News
Improving fiscal health and controls
December 2007
|
State Audit Report District Response |
Two years ago, Mohonasen was a district
headed for financial distress. Now, thanks to more detailed
budgeting, a concerted effort to rebuild its “rainy day” reserves
and a bump in state aid for the 2007-08 school year, the district’s
fiscal outlook is much improved. That was the message from
Mohonasen’s independent auditor Raymond Preusser, CPA, PC in a
report to the Board of Education this fall.
“For too many years, Mohonasen budgeted very close to the bone,”
explains Denise Swezey, Mohonasen’s assistant superintendent for
business. “Then we had several years of unexpected expenses—such as
the spike in energy and fuel prices in 2006—which forced the
district to deplete its reserves to cover this and other costs. Now
we’re being much more realistic in predicting and monitoring annual
expenses in every budget line,” she said. This approach—along with a
much-needed boost in state aid—has allowed the district to restore
some of the 19 positions that were cut two years ago, rebuild
reserves and restore the fund balance to the three percent now
allowed under state law.”
Tightening fiscal controls
This year Mohonasen also underwent an audit of its financial
practices by the Office of the New York State Comptroller and has
taken steps to improve internal financial controls.
Following the 2004 discovery of massive fraud in a Long Island
school district, the state comptroller initiated a five-point plan
that included new fraud prevention and accountability rules for all
schools in New York State. As part of this plan, every public school
district, BOCES and charter school in the state is being audited by
the comptroller’s office during a five-year period. State auditors
look for weaknesses and vulnerabilities in each district’s financial
controls in order to prevent the likelihood of fraud. The purpose is
to inform school districts about areas where they may be at risk and
provide recommendations for improved business practices.
The
official state audit report was released on December 17, 2007.
However, almost all of the recommendations have already been put
into place. In fact, some were underway before the audit even began.
Mohonasen's
official response to the auditor's report can be found here.
None of Mohonasen's audits have uncovered any evidence of fraud, and
the chance that anyone could defraud the district going forward is
now much less likely thanks to all of the steps the district has
taken to improve fiscal controls.
Many of auditor’s recommendations related to the need to ensure
greater separation of business office duties so that no one person
has full control over the receipts, deposits and reconciliation of
bank records. Toward that end, Mohonasen had already planned for the
creation of an assistant treasurer position in the 2007-08 budget
and the person was hired this fall. Without this additional
position, it was very difficult to comply with all of the new state
fiscal regulations.
“Mohonasen has a long history of running very lean and, frankly, our
business office was understaffed by today’s standards,” Swezey
admits.
Other recommendations from the state auditors relate to the need for
more timely preparation of records and deposits. District officials
acknowledged problems in this area which were exacerbated when
Swezey herself was out for three months on extended medical leave
and there was a turnover in the district treasurer position. The
state audit came soon after, when officials were already taking
steps to catch up on the backlog of work created by these two
factors.
“The good news is our business office is now staffed more
appropriately to meet the state’s new regulations,” Swezey said.
“We’re definitely in a stronger position coming out of the state
audit process since it forced us to take a hard look at how we
operate and where we might be at risk.”
Swezey underscored the fact that none of Mohonasen’s audits (state,
internal or independent) have uncovered any evidence of fraud --
and the chance that anyone could defraud the district going forward
is now much less likely thanks to all of the steps the district has
taken to improve fiscal controls.
