State Comptroller Thomas DiNapoli released a favorable report Wednesday on a recent audit of the Southold School District’s financial procedures, which shows a significant improvement compared to the last report completed in 2006.
The new 12-page report reviewed purchase orders the school district made between July 1, 2011 to April 30, 2013 and found it had established “adequate controls over claims processing.” The report also found the school district “generally conducts a thorough and deliberate audit of each claim before the school board authorizes payment.”
The state selected a sample size to review out of the district’s 4,072 claims totaling nearly $24.5 million in payments made during the 16-month time period.
Although the state audit found the district has, overall, processed its claims properly, the report also found that the district had processed some orders prior to having a purchase order in place.
Of the 25 claims totaling about $145,600 state auditors selected to examine, it found nearly $33,500 issued in six claims were “prepared after the invoice was received from the vendor.” The process is called “confirming purchase orders” and should be limited to emergency situations, according to the state.
The lone specific example listed in the report explains how the school district “paid a vendor $3,025 on Oct. 13, 2011 for an advertisement in a newspaper.”
“The vendor’s invoice was dated Aug. 25, 2011 and the purchase order was dated Sept. 2, 2011,” according to the audit.
Although the report concludes the confirming purchases “appeared to be reasonable and legitimate,” it asked that the district prepare and approve all of its purchase orders (except in emergency situations) before it issues any future payments.
Southold school board president Paulette Ofrias said in an Aug. 14 letter addressed to the state comptroller’s office that although the district agrees that six of the 25 claims were confirming purchase orders, the school district doesn’t believe the rate of confirming purchase orders observed in the sample size is “indicative of the total population of claims processed.”
The district is expected to provide the state with a corrective action plan within 90 days, according to the report.
The state’s recent report is very different to the last audit completed in 2006.
In that report, the state found the district had been overstating its financial position for “at least six years,” and went over budget during the 2004-05 school year by about $746,000. It also found errors in how the district paid portions of a 1996 capital improvement project through the general fund and failed to follow its own policy to publicly advertise for contract bids on purchases, services and repairs.
Southold School District assistant superintendent for business Stephen Harrison, who was hired about a year after the state issued the 2006 audit, said he attributes the improvement between the two reports to the work his staff and members of the district have done over the years.
Mr. Harrison said the district came up with a corrective plan focusing on the budget planning process and found more efficient ways to organize the school’s finances.
Although Mr. Harrison said he was pleased with the state’s recent report, he said he’ll be working toward “tightening the process up.”
“It’s correctable,” he said about the state’s findings. “We always look at this as a learning experience.”
Scroll down to read the recent report.
State audit of Southold School District’s claims processing, 2013