State audit finds no improper payments but problems in claims processing

GUILDERLAND — An audit released yesterday by the State Comptroller’s Office found deficiencies in the design of the school district’s internal controls over claims processing.

“Although our testing found no indication that improper payments were made,” the audit says, “an environment where claims are paid outside of the normal warrant cycle without a documented reason or explanation, are paid prior to audit and approval of the claims auditor, or are paid absent adequate supporting documentation weakens the district’s otherwise effective system of internal controls over the claims process.”

The comptroller’s office made four recommendations:

— The claims auditor should regularly report to the school board;

— The treasurer should see that no claim against the district, except those allowed by law and unauthorized by the board, be paid prior to audit;

— The claims auditor should ensure that all claims are itemized, contain evidence of receipt of the goods or service, and include proper documentation; and

— District officials should start a procedure requiring people who request hand-drawn checks to document the reason for processing a payment outside the normal warrant cycle.

The district’s assistant superintendent for business, Neil Sanders, said the school board would discuss the audit in public at its meeting tonight, which was postponed from Tuesday because of the snowstorm.

“They didn’t find anything amiss,” he stressed.

Sanders declined to respond to the recommendations, though, preferring to follow the process the district has in place.

“We will sit down with the audit committee and the board of education and come up with a corrective action plan,” said Sanders. He added, “We’ve already initiated some of the recommendations.”

At its Jan. 4 meeting, the school board authorized payment in advance of audit of claims for public utility services, postage, freight, and express charges.

Asked if implementing the audit’s recommendations would cost the district much money, Sanders said it wouldn’t. “We may have to have a little more time for the internal claims auditor,” he said.

Sanders explained that the comptroller’s audit is different than the state-required internal audit that the board discussed at its last meeting. (To read a story on that audit, go online to www.altamontenterprise.com and look under Guilderland archives for Jan. 13, 2011.)

“The state will come in and test five broad areas initially,” Sanders said, “and then hone in on certain areas or a certain area.” In this case, the audit focused on internal controls over claims processing.

By law, the state audits a school district every five years; Guilderland was last audited in 2007. “They got through the first round quickly,” said Sanders.

Guilderland’s 2007 audit found few problems — in segregation of duties, unused leave, purchasing, and safeguarding records — all of them relatively minor. (For the full story, go online to www.altamontenterprise.com and look under Guilderland archives for Dec. 6, 2007.)

Richard Weisz, the president of the school board, responded in a Dec. 22, 2010 letter to Kenneth Madej at the State Comptroller’s Office, saying that the district was pleased with “the findings that show, overall, adequate and appropriate internal controls are in place to reduce the risk of theft, fraud, and abuse.”

Weisz also said that the recommendations would be heeded, and that several measures to follow them had already been introduced.

“We are very pleased to hear that your office considers our claims auditing policy procedure and checklist to be one of the best, most well-defined and comprehensive procedures in existence throughout the state,” Weisz wrote.

Sanders said this was in a reference to a comment the auditor made in the exit interview. “Many school districts have vague policies,” said Sanders, “and they found ours was very comprehensive with a well defined role for the claims auditor.”