Comptroller Continues L.I. School Audits

Comptroller Continues L.I. School Audits
Program Expands Statewide

By Stephanie R. Myers

Continued from the Home Page

In a press release last month, State Comptroller Alan Hevesi announced that his office had received funding from the legislature and Governor Pataki to hire 89 auditors to conduct regular audits of school districts statewide.

Following the Roslyn scandal, several Long Island school districts came under scrutiny when Hevesi’s office initiated a broad series of audits. Other school districts that the comptroller’s office has found to have poor financial controls in place, but that are not necessarily suspected of any wrongdoing, so far include Central Islip, Hempstead, Lawrence and Syosset. Most recently, a federal audit reported that $6.6 million could not be accounted for in the Wyandanch school district. Local and state officials say that the funds, which were for student tutoring and teacher training, were not misappropriated and instead were lost in poor bookkeeping.

Other state-initiated audits have revealed positive findings. Recently, the comptroller’s office stated that it found strong internal financial controls at the North Shore Central school district. The Locust Valley school district also has improved financial controls and policies for spending, said an audit released by Hevesi’s office on Oct. 6. Its board of education, the audit noted, is also supplying effective oversight.

So far, the comptroller’s office has completed 16 Long Island school audits, and audits for six other districts on Long Island are in progress. As of press time, the audits of several additional school districts are either currently under way or will begin soon, including Allegany-Limestone, Brentwood, Cairo-Durham, Catskill, Cassadaga Valley, Center Moriches, Corinth, Coxsackie-Athens, East Islip, Franklin, Geneva, Hannibal, Heuvelton, Manhasset, Mineola, Mount Vernon, Oswego, Patchogue-Medford, Phoenix, Port Jervis, Schuylerville, Solvay, Spencer Van-Etten, Sullivan West, Three Village, Voorheesville, William Floyd and Windham-Ashland-Jewett.

Susan Barossi, chair of the Society’s Public Schools Committee, said that the increased measures put forth by the comptroller’s office are a direct result of the Roslyn scandal.

“I think those school districts that are following policies will have good audit results and those that weren’t will make the public aware,” she said.

She added that the state comptroller’s five-point plan (the Society served as a member of a coalition to develop the plan) will likely bring “more board awareness.” The plan requires a school district to have an internal claims auditor, an internal audit function plan and an external independent auditor. Additionally, the district must set up an audit committee, and each new board member must have six hours of training.

“I think more communication from the board with its external auditors will come out of these measures,” she said. “Ultimately, the board is responsible to the public, and that’s what’s important.”

The lasting results of the newly implemented measures are likely to show the value of auditing, Barossi said.

“The additional policies and controls implemented in school districts and the respect for a quality audit firm are likely to be long-term effects, because I think in the past it’s been lowest bid,” she said.

Frank Nusspickel, chair of the Society’s Professional Ethics Committee, said that the tightening that is happening within school districts is a good thing in the long run.

“It’s probably the same kind of reaction you would get from Sarbanes-Oxley,” he said. “Everybody’s gone a little bit overboard with internal controls, and you’ll see the same effect with the school boards. You’re probably in for a very tight program of exacting performance of audits. Which is not bad—it’s always a big sweep of the broom.”

Nusspickel added that the Long Island audits are likely to create a new awareness.

“I think with everything happening on Long Island, there’s going to be a further look at auditing,” he said. “I think the politicians are going to say, ‘We’re going put in the same kind of controls on this as corporate America has.’”

Although more attention should have been paid to prevention measures earlier, Nusspickel said, it’s important to look to the future.

“Definitely there should have been more emphasis on internal controls, but although I think the control features are key, it may not have received adequate attention in the past,” he said. “But I think it will get more attention as we go forward.”

Comptroller Audits Public Utilities

Outside of the ongoing school district audits, the comptroller’s office also has turned its focus on public authorities.

A recent state audit found that the Albany Water Board and Albany Municipal Water Finance Authority lost a total of $12.5 million from 1999 though 2003.

“The Albany Water Board and Finance Authority are more examples of very poorly operated public authorities,” Hevesi stated. “The result is huge deficits and fast-growing costs for Albany water ratepayers.”

Jeffrey Gordon, a spokesperson at the comptroller’s office, said that the office is currently involved in a “regional project to see whether local governments can save money by reducing water losses.”