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Developments
Continue with School District Audits A former partner with the now-defunct audit firm Miller, Lilly & Pearce has been indicted for his alleged role in the cover-up of embezzled funds in the Roslyn School District. Meanwhile, the federal government is also investigating Nassau and Suffolk school districts, and the State Comptroller continues to release audits of additional districts. Andrew Miller, former managing partner of the dissolved firm, was arraigned on Sept. 8 on charges that he tampered with evidence by changing business records in an effort to help conceal the theft of more than $11 million, according to Denis Dillon, the Nassau County district attorney. He was indicted by a grand jury on 26 criminal counts, including tampering with public records, falsifying business records and tampering with evidence. Miller, whose firm audited the finances of more than 50 Long Island school districts, pleaded not guilty yesterday and was released on his own recognizance. He faces up to seven years in prison on each of three charges and up to four years each on the other 23. “It is alarming to me that an accounting firm that was responsible for the auditing of over 50 school districts on Long Island would so flagrantly disregard the law,” Dillon said. “Their duty was to protect the Roslyn community from corrupt school officials. Instead, Miller helped (others) hide their criminal actions.” In related news, the board of Roslyn’s school district in late August agreed tentatively to settle a lawsuit brought against it by Miller, Lilly & Pearce. The board held an early-morning emergency meeting on Aug. 23 and voted unanimously to accept the terms of the settlement. According to published reports, the settlement will amount to approximately $950,000. Feds Get Involved in Audit Proceedings School districts in both Nassau and Suffolk counties have reported receiving a letter issued by the U.S. Department of Education’s Office of the Inspector General requesting several years of financial data from the districts. The letter said that the requested information would be used to review the expenditure of public funds by the districts and that information would also be used by the Department of Justice and other federal agencies as well. Specifically, the letter asked for financial records pertaining to all third-party contracts of at least $10,000 between January 2000 and July 2005. Additionally, the letters requests copies of all 1099 forms from January 2002 to July 2005. The Department of Education has set an Oct. 21 deadline for the school districts to deliver the requested records. Audit Finds Central Islip School District Lacking Policies The Office of the State Comptroller released an audit report on Aug. 25 indicating that the Central Islip school district did not have sufficient fiduciary policies in place during the audit period—July 1, 2002, through Aug. 31, 2004—which resulted in approximately $133,000 of expenditures that the OSC found to be questionable or that were made without an explicit written policy. The top of the OSC’s list of problem areas for Central Islip related to credit card use. During the audit period, the school board did not have a written credit card usage policy for school board members and provided only limited documentation to support credit card charges. “While officials supplied us with some receipts and other documentation during our audit, about 68 percent of the credit card charges remain unsupported by receipts or invoices,” the OSC stated in its audit report of Islip. Questionable travel-related expenses also figured prominently in the audit report. During the audit period, the Central Islip board did not have an official policy in place that outlined which travel expenses it would reimburse, nor did it have a set limit on how much it would pay out to school board members. “Because the (Islip) school district did not establish maximum limits for lodging costs, board members sometimes charged abusive and excessive costs to the school district,” the report stated. Mileage reimbursement also came under scrutiny in the report, which found that a majority of claims were either for local travel that could not be verified as work-related or for normal commuting costs. “There was so little documentation that auditors could not determine whether expenses were legitimate or not, and the Central Islip school board failed to meet its fiduciary responsibilities to taxpayers,” state comptroller Alan Hevesi said. “The level of questionable spending may not reach the magnitude of other Long Island districts, but poor internal controls can lead to larger problems down the road. I urge district officials to take decisive action to properly safeguard taxpayer money and significantly improve internal controls.” The creation of an internal audit committee is a fundament responsibility of each school board, said Susan Barossi, chair of the Society’s Public Schools Committee. “School board members have a fiduciary responsibility for district assets, finances and investments, and must exercise good faith, due diligence, care and caution,” Barossi said. “The audit committees should include those board members that are designated as financial experts who can oversee internal and external audits.” Oswego School District Requests Audit Thus far, 13 Long Island school districts have been audited by the comptroller’s office, and another 10 audits are on the horizon. The latest school district to undergo a full audit is the Oswego district. After an approximately $6 million budgetary shortfall that the Oswego school board said took them by surprise earlier this year, the board asked the OSC for help in figuring out how the shortfall happened. After the completion of a risk assessment initiated in June, the comptroller’s office in August determined that a full audit of the district was necessary. The audit
of the Oswego district began Aug. 26 and could take up to several
months to complete, the OSC stated. |
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