By Hank Russell
A recent report released by the New York State Comptroller’s Office found that the West Babylon School District did not properly audit claims, meaning requested goods or services may not have been received, and incorrect or inappropriate claims could have been paid.
Between July 1, 2021 and September 30, 2023, the comptroller’s office examined 86 claims totaling $10 million and found that 73 claims totaling $9.8 million had one or more deficiencies, including issuing purchase orders (POs) after goods and services were received instead of having the POs approved before goods and services were acquired, and inadequate supporting documentation, such as POs not attached to the claim and lack of documentation and evidence the claims auditor reviewed and/or approved the claim.
There were also 21 claims totaling $3.1 million that were not audited before payment, which is a violation of New York State Education Law Section 1724. “The claims approved prior to audit included payments for credit cards, health insurance, professional services, fuel and IT services, which are not among those authorized by NYS Education Law to be paid prior to audit,” the report stated. In addition, the claims auditor did not report to the Board of Education, did not note exceptions on the warrant and did not include all exceptions on her monthly reports.
The comptroller’s office reviewed 18 claims held by the school district’s claims auditor in the amount of $398,959, fifteen of which totaled $345,317 and were stamped for approval that same day.
“The claims auditor indicated that any claims she rejected at the time were eventually resolved, so she did not believe she had to specify the number of claims or amounts that she rejected,” the report said. “In addition, if the claims are resolved and released before she completes her monthly report, they are not included on her reports to the Board. However, this practice does not give the Board and officials complete information to assist in improving procedures to ensure that all claims submitted for payment have sufficient support and comply with District policies.”
Based on their findings, the comptroller’s office recommends that that Board of Education makes sure that the claims auditor reports to them and reports all claims (with exceptions), all claims contain sufficient documentation before they are approved, include the number of claims and dollar amounts approved for payment of claims approved for payment when certifying each warrant. Lastly, district officials should ensure that only those claims authorized by law to be paid prior to audit are approved before payment is made.
In response, the district stated that it has complied with all the recommendations. A new claims auditor was hired in July and their duties will entails providing monthly audits to the district clerk, who will approve the audit report on behalf of the Board. They will ensure that all POs are attached to the invoices and all invoices are signed off.
There was one point of contention between the comptroller’s office and the school district. In the letter, the district stated, “As expected the report does not suggest any findings of operational improprieties, fraud, misappropriation of funds, of malfeasance.”
The comptroller’s office noted in reply, “The audit objective focused on whether the District’s claims auditor properly audited claims. The audit team assessed the risk of fraud occurring that is significant within the context of this audit objective, as required by generally accepted government auditing standards. Therefore, these audit results cannot be used to conclude there is no fraud, theft or professional misconduct in the District’s operations.”