During the 2020-2021 school year, New York State audited over 105 school districts for compliance with everything from budgeting and claims auditing to procurement and mental health training (plus a whole lot more). Reports summarizing findings and key recommendations are posted on the Office of the State Comptroller website. Since auditing is part of our DNA (we’re accountants, after all) we figured we’d take a look and summarize findings that may be of interest to you.
We reviewed all the 2022 result reports posted as of September 8 of this year. Of the districts audited, less than ten met all prescribed requirements; the balance received key recommendations on how to improve services, processes, and more going forward. More than a few audits uncovered potential savings opportunities ranging from several hundred dollars to several hundred thousand dollars. One even resulted in an arrest for misappropriation of funds!
Below you’ll find highlights of findings for the five areas audited most frequently. Perhaps you’ll come across a few items to help your district save time and money.
Mental Health Training Under the New York Students Against Violence in Education (SAVE) Act
Out of the 20 districts audited, two provided all 12 recommended components of mental health training for all staff by September 15, 2020, as required by law. The audit results, which made headline news, noted whether all 12 training components were made available to all staff; whether the district tracked attendance; and whether training was completed by the September 15 deadline.
Network Access Controls/User Accounts
19 districts were audited. None met all requirements which included regular reviews and updates of network user accounts for necessity and appropriateness; immediately disabling unneeded accounts; having written procedures for managing system access; regularly reviewing and securing access with proper user permissions to the network and financial application; having a password security policy; having a policy clearly stating what is an acceptable use of a district computer, how you monitor compliance and provide training; having clear roles and responsibilities for cybersecurity; having an up-to-date disaster recovery plan that has been shared with all responsible parties; periodically comparing installed software to an authorized software inventory list, and reviewing whether you are at risk for data loss and operational disruption. More sensitive issues were communicated confidentially to school officials.
16 districts were audited. None met all requirements which included ensuring goods and services are always procured in the best interest of taxpayers; seeking competition for professional services in accordance with a written procurement policy; periodically reviewing service provider contracts to determine the need for new RFPs; having a written procurement policy specifying when and how frequently officials should issue RFPs and including detailed guidance for procuring goods and services not subject to competitive bidding or when there is no possible competition; having the Board review the policy annually; saving on things like fuel by using the Office of General Services (OGS) fuel card program or state contract; comparing bills against awarded contract prices to ensure billing is correct and does not include taxes and unnecessary fees; awarding contracts in a manner consistent with New York State General Municipal Law; and fully evaluating and comparing benchmark rates before entering a contract.
Financial Management & Controls
14 districts were audited; none met all requirements, which included having a realistic budget; managing fund balance properly and in accordance with the law; having an adopted budget accurately estimate appropriations to fund options; being transparent about funding reserves; having appropriate workers’ compensation reserves, unemployment insurance reserves, and a retirement contribution reserve fund; not levying more taxes than needed to fund operations; discontinuing unnecessary appropriations of fund balance; using overfunded reserves to benefit district residents; keeping surplus fund balance at or below the 4% statutory limit; creating accurate and reliable financial reports; Finance Committee participation in budgeting and review of reports; consulting legal counsel regarding excess reserve funds, as well as the appropriate remedy for addressing improper funding of and transfer of reserve funds; having a debt reserve and using funds to pay debt as required; having a written reserve policy establishing targeted or optimal funding levels; and having the Board define financial objectives including purpose, funding goals, conditions for fund use and replenishment.
12 districts were audited. Interestingly, the four that were audited for compliance with FCC Internet bandwidth and download speed met all requirements. Requirements that were not met include having and testing an IT contingency plan to minimize operational disruptions; having a written policy detailing proper use of fixed IT assets; having procedures to affix tags to assets; tracking inventory and equipment, conducting an annual physical inventory, and removing devices not in service; and having your server room establish physical security and environmental controls.
What about the remaining audits? Four focused on claims auditing; three focused on Extra Classroom Activity Funds; five were on salary, wages, and leave benefits; three were on capital projects; one focused on website transparency and another focused on electronic records and reports; two were on non-resident student tuition; three were on special education services and Medicare reimbursements; and one was conducted for each of the following – electronic records and reports, online banking, safeguarding personal, private and sensitive information on mobile computing devices, property disposal, and transportation department operations. For more details, visit the NYS Comptroller website to review audit reports.
While you’re using audit results to help your district operate more efficiently and effectively, remember, RBT CPAs is here to partner with you on financial audits, accounting, taxes, and more. We’ve been partnering with school districts and institutions of higher education for over 50 years in the Hudson Valley and beyond. Interested in learning more? Give us a call.