New York State Comptroller Thomas P. DiNapoli announced the following audits were issued for State Departments and Agencies, Municipalities and School Districts during the week ending July 22, 2022.
Click on the text highlighted in colorto access the complete audit report.
State and New York City Audits
The Division of Military and Naval Affairs: Internal Controls Over Selected Financial Operations (Follow-Up) (2022-F-4)
The Division of Military and Naval Affairs (DMNA) manages New York State’s military forces, which are composed of the New York Army National Guard, the New York Air National Guard, the New York Naval Militia, and the New York Guard. An audit issued in 2020 found numerous weaknesses in DMNA’s internal controls to ensure that state assets were appropriately managed and safeguarded. In a follow-up audit, auditors found that DMNA has made significant progress in addressing the issues identified in the initial audit, implementing all nine recommendations that were made.
State Education Department: Oversight of Pupil Transportation Services (Follow-Up) (2022-F-5)
Approximately 2.3 million children are transported to school daily across the state, with one third riding School District-owned buses, one third riding contracted buses, and the remaining third utilizing public transportation. The New York State Education Law requires the State Education Department to take steps to ensure that school bus drivers, monitors, and attendants are qualified and properly trained. A 2020 audit found that the Department could improve its efforts to monitor School Districts’ compliance with its requirements and, consequently, did not have assurance that drivers, monitors, and attendants across the state were qualified and had completed required training. The follow-up audit found that Department officials made limited progress in addressing the issues identified in the initial audit report.
NYC Department of Transportation: Street Construction-Related Permits 2020-N-6
The NYC Department of Transportation issues 150 different types of sidewalk and roadway construction permits that cover activities such as street openings, sidewalk construction and installation of canopies over sidewalks. DOT Highway Inspections and Quality Assurance (HIQA) is the agency’s enforcement unit and conducts construction site inspections to ensure permittees comply with the laws, regulations, and permit specifications and stipulations. Auditors determined that DOT did not always ensure that permittees were in compliance with street permit requirements.
Department of Taxation and Finance - Collection of Petroleum Business Tax and Motor Fuel Excise Tax (Follow-Up) 2021-F-30
An audit issued in 2020 looked at the systems and practices that the Department of Taxation and Finance put in place to allow it to appropriately collect Petroleum Business Tax and Motor Fuel Excise Tax, as they are required to do by law. The audit uncovered weaknesses in the Department’s efforts to appropriately collect taxes and suggested recommendations for how the Department could improve oversight of distributors and tax collection processes. In a follow-up, auditors found the Department has made significant progress in addressing the issues identified in the initial report, implementing both recommendations that were made.
United Cerebral Palsy Association of Nassau County, Inc. – Compliance With the Reimbursable Cost Manual
United Cerebral Palsy Association of Nassau County, Inc. (CPN) is a State Education Department (SED)-approved, non-profit special education provider located in Roosevelt. Among other programs, CPN provides preschool education services to young children with disabilities. CPN is reimbursed for these services through rates set by SED. Auditors looked at the fiscal year ended June 30, 2018, and found several issues with CPN’s reporting, including nearly $160,000 in ineligible costs reported by CPN on its Consolidated Fiscal Reports.
All My Children Day Care — Compliance With the Reimbursable Cost Manual
All My Children Day Care (AMC) is a New York City-based not-for-profit organization authorized by SED to provide Special Education Itinerant Teacher (SEIT) services to young children with disabilities. AMC also operated other programs, including the New York City Administration for Children’s Services’ Early Learn program. Auditors found that on its annual Consolidated Fiscal Reports, AMC failed to provide certain key documents it should have retained to support the expenses claimed on its annual CFRs, including over $3 million in unsupported costs for fiscal year 2014-15.
Municipal Audits
Finger Lakes Horizon Economic Development Corporation – Revolving Loan Fund Program (2022M-36)
The board did not properly manage and monitor the revolving loan fund program. As a result, the board cannot ensure the loan proceeds were used to further the corporation’s mission. Revolving loan fund activity was not adequately monitored to ensure loan recipients’ performance goals were achieved. Officials requested follow-up information from loan recipients to verify job creation/retention goals but did not enforce these goals if not achieved. No practices were in place to ensure penalties were accessed when warranted and no formal written policies and procedures were in place for officials to monitor whether loan disbursements were used for their intended purposes. Clear, written guidance was not developed for loan project eligibility, how loan applications should be reviewed or approved, confirming loan funds were used for approved purposes and goals, or how collections should be enforced.
Village of Hewlett Neck – Financial Management (2022M-35)
The board did not adopt realistic budgets or monitor and effectively manage fund balance. Revenues were underestimated by a total of $334,095 and appropriations were overestimated by a total of $171,095 from 2017-18 through 2020-21. As a result of the village officials’ budgeting practices, officials collected a four-year total of $505,187 more than necessary in taxes and maintained an excessive level of surplus fund balance in the general fund from 2017-18 through 2020-21, ranging between $364,415 in 2017-18 (100% of the ensuing year’s budget), and $445,858 in 2019-20 (109% of the ensuing year’s budget).
Town of Lansing – Information Technology (2022M-66)
Town officials did not ensure IT systems were adequately secured and protected against unauthorized use, access, and loss. In addition to sensitive IT control weaknesses that were communicated confidentially to town officials, auditors found the town had seven unneeded network user accounts and did not create adequate written IT policies for network user access, online banking, and breach notification. The board did not require IT security awareness training for computer users.
City of Poughkeepsie Industrial Development Agency – Project Approval and Monitoring (2021M-168)
The City of Poughkeepsie Industrial Development Agency (CPIDA) Board did not properly evaluate and approve projects and monitor the performance of businesses that received financial benefits. Specifically, the board did not have a process to adequately oversee and monitor CPIDA projects. As a result, projects were missing applications, cost-benefit analyses, project agreements, and uniform tax exemption policies. The board cannot verify two projects’ self-reported and calculated revenues upon which their payments in lieu of taxes (PILOTs) are based on. These projects have 99-year PILOT agreements. CPIDA officials did not ensure that projects were assessed late payment penalties totaling $30,664.
School District Audits
Genesee Valley Board of Cooperative Educational Services – Purchase Cards (2022M-27)
While the 198 BOCES purchase card charges reviewed were adequately supported and for valid purposes, only one was properly approved. The purchasing agent did not approve 197 purchases totaling approximately $46,000 before goods or services were obtained.
Genesee Valley Board of Cooperative Educational Services – Reserve Funds (2022M-39)
While the board and BOCES officials properly established reserve funds, they did not transparently fund the reserves or use or maintain reserve funds at reasonable levels. The board and officials used unnecessarily restricted funds that could have been refunded to school districts and overfunded two reserves totaling $1.9 million. Officials could not demonstrate the balances in the four remaining reserves, totaling approximately $800,000, were needed or reasonable and did not adopt a written reserve fund policy.
Ogdensburg City School District – Medicaid Reimbursements (2022M-52)
The district did not maximize Medicaid reimbursements by submitting claims for all eligible Medicaid services provided. Claims were not submitted and reimbursed for 1,365 eligible Medicaid services provided totaling $65,254, which resulted in the district not realizing $32,627 in revenue. The district lacked adequate procedures to ensure that Medicaid claims were submitted in a timely manner, necessary documentation requirements were met, and disallowed claims were reviewed and resubmitted when appropriate.
Otselic Valley Central School District – Procurement (2022M-58)
District officials did not always seek competition to procure goods and services not subject to competitive bidding. Out of nine purchases under the competitive bidding threshold reviewed totaling $109,671 and two professional service contracts totaling $35,038, officials did not seek competition for a transportation efficiency study ($32,500), purchases of ice melt ($10,845) and information technology equipment ($8,512), or for the district’s attorney that was paid $21,038 during the audit period. District officials may have saved $13,781 on fuel costs had they been able to use state contracts. Procurement policies and procedures were inadequate and did not help ensure officials sought competition for goods and services.
Town of Webb Union Free School District – Financial Management (2022M-53)
The board and district officials did not adopt realistic budgets and did not properly manage fund balance. The board consistently overestimated appropriations in the 2018-19 through 2020-21 budgets by a total of $3.7 million (16%) and appropriated fund balance totaling $3.5 million that was not needed. Officials improperly overstated fiscal year-end encumbrances by approximately $974,000 from 2018-19 through 2020-21. When unused appropriated fund balance and invalid encumbrances are added back to surplus fund balance, it increased to approximately 26%, as of June 30, 2021, exceeding the 4% statutory limit. Despite reporting excess surplus fund balance, the board increased the real property tax levy by 6.8% from 2017-18 through 2021-22 and levied more taxes than needed to fund operations.
West Islip Union Free School District – Financial Management (2022M-40)
The board appropriated fund balance that was not needed to fund operations and was not transparent when funding reserves. The board adopted budgets that overestimated appropriations by $24.6 million, or approximately 5.2% over a four-year period. The board annually appropriated fund balance that was not needed to pay operational expenses and made year-end unbudgeted transfers to reserves to stay within the statutory surplus fund balance limit. The board did not properly establish the workers’ compensation and unemployment insurance reserves which are also overfunded, having enough money to pay the average annual expenses for eight and 51 years respectively. The board and officials’ budgeting practices and management of fund balance and reserves resulted in levying more taxes then were needed to fund operations.
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