CAPITAL DISTRICT — The Capital Region BOCES is now drafting new policies after a state audit pointed out problems with, for one, meals served at meetings. Two claims totaling almost $3,800 were for lunches at meetings that auditors say did not appear to be of a business nature.

Mark Jones, the Capital Region BOCES assistant to the superintendent for business services, said auditors automatically thought the worst without looking at the entire picture. He cited one meal and said the actual circumstances were different from how they were presented or written in the audit.

A new policy is being drafted by BOCES for issuing pre-paid purchase cards — 40 cards of $100 each were bought from Starbucks to help kids stop smoking. Auditors say three-quarters of the reviewed cards weren’t used.

A third policy is being drafted for assigning and using cellular phones and Blackberry devices.

The audit also found weaknesses in data security and accountability over technology equipment and found problems with the appointment of a claims auditor.

The 29-page audit by the State Office of the State Comptroller was released Jan. 21.

The comptroller’s office evaluated internal controls over claims processing and purchasing functions at the Capital Region Board of Cooperative Educational Services from July 1, 2005 to Feb. 2, 2007 and examined technology equipment and data security.
"Overall, we feel as though it was a positive report, even though a casual reader may not pick that up," said Jones.

The comptroller’s office began auditing all public schools in New York after flagrant abuse was discovered on Long Island. The State Legislature, then, also passed requirements meant to prevent future school fraud.
"There was none of that here, and none of it mentioned in here. So, that, I think, from a starting point, is very good," said Jones.
"The concept of a comptroller’s office audit, I think, is a good concept. Our feeling, though, is that they should be a little bit more pro-active in terms of trying to offer best practice solutions to help school districts...instead of always just pointing out what might not be right but also kind of point out how things might be shaped to be better."

The Capital Region BOCES serves 24 schools in the Capital District — including the Berne-Knox-Westerlo, Voorheesville, and the Guilderland school districts and the Albany City School District. It has about 1,200 workers and is governed by a board of 10 members, elected by the school districts it serves. BOCES has 37 regional offices throughout New York State. "We have a policy committee and those policies related to this audit will be going, actually, to both the audit committee and also to the policy committee," said Jones. "They’re going to review them jointly. They are actually in the policy committee’s hands at this point and at our next board meeting, in February...they’ll review those policies and they should be fully operational within the month of March," he said.

According to the state comptrollers office, the Capital Region BOCES educates about 80,000 students in Albany, Schoharie, Schenectady, and Saratoga counties. Its 2006-07 budget was about $85.7 million, funded by charges to schools for its services and federal and state aid. About 98 percent of its budget, said Jones, comes from expenses associated with services it provides to school districts. Schools pay tuition to send students to career and vocational programs, such as auto mechanic, auto body, and culinary programs.

BOCES offices throughout the state offer many services to the area schools they serve, which include: hands-on job experience for students and programs for adults and students with special needs. BOCES also provides administrative services, such as superintendent searches, and it develops websites, coordinates substitute teachers, and stores and analyzes student data.

Technology
In its report, the comptroller’s office says, "We found weaknesses in data security and accountability over technology equipment. BOCES does not maintain its inventory records on a current basis and a periodic physical inventory is not performed, which increases the risk for loss, misuse, or abuse of computer and communication equipment."

BOCES does not have a disaster recovery plan, says the audit.
"We have back-up systems and we do regular back-ups," said Jones.

The Northeast Regional Informational Center (NERIC) at the Capital Region BOCES is one of 12 regional information centers in New York State, which covers six BOCES regions — 137 school districts.
"And the purpose of NERIC is, basically, to provide technology infrastructure to school districts," said Jones. "So, as such, we house many of the server-based activities here in our building, and we do have backup systems."
Jones said a BladeSystem Storage Area Network (SAN) server was in place when the comptroller’s office performed the audit. He called the server "a comprehensive approach to holding the data."
"It allows us to balance the load of all the incoming data. As you can imagine, there are quite a number of different software platforms...that we host with the services that we provide...In addition, we’ve always had [an Uninteruptible Power System] here, a very significantly-sized UPS system.
"What we had not had was a generator. We do have a generator in process, the installation in process, and that generator will basically allow us to run our technology platforms in the event of an extended power outage.
"At this point, we’re told that the generator will be delivered some time in March, and we’ve already done the majority of the electrical work that’s necessary for the installation of the generator. So it will probably be fully operational by the end of the school year, if not sooner."

Claims auditor

A claims auditor is appointed by the board to verify the appropriateness of all claims for payment, says the audit. This person may not be a member of the board, the treasurer or clerk of the board, the superintendent, or any official of BOCES responsible for business management, and, to maintain independence, should report directly to the board, according to auditors.
In July of 2005, the BOCES board "improperly appointed a senior account clerk in the business office to serve as the temporary claims auditor," says the comptroller’s audit. The clerk served for more than seven months and approved 5,238 claims, which totaled about $88 million, says the audit. In early 2006, the board appointed a claims auditor, but the claims auditor reports to officials in the business office, not directly to the board, the comptroller’s office says.

The comptroller’s office tested 69 claims, totaling $1,325,879 of expenditures for professional services, supplies and equipment, and travel and expense reimbursements.

Eighteen claims totaling $23,630 lacked adequate documentation, says the report, which cites a claim that was approved and an employee was paid $1,177 in advance for estimated travel, lodging, and meals for a meeting in New York City.

For many, many years, Jones said, the Capital Region BOCES has had a claims auditor. He referred to legislation that passed shortly after the appointment.
"The accountability legislation did not take effect until the end of July or August in the year in which it was passed," said Jones.
"Our fiscal year starts in July. We had already had that individual appointed to that claims auditor position prior to any legislative change and then, during that time period of August through the appointment of that different individual, we were going through the process of trying to understand what the legislation was, how to react to it, and then we had to go through a search process to find somebody," said Jones.
Jones said of having a person in the business office working as the claims auditor, "Did we have somebody in the business office doing that" Yes, we did. We reviewed the circumstances with our external auditor. We told them, basically, we’re in the process of trying to find an appropriate person, based on the new requirements in the legislation. So, based on that, they felt comfortable that we were moving toward the intent of the legislation," he said.
"When the comptroller’s office comes in, I guess they only see things in black and white, and they see the legislation passed on X date, and you had your original person in place past X date, so, therefore, there was an improper appointment," he said. "That is a situation that was not uncommon with many, many school districts"

Jones said auditors asked what the claims auditor does if he has a problem and what is the process. The claims auditor either asks the business office supervisor or the accounts payable clerk, which, he said, is allowed by the guidelines set forth by the education department.
"It’s absolutely permissible to have those conversations. They took that to mean — and construed that to mean — that the claims auditor doesn’t report to the board. And we were at a loss at how they made those two connections, or how they could not connect the two, or where the disconnection came from," he said.
Jones said, at an exit conference, the chairman of BOCES audit committee explained, "No, our claims auditor reports directly to this audit committee. He’s been to a couple of our audit committee meetings. We’ve told him explicitly that he reports to us."
"But, at that point," said Jones, "the auditors had already made their decision that ‘Well, it doesn’t sound to us like you have the separation piece that you need.’ We were very much in disagreement with that finding and recommendation that the claims auditor was not independent."

Policy on meals and refreshments

In their report, auditors say the board had not adopted a written policy outlining when it is appropriate to provide meals and refreshments to employees and board members, and BOCES has made it a practice to provide meals and refreshments at administrative meetings and training, as well as at regularly-scheduled meetings of the board.
Six of 29 food and refreshment claims examined by auditors, which totaled $5,192, the audit says, "were of questionable business purposes." Two claims totaling almost $3,800 were for lunches served at regularly-scheduled meetings "that did not appear to be business of an immediate nature or meetings that were essential at mealtime," says the comptroller’s report.Currently, the Capital Region BOCES is examining a policy on meals and refreshments for employees and board members at meetings and training sessions, which Jones called "an official set of parameters...where there will be more clear direction when it is more permissible to have a meal or coffee or pastries."
"One of the things that we do a lot of," said Jones, "is a lot of staff development activity in a whole variety of different areas. So we host a lot of training events. If you’ve ever been to a professional development training — if you’re there for an all-day event — usually there’s some kind of lunch served. So we do that type of thing very frequently," he said.
"And, basically, the comptroller’s office perspective is, on a couple of things that they looked at with us, their opinion is that, ‘Well you could have done this differently and it would have been less expensive,’ without, in our opinion, looking at the whole picture...When they see a meal, they automatically think the worst without looking at the entire picture.
"In fact, in the audit, they specifically reference a situation where there is a couple thousand dollars on a lunch for a particular event," said Jones. He was referring to one of the meals the comptroller’s office called "of questionable business purposes."

The April 25, 2006 meeting was NERIC-wide with 137 schools participating, in which schools tried to determine what is the best Student Information System platform to support, said Jones.
Because there are quite a number of SISs in the marketplace, they wanted to illicit input and have presentations from a variety of different vendors "in pursuing the goal of what are the best or most prominently used SISs," said Jones.
"So, they had folks from all over the Northeast up in Hudson Falls doing this over the course of a couple of days," he said.

People came from the school districts, traveling from quite a distance, he said.
"They had coffee and pastries in the morning. They had lunch and so on and so forth. So, yes, the invoice was $2,000, but it served quite a number of people," said Jones. "The actual circumstances were a little bit different than they were presented or written in the audit."

Cards

Among the claims, two purchases were made of $4,000 for 40 prepaid cards from a nationwide coffee franchise in denominations of $100, according to the comptroller’s report. Twenty cards were bought in September of 2005 and 20 were purchased in February of 2006. Only five of the 20 cards on a list that BOCES provided to auditors had been used up, and one card was lost.
"At the time of our audit, almost 75 percent of the 20 cards reviewed had not been used up. Therefore, it does not seem reasonable to purchase $4,000 of cards in advance," said the report. While the amount is not large, says the report, items bought and lack of adequate record-keeping creates a situation where prepaid cards may be used for non-business purposes and may go undetected.
"What we did in our policy that’s coming up, is we encompassed credit cards, debit cards, and pre-purchased cards into one policy," said Jones. "And, essentially, what we’re doing in that policy specific to debit cards and pre-purchased cards is, basically, we’re saying they’re not going to be allowed."

Jones said one of the issues that the comptroller’s office brought up, specifically, in the audit, was buying pre-paid cards to Starbucks Coffee with grant funds, which was approved by the State Education Department.
"The purpose of that grant was there was a smoking-cessation grant so the effort was there to try to get kids to not smoke or stop smoking," said Jones.
"One of the counselors that was involved had suggested that we need an environment where these kids feel comfortable and feel comfortable sitting and talking in a casual environment to facilitate the counseling process [and] suggested that, since kids tend, in this day and age, to drink coffee, and Starbucks is a popular venue for folks, that that would be an appropriate manner in which to conduct the goals of the grant," said Jones.
"So, the education department, basically, approved that expenditure. However, the comptroller’s office — their opinion was these are just problematic even if you’re approved in the grant," he said.
"So we were in agreement with them. They’re a headache. They’re difficult to manage so, therefore, in our policy, we’re just not going to allow them in any circumstance."
Jones said it doesn’t mean that the program and programs like it will be discontinued. "It means we’re just going to have to find a different way to do this," he said. "That’s all it means. It just simply means that we’re not going to allow the counselor, for instance, to have several of these prepaid cards to do this.
"We’re just going to have to find a different way to deliver the program. The goal of the grant is still a very admirable social goal in terms of trying to get kids not to smoke and understand the effects."

Portable devices
"We acknowledge that at the onset of our audit BOCES was considering the Northeastern Regional Information Center (NERIC) as a centralized source for purchasing and paying for cellular phone service," says the comptroller’s audit. "If BOCES were to take this pro-active step, the purchasing agent estimated that by pooling the accounts and ultimately the plans’ minutes, BOCES could save approximately $12,000 annually on their current service," it says.
The comptroller’s office says, of its 78 cell phones and Blackberry devices, BOCES spent $41,199 in the fiscal year 2005-06 for over a dozen service plans, including minutes, text messages, and e-mail use. The audit said the plans "are not cost effective."
"Here’s the interesting thing about these audits," said Jones. "That is a process that we brought to their attention and that we said we were doing. We had this underway well before the comptroller’s office even arrived here — with investigating ways we can pool minutes and so forth.
"We had that process well underway and that’s something we talked about with them, but they, evidently, felt it necessary to write that up in the audit as if it was their idea. So it was something we had in place and had been doing for quite a number of months before they even arrived. So, that’s my specific comment with respect to their verbiage in the audit."

The policy under consideration has two forms, said Jones. If employees feel they need a cellular communications device, he said, they will have to go to their supervisor, and get authorization and BOCES will have a form for that.
"And then it goes, basically, through our hierarchy," he said.
The form will go to the manager or the immediate supervisor, then to the division director, and then to his office "for ultimate signoff," Jones said.

BOCES Northeastern Regional Information Center division, he said, already has a telecommunications service, which uses voiceover IP technology. IP technology allows people to use their computers as telephones.
"They will, basically, be the processors of the day-to-day managing of the bills and day-to-day cell-phone type issues, versus having to do it within each division. We’re kind of centralizing the operation of it, if you will," said Jones.

BOCES uses three or four vendors, Jones said.
"Because of the location of some of our employees, some cell-phone service works better, say, with Nextel, depending on the area you’re in, versus Verizon," he said. "But we have a pool for each group, and we’ve been working with the vendors to get the pricing plans for each of those groups."

Concluding statements

In the comptroller’s report, auditors have the final say and respond to an agency’s response to their audit. Auditors from the comptroller’s office met with BOCES officials at two exit meetings — on Dec. 4, and 14, to review and discuss the audit.
"The draft report contained no inaccuracies," say the auditors in conclusion. "However, subsequent to these meetings and after careful review of the audit evidence, OSC agreed to remove the citation of three claims deficiencies initially cited in the draft report. Other minor wording changes were made to clarify certain findings."