H. Carl McCall

New York State Comptroller

By Louis Grumet

How large is your staff, and how many employees are CPAs?

As the state's chief financial officer, I have a variety of responsibilities including managing the state's central accounting system, paying all state bills, financial reporting, investing and managing cash, auditing, and fiscal oversight of state and local governments. In addition, my office manages the state retirement systems. I have about 2,200 people working in the comptroller's office, including staff in the various auditing and accounting functions and the statewide retirement systems. In terms of professional audit staff, I have about 400 auditors in total, and more than 100 CPAs.

What are the responsibilities of your audit units?

We have both pre-audit and post-audit functions. Our three post-audit units have different areas of responsibility. Our division of municipal affairs examines the operations of all municipalities except New York City. Our management audit staff audits all state agencies, public authorities, and the City of New York. Both of these audit units perform a variety of audits, ranging from audits of financial statements to operational or performance audits. The major issues addressed vary based upon the audit, but generally we are concerned with the financial condition of local governments, or the efficient, effective, and economical operation of government programs and compliance with appropriate laws and regulations.

Auditors in our unclaimed property unit have a different focus in their work. They examine the financial records of various organizations such as banks, utilities, and insurance companies to make certain that abandoned property has been properly reported and turned over to my office in a timely manner, as required by state law.

For more information regarding our audits, I encourage your members to visit our website at www.osc.state.ny.us.

How are the audits selected by your office, and what are the major issues addressed in these audits?

As you might expect, even with the significant audit staff that I have, we cannot audit every entity or program as often as we would like, therefore we look for audits that will provide the best return for our investment, or areas where we are most likely to identify opportunities for improvement. So most audits are selected using a risk-based approach, though we also conduct some audits required by law.

The NYSSCPA Public School Committee works closely with your office and helped publicize to school board auditors the results of your July 1996 report, Annual Audits of School Districts and Related State Education Department Oversight. The committee also developed training materials and other communication vehicles to improve audit quality. Has your office seen improvements in audit quality as a result of these efforts?

This audit reviewed the work of a number of CPAs who conduct audits of school districts. It found that most school district audits were fine but there was some opportunity for improvement. Unfortunately, there were also a few firms that had performed inadequate work. The NYSSCPA Public School Committee helped to publicize the results of that audit to a very important audience, the CPA profession. My staff also worked in close cooperation with your committee and the State Education Department to develop and present training designed to address the shortcomings identified. At the present time, I cannot say that audit quality has improved because my staff has not re-audited this topic, though we do expect to conduct another audit in the future. However, I expect that audit quality will have improved as a result of the training programs and improved reference materials.

Are there opportunities for CPAs to assist your office in carrying out its duties?

Many government entities engage CPAs to perform audits and related work. I believe that the CPA profession can help improve government operations at all levels. For example, the CPA has the opportunity to assist local officials in establishing meaningful systems to measure the efficiency and effectiveness of their operations. CPAs have experience working with a wide range of clients and they can use that knowledge to help government officials to improve their operations. For example, my office has been encouraging municipalities to think beyond the one-year budget for operating and capital planning. CPAs can assist their clients in developing long-term plans. I would encourage the CPAs that audit local governments to attend the annual training sessions provided by my office. We also hope to continue working cooperatively with your organization to address issues of mutual interest.

Your office has been working on the state's new College Savings Program. Could you give us details about this program, and whether it is too late to set up an account for a 1998 tax benefit?

New York has the best program of its kind in the nation. The College Savings Program allows individuals to save for higher education expenses at any accredited higher education institution--including schools in New York, elsewhere in the nation, and many foreign schools. There are no income or residency requirements for opening an account, and accounts may be opened with as little as $250, or $25 in automatic monthly deposits.

Up to $5,000 in contributions ($10,000 for a couple) can be excluded from New York taxable income for both state income taxes and New York City resident taxes. Federal taxes on investment earnings are deferred until withdrawal, when taxes are paid at the student's rate. Withdrawals, including earnings, are exempt from state taxes if used for qualified higher education expenses. Unfortunately the deadline for setting up an account and obtaining a tax benefit for 1998 was December 31, 1998. However, this would be a great time to set up new accounts for 1999. I understand that a number of people are planning to use their 1998 tax refunds to fund these savings accounts.