School Audit Bills Become Law
Reform Legislation to Enhance Schools’ Internal Controls

By Jay Dismukes

NEW YORK—New York Gov. George Pataki last month signed into law a bill, in which the New York State Society of CPAs played a guiding hand, to help strengthen the financial accountability and oversight of the state’s public school districts.

Considered a major piece of reform, the new law is intended to prevent the type of financial scandals and alleged audit failures that took place in Long Island’s public school systems, which so far have resulted in the alleged theft of millions in taxpayer money and the arrests of several school officials.

On July 19 Pataki signed bill A.6082-B, sponsored by Assemblyman Thomas DiNapoli (D-Great Neck), into law. It is based on the five-point plan developed by State Comptroller Alan Hevesi’s School Accountability Coalition, in which the Society participated.

The five-point plan calls for requiring training of school board members in their financial oversight responsibilities, establishing an internal audit function in school districts, creating audit committees, mandating competitive bids when schools engage outside auditors, and involving school boards more closely in the external auditing process and in maintaining internal controls. The Assembly bill originally required rotation of lead and reviewing audit partners every five years on school district audits, but was amended to conform to the competitive-bid provision found in S.5050-A, which Sen. Steven Saland (R-Poughkeepsie) sponsored and which also drew heavily from the comptroller’s five-point plan.

In addition to the Society, the New York State School Boards Association, the New York State Council of School Superintendents and the New York State Association of School Business Officials worked closely with Hevesi’s offices to help develop the plan.

“I would like to thank the governor for signing these two bills that will help restore public trust and accountability in school finances following the scandals in several Long Island districts,” Hevesi said in a press release. “These new laws represent real reform and a significant step forward in improving school governance in New York state.”

On the same day, Pataki also signed into law a second DiNapoli-sponsored bill, A.6761-B. The new law will direct the state comptroller to conduct fiscal audits of each New York school district, board of cooperative educational services, and charter school every five years. The legislation, the Senate version of which is S.890-B, sponsored by Carl Marcellino (R-Syosset), will give Hevesi’s office access to approximately $2.9 million to help hire and train additional audit staff.