1. The Department’s formal approval was limited to certain program-related and facility rental costs associated with a relocation of the junior high school. The District did not request written prior approval from the Department for the building renovation associated with the junior and senior high school relocations. Further, the Department advised us that it did not provide the District with any written prior approval of the renovation. Consequently, there was no explicit understanding that the District would be reimbursed for all costs associated with a renovation program of this nature. Also, the Regional Associate’s verbal approval of the renovation costs would have been appropriate only if the cost of such renovation was minimal. In fact, the Regional Associate indicated that the rental property required only minimal renovations for use by the junior and senior high schools. Nonetheless, the District spent over $200,000 to renovate it. It should be noted that we allowed certain costs associated with the relocation, including those of District staff for cleaning, painting, fixing chairs and windows, and other minor maintenance items. However, because a building renovation (capital project) of this magnitude is not a routine operating cost (and should not be included in the District’s permanent operating cost base), the District should have sought and obtained formal prior Department approval for it, as required by the Manual. 2. At the outset of our audit fieldwork (March 2001), the District’s controller (at that
time) advised us that the District did not have formal policies and procedures for its fiscal administrative functions. Rather, officials advised us that they intended to review a BOCES manual and use sections of it to prepare a manual for the District. Thus, at the time of our fieldwork, the District staff did not have a Manual to follow to ensure that staff followed proper policies and procedures. According to District Board minutes, GNC adopted a fiscal accountability and control resolution (which included the BOCES Manual) in October 2001, after our audit fieldwork was completed. In addition, we are pleased that District officials have taken steps to improve the existing system of internal controls with guidance from the Department.
3. We did not agree that the information provided by the District’s former controller was inaccurate and misleading. Moreover, we believe that District officials took actions to develop a manual and improve their internal controls because they recognized that there were control weaknesses that needed to be addressed. 4. The Manual states that: “Ordinary living expenses, such as the cost of clothing
and uniforms that are normally assumed by parents or legal guardians of students…are not reimbursable. Clothing expenses for staff such as uniforms …even if required by school policy are not reimbursable.” On a one-time basis, the Department approved (and therefore we allowed) $3,000 for uniforms for crisis intervention staff to use when a student exhibited severe behavioral problems. Therefore, we disallowed the difference ($83,695) between the amount the District spent and the amount the Department approved.
5. The relationship of travel to the District’s travel education program is not the issue. The Manual states that: “Ordinary living expenses such as the cost of overnight class trips or other expenses that are normally assumed by parents of students…are not reimbursable.” Moreover, although Department program staff may have expressed general support for the travel program, there is no evidence that the Department approved the specific travel costs in question.
6. This matter was included in preliminary findings that we provided the District during our fieldwork. However, based on additional information provided to us by the District and advice from the Department, we deleted this matter (and the corresponding disallowance) from the draft audit report and this final report as well.
7. The language in the draft audit report paraphrased the Manual and was not intended to allege that the costs in question were Board meeting-related. Thus, we have amended the report to clarify what the food and beverage costs in question were used for. Moreover, these costs are not allowable per the manual. 8. We question the District’s assertion that an emergency situation existed at the District’s schools. Neither during the course of the audit or in their response to the draft audit report did District officials provide us with details of any “accident” or other “unforeseen occurrence” that took place at District schools and posed an immediate and significant safety risk to students. Further, the District continued to use its own facilities for an entire school year before the renovations of the rental site took place. Moreover, the renovations were made at the rental site (and not at the District’s schools) where conditions did not constitute an emergency situation. (In fact, another public school district held regular classes at the site throughout the school year prior to the District’s lease of it.) Therefore, the District should have used competitive procurement processes to perform the major components of the renovation of the rented property.
9. The twenty-person crisis intervention team was not required primarily because of structural problems with district facilities. Rather, the main purpose of the crisis intervention team was to help the District handle students with severe behavioral problems who posed a significant threat to District staff and fellow students. 10. Contracts for busing, cleaning and maintenance, and professional services were
matters included in preliminary findings that we provided the District during our fieldwork. However, based on additional information provided to us by the District and advice from the Department, we allowed all costs related to these contracts. As noted previously, we disallowed certain renovation costs because they were not pre-approved by the Department, and the District did not use competitive processes to procure the related materials and services. (Also, see notes #1 and #8.)
11. The District requested its accounting consultant to recalculate the corrected FTE enrollment figures for the audit period in compliance with Regulation 175.6. Those figures differed somewhat from those we presented in the draft report. Thus, we amended the FTE enrollment amounts, based on the information provided by the District, for this final report. Moreover, the amended enrollment amounts still indicate that the District’s original enrollment reports to the Department were generally incorrect.
12. The District’s comment is speculative. The reconciled (final) tuition rate, as determined by the Department could have been either higher or lower than the errant rate the District actually charged some of its clients. Moreover, the District acknowledges that it charged certain districts at the wrong rate (which exceeded the rate approved by the Department at the time of the billings in question) and has taken action to address this problem.