In an effort to identify areas where school districts can improve their operations, the New York State Comptroller's Office recently released an audit report on the Saugerties Central School District covering the period of July 1, 2004 to January 13, 2006. The objective of the audit was to determine if internal controls over selected financial activities are appropriately designed and operating effectively. Whether the District established adequate internal controls over purchasing and claims processing to protect District assets against fraud, abuse and professional misconduct, and if the District had established adequate internal controls to protect capital assets, etc., against loss, waste and misuse are areas examined during the audit. The audit determined that the District had not established such adequate internal controls, citing failure to enforce compliance with policies relating to bid solicitation, quotes, claims authorization, and payment of unsupported travel and entertainment expenses. The audit also found that District officials had not established adequate controls to protect capital assets and inventories. For those who do not have access to a computer, I am sharing herewith portions of that Audit Report. Those with computer access may wish to review the report (as well as the School's response to the Comptroller's Report) in its entirety. Access directly to the report is available through the Watchdog web site www.saugertieswatchdog.com (as well as through the State Comptroller's Office itself).
Travel and Conference Expenses According to the Report: "The Board has adopted policies and regulations related to travel and conference expenses. These policies state that District officials, employees and Board members will be reimbursed for actual and necessary travel-related expenses that are authorized and that are incurred while traveling for school-related activities. District policy requires conference participants to get prior written approval to attend a conference by submitting request forms. To receive reimbursement, the employee must complete and sign a claim form, with receipts and proof of attendance attached."
Their review of "purchase packets" and employee reimbursements to verify that payments were properly made and supported by appropriate documentation, revealed, among other inconsistencies, that one payment for $160 should not have been made. In this instance, Superintendent Richard Rhau was improperly reimbursed for actual travel mileage to attend a conference while he had simultaneously received a $450 monthly stipend as compensation for use of his personal vehicle in the conduct of District business. The Report noted that "the failure to enforce compliance with the District's travel and conference expense policies increases the risk that the District will reimburse costs that may not be authorized or appropriate." In fact, in its report, the Comptroller's Office recommends that the Board obtain reimbursement from Superintendent Rhau for the inappropriate $160 travel reimbursement that he had received. As the reader will recall, this very issue is one that I continuously addressed with the Board for more than a year. I stated repeatedly that Mr. Rhau is not entitled to that $160 but, unfortunately, my complaint fell on deaf ears. Now, since the Comptroller's Office has confirmed my position, I can only say "I told you so."
Meals, Cellular Telephone and District Credit Cards The report states: "The District paid $9,395 for meals for the period July 1, 2004 to December 22, 2005; paid $34,337 for credit card charges for the period July 1, 2004 to December 21, 2005; and paid $13,000 for cellular telephone costs for the period July 1, 2004 to January 6,2006. District officials should limit these costs to necessary expenses incurred in the conduct of District business. However, the District lacked policies and procedures designed to control these expenses thereby increasing the risk that the District could pay for excessive or inappropriate costs."
and then further states that they had reviewed: ". . . 14 District payments, totaling $8,672 for meals and refreshments made between July 1, 2004 and December 22, 2005. These payments were for various events, including Board and committee dinner meetings, a Board administrative retreat meeting at a local country club and the Superintendent's lunch meetings . . ."
(such as Chowhound, Applebee's, etc.,. with selective board members). The auditors: ". . . could not verify the legitimacy and appropriateness of any of these payments because payment packages did not clearly show who attended the meetings, or why District-paid meals and refreshments were required to conduct District business. [They] also reviewed an additional 11 payments, totaling $723, to cafes and restaurants for charges made by the Superintendent [Richard Rhau and Assistant Superintendent Cheryl Nucifaro] . The receipts attached to the packages did not itemize the meals and beverages purchased."
Regarding cellular telephones used by the District during the audit period, the report continues, stating: "The District has spent approximately $13,000 for 25 District-issued cellular telephones. . .
Again, as the reader will recall, this is another point that I continuously addressed with the Board. Again, it fell on deaf ears when I suggested that the District establish a detailed log of those hundreds and hundreds of calls made with the District cell phone by the Superintendent in order to monitor which calls were District business and which were personal. As pointed out in the Comptroller's Report, the District pays the phone bills without reviewing them to identify or monitor individual usage! In fact, the Comptroller's Report recommends procedures to monitor compliance with the policy, and that employees should reimburse the District for excessive personal usage. With respect to six credit cards the District has in order to pay for travel-related expenses, supplies, equipment and Internet purchases, the report indicates that charges to these credit cards totaled $34,337 for the period July 1, 2004 and December 21, 2005, and goes on to state that the auditors had: ". . . selected and tested 11 credit card charges from 10 credit card statements. Two purchases of books, totaling $1,415, were supported by post-dated purchase requisitions. When purchase requisitions are not approved prior to buying goods and services, there is increased risk that the District could pay more than it should for these purchases." They found that: ". . . two travel-related charges (hotel rooms and airfare), totaling $527, were supported by reservation forms, but not by invoices. Charges should be supported by invoices to show the amount actually paid to the vendor."
The People Do Care In closing, I just can't help recalling board member Ed Kovac calling me a "lousy reporter," and foolishly denouncing me for wasting my time writing about school business issues as "no one cares." How wrong Mr. Kovac has been! People do care, and, apparently, so does "Albany." Perhaps if Kovac had paid a little more attention to school business issues himself, Saugerties Central School District might have received a glowing review instead of a scathing one. More to come.... George D. Heidcamp, Sr. January 4, 2007 |