Audits and reports issued during the week ending August 14, 2021 by the New York State Comptroller

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending July 23, 2021 

Click on the text highlighted in color to access the complete audit report.

MUNICIPAL AUDITS

Town of Butternuts – Disbursements (Otsego County)

The board did not provide adequate oversight of the disbursement process and exceeded its authority under New York State Town Law by authorizing insurance claims and annual contracts to be paid before audit and approval. The board also exceeded its authority by allowing a third-party vendor direct access to the town’s bank account that, at times, had more than $500,000 on deposit. In addition, the board allowed debit cards to be used, which resulted in a circumvention of the town’s disbursement controls. Auditors found that the142 disbursements totaling $142,200 they reviewed were for proper purposes and adequately supported. However, the board, did not audit and approve 53 of these claims totaling $15,600 before payment as required.

 

Village of Montgomery – Board Oversight of the Treasurer’s Office (Orange County)

The board did not provide adequate oversight of the treasurer’s financial operations. The board also did not know the treasurer did not comply with water and sewer village laws and codes which resulted in $29,300 in penalties not being assessed. The board did not Implement sufficient compensating controls to minimize the risks associated with the lack of segregation of duties within the treasurer’s office. In addition, the board did not approve or authorize anyone to approve billing adjustments for water and sewer bills nor did they require adjustments to be documented and retained. Auditors also found the board did not perform required annual audits. The last required audit was conducted in 2016.

 

Otsego-Northern Catskill Board of Cooperative Education Services (BOCES) (Otsego County)

Otsego-Northern Catskill (ONC) BOCES officials did not properly monitor and account for 66% of the 76 fixed assets auditors examined, including security cameras, computers, tools and equipment. Auditors found 30 assets totaling more than $104,000 did not have required asset tags. Eight assets totaling more than $12,000 were not added to the inventory list. Three assets totaling more than $6,000 were not located. Seven assets totaling $18,600 were found at different locations than shown on the inventory list.

 

Town of Walton – Justice Court Operations (Delaware County)

The court properly accounted for, deposited, disbursed and reported fines and fees examined. There were no recommendations in this audit.

 

Washington County Local Development Corporation – Revolving Loan Program (Washington County)

Corporation officials did not provide adequate approval and oversight of the revolving loan program. Auditors reviewed six of the 11 loans that were approved and paid but found they lacked required documentation of a commercial loan denial letter. The director did not adequately follow up with seven of the 14 businesses to verify that funds were used for the approved purpose. Loan agreements do not have job creation or retention enforcement mechanisms. Business job creation and retention numbers were not verified.

SCHOOL DISTRICT AUDITS

Keene Central School District – Transportation State Aid (Essex County)

District officials did not apply for all transportation aid in a timely manner and were at risk of losing $20,513 for new bus acquisitions. The district also did not properly file for transportation aid for seven buses. However, after auditors identified the risk of lost aid, the treasurer prepared and submitted state aid applications for five of these buses and indicated she will file for the remaining two. Officials did not establish adequate procedures to ensure the district applied for all state aid for new bus acquisitions. In addition, officials did not perform an annual reconciliation of the district’s state aid receipts, records and reports.

Marlboro Central School District – Information Technology (Ulster County)

District officials did not establish adequate controls over network user accounts and settings. Auditors found officials did not regularly review network user accounts and permissions to determine whether they were appropriate or needed to be disabled. In addition, 79% (71 network user accounts and 14 generic or shared user accounts) of the reviewed accounts were unneeded or questionable accounts. Officials developed a data security plan in January 2010 that included password security and user account management policies and procedures, however, the board did not adopt the policy and the practice was not implemented. Sensitive information technology control weaknesses were communicated confidentially to officials.

New Paltz Central School District – Payroll (Ulster County)

District officials generally paid employees’ salaries and wages accurately but did not establish adequate controls over payroll. Payroll was not always properly reviewed and certified before payments were made. There was no support, such as timesheets, for $1,497 of the $40,688 (4%) paid to hourly/daily employees during the months reviewed. The district has not performed a payroll audit or payout test (e.g., requiring employees to pick up their payroll statements in person).

Rocky Point Union Free School District – Overtime (Suffolk County)

District officials did not adequately authorize, monitor or control overtime. As a result, the district may have incurred unnecessary costs. District officials did not adopt written policies to ensure all overtime hours were preapproved, incurred only when necessary and adequately recorded. District officials also did not preapprove non-emergency overtime as required by district procedures. In addition, district officials did not adequately monitor the overtime budget to ensure that sufficient appropriations were available for overtime costs nor did they properly record all overtime costs.

 

The untimely filing of a CPLR Article 78 petition bars the court from considering the merits of the issue

An employee [Plaintiff] challenged his employer's [Employer] calculation of his pension is a challenge to an administrative determination. According, as the Appellate Division noted, any legal action should be brought pursuant to CPLR Article 78 and is subject to the four-month statute of limitations to file such a petition set out in §217[1] of the Civil Practice Law and Rules [CPLR].

Employer had excluded Plaintiff's "summer pay" from its calculation of Plaintiff's pension benefits. This calculation became "final and binding" on the Plaintiff when he received his annual "benefits letter" from the Employer. Further, noted the Appellate Division, Employer's reply to Plaintiff's inquiry concerning the calculation of his retirement allowance that Plaintiff submitted almost six years later indicating that "there is nothing further than can be done" did not serve to extend the controlling limitations period.

Similarly, as was noted in Raykowski v NYC DOT, 259 AD2d 367, a request for reconsideration of an administrative determination does not extend the statute of limitations for perfecting an appeal. 

CLICK HEREto access the Appellate Division's decision in the instant case.

A party challenging a decision of the Worker's Compensation Board must comply with its rules

Appeal from a decision of the Workers' Compensation Board, filed September 17, 2019, which ruled that the self-insured employer and its third-party administrator failed to comply with 12 NYCRR 300.13 (b) and denied review of a decision by the Workers' Compensation Law Judge.

The Appellate Division stated that it had consistently recognized that "the Board may adopt reasonable rules consistent with and supplemental to the provisions of the Workers' Compensation Law, and the Chair of the Board may make reasonable regulations consistent with the provisions thereof" (Matter of Randell v Christie's Inc., 183 AD3d 1057, 1059 [2020] [internal quotation marks and citations omitted].

Those regulations require, in relevant part, that "an application to the Board for administrative review of a decision by a [WCLJ] shall be in the format as prescribed by the Chair [and] . . . must be filled out completely" (12 NYCRR 300.13 [b] [1]" and "Where, as here, a party who is represented by counsel fails to comply with the formatting, completion and service submission requirements set forth by the Board, the Board may, in its discretion, deny an application for review" (Matter of Charfauros v PTM Mgt., 180 AD3d 1132.

CLICK HERE to access the full text of the Appellate Division's decision.

Concerning proper service, timeliness, standing and employment discrimination with respect to appeals to the Commissioner of Education

In this appeal to the Commissioner of Education from action of the Board of Education, the Commissioner first addressed a number of procedural issues.

1. Proper service:  §275.8 (a) of the Commissioner’s regulations requires that the petition be personally served upon each named respondent.  If a school district is named as a respondent, service upon the school district shall be made personally by delivering a copy of the petition to the district clerk, to any trustee or any member of the board of education, to the superintendent of schools, or to a person in the office of the superintendent who has been designated by the board of education to accept service.

Effective April 7, 2020, during the time period of any movement restrictions or school closures directed by the Governor pursuant to an Executive Order during the COVID-19 crisis, the Commissioner noted that a petitioner may effectuate alternative service on a school district in the following manner:  

(1) by mailing the petition, notice of petition and all supporting papers by first class mail in an envelope bearing the legend “APPEAL TO THE COMMISSIONER OF EDUCATION” (in capitalized letters) ... to the attention of the district clerk and superintendent of schools ...; and (2) on the same date as the mailing, emailing the petition, notice of petition and all supporting papers under the subject heading “APPEAL TO THE COMMISSIONER OF EDUCATION” (in capitalized letters) ... to both the district clerk and superintendent of schools ....  Service shall be deemed complete upon completion of both steps identified above (8 NYCRR 275.8 [f]).

The Commissioner rejected the Board of Education's argument that this provision "does not apply because, at the time the appeal was commenced, the district was “open” and there were no movement restrictions or school closures that would have impacted petitioners’ ability to effectuate personal service."  

The Commissioner declined to dismiss the appeal for lack of personal services "Under the circumstances of this appeal," noting that the Board of Regents adopted the version of 8 NYCRR 275.8 (f) applicable here in April 2020, shortly after the Governor declared a State disaster emergency for the entire State of New York on March 7, 2020, finding that "it is in the spirit of the amendment to permit alternative service under the circumstances of this appeal, and I decline to dismiss the appeal on that basis."

2. Timeliness: An appeal to the Commissioner must be commenced within 30 days from the making of the decision or the performance of the act complained of, unless any delay is excused by the Commissioner for good cause shown (8 NYCRR § 275.16. Noting that the record indicates that "the acts of which petitioners complain occurred at a public meeting of the board held on October 8, 2020", the Commissioner held that although petitioners would ordinarily be required to commence the appeal by November 7, 2020, "that day was a Saturday.  Where, as here, the 30-day time period in which to commence an appeal ends on a Saturday, the petition may be served on the following business day," citing 8 NYCRR 275.8 [a].  Thus, said the Commissioner, petitioners’ service of the petition on November 8, 2020 was within the 30-day time limitation.*

3. Standing: An individual may not maintain an appeal pursuant to Education Law §310 unless aggrieved in the sense that he or she has suffered personal damage or injury to his or her civil, personal, or property rights and only an individual who is directly affected by an action has standing to commence an appeal therefrom. The Commissioner explained that a petitioner lacks standing to assert the rights of others who applied for the special education teaching positions.

4. Employment discrimination: The Commissioner ruled that a petitioners’ claims of employment discrimination is beyond the scope of an appeal to the Commissioner pursuant to Education Law §310, noting that the State's Human Rights Law contains a comprehensive scheme for the investigation and enforcement of human rights violations through the Division of Human Rights, citing Executive Law § 295).  Accordingly, it would be contrary to this structure for the Commissioner to assume jurisdiction over such claims.

The Commissioner noted that "Petitioners are correct that the Commissioner has opined upon claims of discrimination in prior appeals (e.g., Appeal of D.B., 49 Ed Dept Rep 319, Decision No. 16,041)." However, said the Commissioner, the "does not affect my conclusion that petitioners’ claims here — such as the disparate impact of hiring practices like “word of mouth” referrals – are more appropriately resolved by a fair employment practice agency or a court of competent jurisdiction," citing Grant v Bethlehem Steel Corp., 635 F2d 1007.

The Commissioner then addressed the merits of the appeal.

Click Here to access the full text of her decision.