Audits

On Wednesday, the US Department of Education Office of Inspector General issued an audit report titled New York Local Education Agencies Systems of Internal Control Over American Recovery and Reinvestment Act Funds. According to the report the purpose was to “determine whether agencies charged with responsibility for overseeing ARRA funds have designed systems of internal control that are sufficient to provide reasonable assurance of compliance with applicable laws, regulations, and guidance.” Specifically, OIG auditors looked at controls over data quality, cash management, and use of ARRA funds in three New York school districts (New York City, Kiryas Joel, and Harborfields CSD) during the period from June 11, 2009 to August 19, 2009. While the audit looked at control systems established prior to the passage of the ARRA when school districts were just learning of the accountability requirements, it provides insight into what the Feds are looking for and initial benchmarks against which to assess control systems.  read more »

Now that all school district audits mandated by the “5 Point Plan” have been completed, the Office of the State Comptroller on Tuesday issued a report summarizing its findings. Key features of the report include:

1. Details regarding how many school districts failed to sufficiently provide policies and controls OSC believe are necessary for proper financial oversight;
2. The statement that many districts have engaged in budgeting practices that have inappropriately built-up district reserves beyond demonstrable liabilities ($880 million) and therefore, have overtaxed the local community; and
3. Policy recommendations for school districts and policymakers that the Comptroller believes will improve business practices and provide “relief without sacrificing good internal controls.”

NYSASBO recommends that all school business officials read the Comptroller's report.

The policy recommendations are mixed. While recommending additional flexibility through the creation of new reserves (tax stabilization, TRS, bonded indebtedness), the Comptroller also advocates for additional bureaucratic requirements (notice of planned use of reserves and board authorization to increase funding of any reserve). Other recommendations appear to provide greater flexibility regarding operations including establishing a deputy claims auditor, allowing large districts to audit only a sample of claims, increasing the enrollment threshold requiring an internal audit function from 300 to 1000 students, and expanding the use of “back office” functions of BOCES.

The judgment that school districts have built up reserves at the expense of taxpayers is a clear challenge to the professional decisions school business officials, superintendents, and boards have made on behalf of the students and taxpayers in their respective school districts. How do you feel about the Comptroller's report? Do you challenge the Comptroller's assessment that school districts have overfunded reserves? If so, what rationale do you put forward to challenge the claim that districts are willfully shortchanging taxpayers? Please add your comments below. Your input will help shape NYSASBO's response to this report.

Click here for the Comptroller's press release

Click here for the Comptroller's report

As a member of NYSASBO’s School Business Management Institute, your transcript serves as documentation of your professional development for your school district audits. You can print your professional development attendance certificate from the NYSASBO Website. Your transcript is a neat and orderly way for the auditors and your supervisor to follow your school district training dollars. Enroll in the Institute today.

Comptroller Tom DiNapoli held a press conference earlier today announcing that OSC auditors are currently conducting follow-up audits in 34 school districts across the state. According to the press release, the purpose of the audits is "to see if these districts implemented the recommendations in the initial audits of the districts." While the 34 districts have already been contacted by the Comptroller's office, this is the first time the list of districts has been publicly released.  read more »