monitor the RTTT programs.  The responses obtained through the survey will provide feedback to the Department as to the progress in implementing the programs by grant recipients as well as the basis for reporting to the Federal government.  Further, the responses will be shared with program offices and could be used as a gauge for the need for technical assistance.

2013 Fiscal Report

Our Chief Financial Officer briefed the Members on the Fiscal Report for October.  Extensive spending controls continue for all funds.  General Fund spending reflects the amounts appropriated in the 2013-14 enacted budget.  General Fund accounts are in structural balance with the exception of the Tenured Teacher Hearings (TTH) account.  The 2013-14 budget includes a $6 million appropriation for TTH claims, an increase of $2.2 million from the prior year.  With these additional funds, the deficit at the end of 2013-14 is projected to be $2.03 million.  Special Revenue accounts are all in structural balance on a current year basis and the accumulated negative balance in the Cultural Education Account is being reduced by approximately $2.2 million.