Audit Confirms Our Suspicions Click here to jump to the audit, which appears below On June 30, 2005, certified public accountants Raymond G. Preusser, CPA, P.C., conducted an audit of the Saugerties Central School District. A copy of the auditor’s report, which is very self-explanatory, was obtained through the FOIL process, and its contents, which are significant, are summarized here. I’ve been advised that in spite of any potential value of the report, certain members of the school board have not been provided with a copy, nor have they been given the opportunity to review the actual report in detail to determine whether or not there was compliance with the auditor’s suggestions. It seems apparent that the report has instead been treated as insignificant and then glossed over with some "lip-service" comments about minor problems.   The Report The report suggests the need to improve internal control and achieve certain operating efficiencies. In July 2005, Governor Pataki signed a bill into law. The legislation, which is intended to improve school districts’ financial accountability, is commonly referred to as the "Five Point Plan," and addresses the following five areas: Audit Committees Internal Claims Auditor Internal Audit Function Audit Services Board Training   Policies on Spending.–As a result of recent events, the Comptrollers’s Office recommended that school districts need to strengthen their policies and oversight on spending. School districts need to adopt polices relating to spending on travel (conferences), meals and refreshments, cell-phones, and credit cards. During the audit it was noted that the Saugerties Board of Education had adopted written policies to address these spending areas (and I recently FOILed for copies of these policies). But now that policies have been adopted, it’s the Board’s responsibility to monitor the practices and procedures for compliance. The report further states that the Board of Education should review and update these policies and procedures to meet the changing needs of the District. Also, that the Claims Auditor should obtain a copy of these policies to ensure that every claim contains sufficient documentation to determine that the claim is a necessary School District expense. For example: was the paying of more than $3,000 for the Superintendent to attend a four-day conference in San Diego, a necessary expense for the District?   Documentation of Invoice Processing.–The report found the following: Purchase orders were not always signed by the purchasing agent (the purchasing agent is the only individual who can authorize the expenditure of district money); Five instances where invoices lacked signature for receipt of goods and date indicating that goods have been received and "are satisfactory;" Five instances where invoice packets lacked detailed supporting documentation (it was recommended that each "payment packet" contain all necessary authorization and documentation to determine that the claim is a necessary School District expense) ; One instance where the District paid sales tax (the District should be exempt); Several instances where the purchase orders/claim forms were not dated by the purchasing agent: and One instance where a purchase order was issued after the invoice date.   Interfund Receivables/Payables.–It was noted that the interfund receivables/payables were not reconciled as of June 30, 2005. Timely recording of all interfund transactions is essential for proper posting of financial information in the respected funds. Without timely posting of interfund transactions the revenue and expenditures are not accurately reflected. It was recommended that steps be taken to ensure that the interfund transactions are properly recorded and balanced on a monthly basis.   Cash Management.–The audit noted that the General Fund had outstanding advances at June 30, 2005 Special Aid Fund $1,695,726 Capital Fund $ 569,255 ___________ $ 2,264,981 It was noted that both funds had cash available to transfer to the General Fund. The audit recommended that on a monthly basis, the "due from/due to" accounts should be reviewed and monies returned to respective funds in a timely manner.   Fixed Assets.–It was noted that the District did not perform an annual physical inspection of asset inventory to determine that all assets are present (which is necessary in order to strengthen internal control over inventory, as well as for proper insurance coverage).   Special Aid Fund.–The audit noted the following: Federal and State receivables increased from $660,130 at June 30, 2004 to $1,492,779 at June 30, 2005; The indebtedness to the General Fund increased from $892,170 at June 30, 2004 to $1,695,726 (year omitted, but presumably at 2005). Monthly/Quarterly request forms for funds for the current year’s programs were not filed (for programs in excess of $100,00 a request for funds should be filed on a monthly basis and for programs less than $100,00, on a quarterly basis); and The District has a receivable of $294,235 for the Summer Handicap Program (included in the above total) which goes back several years (the District should monitor the collection of these receivables closely, because any uncollected funds become a liability to the General Fund). It is their recommendation that the Special Aid Fund needs attention to facilitate timely filing of reports and collection of money.   In closing, we pay almost a half million dollars for the three top administration positions, and this is the result. Again, "checks and balances" and accountability seem to have gone astray in the Saugerties Central School District. Where was the former board president during all this? Did the Board of Education’s leadership properly monitor the policies and procedures for compliance? You be the judge! Stay tuned..... George D. Heidcamp, Sr. July 20, 2006

A copy of the audit (in jpeg image format) appears below.