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ALBANY---New York State school districts have made considerable improvements to their financial practices in the last two years, according to a report issued by the New York State Comptroller's office. The 2006 Annual Report on the School Accountability Initiative summarizes the findings of 83 school audits completed in 2006, as well as identifies areas where auditors found systemic problems in schools, such as high-level administrators being paid for benefits to which they were not entitled to, weak controls over information technology, and poor auditing of expenses claims, among other issues.
Seven school districts received high marks for their fiscal management practices in 2006 including Broadalbin-Perth (Fulton County), Cincinnatus (Broome, Chenango and Cortland Counties), Deposit (Delaware and Broome Counties), East Irondequoit (Monroe County), Franklin (Delaware and Otego Counties), Frontier (Erie County) and Tioga (Tioga County).
"Our audits show that school district overall are improving their fiscal oversight and tightening up their controls over school funds," said Mark Pattison, deputy comptroller for Local Government Services and Economic Development. "After two years of increased training and awareness, much has been accomplished but more still needs to be done to ensure that all school officials understand the breadth of their oversight responsibilities."
In 2006, Office of the State Comptroller (OSC) completed a total of 113 school audits. Eighty-three of these audits looked at current financial practices and internal controls as required by legislation enacted in 2005 (see Appendix A for list), while the remaining 30 audits focused on school districts' budgets, the work of independent auditors and identified ways that districts could save money. One audit examined the practices that six school districts in the Southern Tier of New York had regarding energy use. Auditors found that the Binghamton City school district saved about $284,000 by taking measures such as replacing old equipment and installing motion sensors that turned lights on and off.
One of the most critical areas of vulnerability identified by auditors related to how districts managed their computerized financial systems. Auditors found that districts often did not limit the various functions that employees could perform and built-in controls were not operating as intended to prevent inappropriate transactions. For future audits, OSC will focus additional attention on whether districts have proper internal controls over information technology and outsourced business office functions, such as payroll.
OSC stopped routine school audits in the late 1970s after budget cuts and staff reductions. But in 2005, after theft and other questionable actions occurred at several Long Island school districts, OSC requested and received additional funding from the state legislature to hire 89 additional staff to audit all of the state's 832 school districts, BOCES and charters schools by March 2010. Currently, approximately 180 school audits are underway statewide.
While OSC will be auditing all school districts, BOCES and charter schools, the auditing schedule is determined based on a number of factors including taxpayer complaints, allegations of impropriety, financial indicators, staff availability or the determination that an entity has significant issues and could benefit from an audit. During a typical school audit, auditors examine internal controls over basic financial operations, including purchasing, capital assets and claims processing, as well as administrative expenses for travel, food and other costs. School districts are still required to obtain an outside independent audit on an annual basis.
The state legislature adopted into law a five-point plan in 2005 developed by OSC and a coalition of government and educational organizations. Under this plan, school districts were required to follow more rigorous external audit standards, clearly define the duties of the internal claims auditor and obtain training for school board members on their fiduciary responsibilities in 2005. Starting in January 2006, school districts were required to establish audit committees made up of board members or individuals from the community. In July 2006, districts also had to establish an internal audit function to continually assess the district's fiscal operations.
OSC is required under the new law to report annually to the state legislature on its efforts to audit schools. For a copy of the annual report and to view individual school audit findings, visit www.osc.state.ny.us.
Facts about School Audits
New Yorkers spent about $46 billion on K-12 education in 2005.
New York State has 700 school districts, 37 Board of Cooperative Education Services Units (BOCES) and 95 charter schools.
State law requires the State Comptroller's office to audit each school district, BOCES and charter school by March 31, 2010.
At the Roslyn school district on Long Island in 2005, state auditors found $11.2 million that was used by 29 school employees, their friends and families for personal benefit. Six of these individuals have pleaded guilty.
Click here for a copy of the report.
Click here for a list of school audits underway or complete. 12-28-06
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© 2006 North
Country Gazette
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