Purpose of Audit

The purpose of our audit was to assess selected District Financial Operations for the period July 1, 2012 through October 31, 2013.

Background

The Oysterponds Union Free School District is located in Suffolk County and is governed by the Board of Education which comprises seven elected members. The District’s expenditures for the 2012-13 fiscal year totaled $5.4 million.

Key Findings

• The Board needs to improve its oversight and management of the District’s budget. Over the last four fiscal years, the District’s budgeting practices resulted in operating surpluses. To reduce fund balance, the Board appropriated unexpended surplus funds each year to help finance the ensuing year’s operations. However, because of the District’s surpluses, approximately $1 million of the fund balance appropriations over the four years went unused.
• The District accumulated unexpended surplus funds equivalent to 11 percent of the ensuing years’ budgets, or nearly three times the amount allowed by law.
• The Board improperly appointed its President, in place of the Treasurer, as the sole signatory on District checks under $5,000, with its Vice President as co-signer for all District checks over $5,000.
• The Board has not developed and adopted policies, including a disaster recovery plan and a breach notification policy, to ensure the District’s electronic data is adequately safeguarded.

Key Recommendations

• Develop and adopt budgets that include realistic estimates of revenues and expenditures. Discontinue the practice of adopting budgets that result in the appropriation of unexpended surplus funds that will not be used.
• Ensure that the amount of the District’s unexpended surplus fund balance is in compliance with Real Property Tax Law statutory limits.
• Discontinue the practice of authorizing and allowing the Board President to sign District checks as the primary and sole signatory.
• Develop a formal, written disaster recovery plan and formal breach notification policy.