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THE
STATE EDUCATION DEPARTMENT / THE UNIVERSITY
OF THE STATE OF NEW YORK / ALBANY, NY 12234 |
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TO: |
The Honorable the Members of the Board of Regents |
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FROM: |
Michael Abbott |
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COMMITTEE: |
Audits |
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TITLE OF
ITEM: |
Audit Activities |
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DATE OF
SUBMISSION: |
January 13, 2005 |
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PROPOSED
HANDLING: |
Discussion |
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RATIONALE FOR
ITEM: |
Enable the Board of Regents to review audits |
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STRATEGIC
GOAL: |
5 |
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AUTHORIZATION(S): |
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SUMMARY:
The following materials are attached.
· Roadmap
· Minutes of January Meeting (Attachment I)
· Audit Report Abstracts (Attachment II)
· Audit Reports
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REGENTS SUBCOMMITTEE ON AUDITS MEETING
ROADMAP
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Date: February 8, 2005
Time: 8:00-9:00
AM Location: 311 EBLast Revised 1/31/05 | ||
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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 |
Abbott |
1 |
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Key Provisions of Sarbanes-Oxley |
Review |
SED Staff |
15 |
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Colleges’ and Universities’ Financial Condition |
Review |
SED Staff |
10 |
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Audit Report Abstracts (Attachment II) |
Questions Addressed |
SED Staff |
20 |
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Current Issues |
Update |
Abbott |
10 |
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Next Session |
Preview |
Staff |
2 |
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Attachment
I
MEETING OF THE REGENTS SUBCOMMITTEE ON
AUDITS
January 11,
2005
Subcommittee Members in Attendance:
Regent Geraldine D. Chapey, Chair
Regent Arnold B. Gardner, Vice Chair
Regent Joseph E. Bowman
Regent Harry Phillips,
3rd
Other Members of the Board of Regents in
Attendance
Regent John
Brademas
Regent Diane O'Neill McGivern
Discussion Items
Regent Chapey opened the meeting by welcoming everyone and reminding them of the importance of accountability in the public sector and our responsibilities under Regents Goal 5.
Follow-up on
Previous Meeting
Staff responded to follow-up questions. The civil statute of limitations for fraudulent activities is 6 years from the action or 2 years from discovery, whichever is longer. The statute of limitations on criminal activities varies depending on a number of factors.
Packets of information on fiscal accountability are available for the Regents to distribute to colleges of education.
Staff have completed some preliminary steps toward developing a fiscal guide for all USNY institutions.
Previous
Meeting Minutes
The Subcommittee approved the minutes of the prior meeting.
Audits
Steven Hancox, Assistant Comptroller from the
Office of the State Comptroller, briefed the members on the audit of the Roslyn
Union Free School District. The audit focused on Roslyn's procurement of audit
services and the quality of the services.
Roslyn did not follow its own policies regarding obtaining professional
audit services by failing to use a request for proposal. The report also noted deficiencies in
the audit services provided. The
report has been referred to the Department's Office of Professional Discipline.
Discussion followed regarding the results of
the audit and the notification of other school districts. Staff informed the
Regents that school districts using the same accounting firm have been notified
of the audit. In addition, the State Board for Public Accountancy has issued a
directive to all public accounting firms engaged by school districts reminding
them of the independence requirements.
In response to a question, Mr. Hancox
indicated that an audit of the quality of public accountants’ work in school
districts was last conducted in the late 1990's. The members requested a copy of
that report.
Mr. Hancox also provided the members with a
brief overview of audits of the Baldwin Union Free School District and the
Plainedge Union Free School District.
Staff were available to answer questions on
two other audits.
- United Cerebral Palsy of New York City,
Inc. Preschool Program - CA-0402-9
- A Summary of Findings and Recommendations
from the Fiscal Year 2003 Internal Audits of Schools of the Department of
Education for the City of New York - Report
05-15.
Fiscal
Accountability
Staff briefed the Subcommittee on the various
school district fiscal accountability proposals being discussed in the State.
There are proposals emanating from both the State Senate and Assembly, as well
as the Department and two workgroups. The most prominent proposal was the
Five-Point Plan developed by the School’s Financial Accountability Coalition.
The Commissioner urged the Board to be
proactive in understanding the Sarbanes-Oxley legislation and endorsing similar
initiatives in the education community.
Deputy Commissioner Duncan-Poitier reinforced the Commissioner's point by
stating that Regents rules could be used to enhance fiscal accountability
standards. Deputy Commissioner Duncan-Poitier informed the Board that she and
Chief of Staff Kathy Ahearn are preparing a presentation on Sarbanes-Oxley for
the Board.
Attachment
II
Audit Report
Abstracts
Regents Subcommittee on
Audits
February
2005
Office
of Audit Services | ||
Audit |
Major
Finding |
Recommendations/Response |
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Cattaraugus-Allegany-Erie-Wyoming Board
of Cooperative Educational
Services BOC-0403-3 8th Judicial
District |
The audit found that all funds were not
being accounted for in Board authorized bank accounts and were not
included in the BOCES accounting records. The BOCES did not include some
categories of expenditures, operations and maintenance accounts, and
internal services activities in the budget status reports. The BOCES did
not comply with its own policy for the sale of surplus property. Checks
were not restrictively endorsed upon receipt, pre-numbered receipts were
not used, and some individuals collecting funds were not authorized by the
Board to do so. Documentation
of EPE contact hours was not always
maintained.
The BOCES has implemented or otherwise satisfied 18 of the 20 recommendations contained in the prior audit report. One recommendation not implemented was to establish or update policies for overtime, telephone calls, credit card usage, and travel advances. One recommendation partially implemented was to improve controls over personal property accountability. |
12 recommendations
The recommendations were to use
authorized bank accounts, prepare complete and accurate budget status
reports, dispose of surplus property by selling to the highest bidder, and
ensure a physical inventory of fixed assets is conducted. The report also
contains recommendations to strengthen revenue and cash management by
restrictively endorsing checks, using pre-numbered receipts, and limiting
the receipt of revenue to authorized individuals. Recommendations were
also made to maintain adequate documentation of EPE
hours.
BOCES officials generally agree with
the recommendations contained in the
report. |
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Village Child Development Center, Inc.
(the School) Preschool Program
for the Year Ended June 30,
1999 CA-0302-7
An audit conducted by Dadia and Company
Certified Public Accountants, for the Office of the Auditor General,
Department of Education of The City of New York and Approved by the State
Education Department Pursuant to Education Law Section
4410 |
The audit found that the School had
overstated staff compensation and depreciation expenses. In addition, some
audit/legal fees, utilities, repairs, and maintenance and transportation
expenses were not supported with adequate documentation. Finally,
unallowable costs were identified including staff travel, life insurance
premiums, taxes, and dues and subscriptions. The audit also reallocated
certain costs into the preschool program. The net effect of the
adjustments and reallocations is a $43,855 deduction in the cost of the
program. The audit also found
that the preschool program revenue was understated by $20,566 and FTE
attendance was understated by 0.882
FTEs. |
3 recommendations
One recommendation is to ensure all
unallowable or non-reimbursable expenses are excluded from program
expenses claimed in the Consolidated Fiscal Report. Another recommendation is to
comply with documentation requirements, and the final recommendation is to
comply with student FTE methodology.
School officials agree with the
findings and recommendations and have taken action to implement necessary
procedures.
The results of this audit will be used
to establish tuition rates. |
Office
of the State Comptroller | ||
Audit |
Major
Finding |
Recommendations/Response |
Audit of the Tuition Reimbursement
Account For the Fiscal Years Ended March 31, 2003 and
2004 |
$0
adjustment
The Tuition Reimbursement Account (TRA)
is established in law to fund tuition and student loan reimbursements to
students of post-secondary private schools and business schools that close
or are in violation of Education Law. This audit is a financial
statement audit of the fund. The audit found that the financial statements
present fairly the TRA's financial position as of March 31, 2003 and 2004,
and the results of operations for the fiscal years then ended.
The report also states that nothing
came to the auditors' attention that caused them to believe that the
Department had not complied, in all material respects, with selected
statutory requirements applicable to the
TRA.
The audit identified several
opportunities to improve the internal control structure over financial
reporting operations. The opportunities were communicated in a management
letter and include the method of recording accounts receivable, the method
of charging interest on late payments, assessing fees to new schools, and
pursuing payments from unlicensed schools.
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4
recommendations
The recommendations are for the
Department to cease reporting overpayments made by schools as negative
accounts receivable balances, collect interest charges on delinquent
assessments, comply with the law regarding regular and special
assessments, and develop a program to identify and follow up on unlicensed
schools.
Department officials are in the process
of responding to the recommendations.
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