Audit: Poor Recordkeeping at Seaford School District

ALBANY, N.Y. -- Because the financial management practices were so poor and financial records so out of date at the Seaford Union Free school district, school officials proposed a tax levy that was $2.1 million higher for the 2005-06 school year, according to an audit issued Thursday in a press release by the New York state comptroller’s office.

Click here to read the full pdf audit. Click here to read the full press release. Click here for more Society schools coverage.

Auditors found that the district did not take basic steps to manage its finances, such as maintaining current bank balances or cash flow statements showing the district’s current financial situation or providing the board with regular financial reports. These poor financial practices led district officials to believe it had $525,000 in surplus funds, when in fact the district had more than $2.6 million, or five times more than originally estimated.

Even after the miscalculation was discovered, the state law prevented the district from putting the budget before the voters for a third time or using the funds to restore the programs and staff that were cut after the proposed budget was defeated. Instead the district adopted a contingency budget and used the money to lower the tax levy for residents for the 2005-06 budget.

The district agreed with the audit findings and noted in its response to the audit that it has taken a number of steps to strengthen internal controls, prevent over-billings from vendors and improve its management of district assets. The district has since replaced many of its business office staff members. The district’s full response is included in the audit.

Other findings:

• The district paid eight professional service providers $515,653 between July 2004 and January 2006, but the district never sought out competition for these contracts. Five of these eight contractors were paid $323,403 for services without the district having entered into a written agreement with them. One therapy service provider was paid $7,540 more than the amount that had been agreed to under contract.
• Another $49,563 was paid to two vendors for goods and services without being competitively bid as required by state law
• Duties were not adequately segregated within the treasurer’s office to protect against possible error or fraud. Auditors found that the treasurer performed most financial duties, including collecting cash, signing checks, reconciliation of bank records, making transfers between bank accounts, preparing financial reports and recording transactions, with little or no oversight from higher level management.
• After testing 181 expense claims, auditors found that 53 invoices, totaling $163,743, did not have purchase orders as required by district policy.
• Auditors found that $39,349 in expenses claims were supported by copied invoices rather than original invoices. Auditors found an instance where the district made a duplicate payment to a tutoring firm for $1,024 because it paid the first payment on an invoice copy and a second payment based on the original invoice.
• The district had not conducted a physical inventory of capital assets in at least three years.
  

-- NYSSCPA.org News Staff

Posted on 1/4/07