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NYS Comptroller

THOMAS P. DiNAPOLI

Audits of Local Governments and School Districts

Newark Central School District – Financial Condition and Claims Processing (2016M-267)


Released: November 18, 2016 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to evaluate the District’s financial condition management and claims auditing process for the period July 1, 2014 through June 30, 2016.

Background

The Newark Central School District is located in the Village of Newark and includes the Town of Arcadia and parts of the Towns of Lyons, Sodus, Palmyra and Marion in Wayne County, along with parts of the Towns of Manchester and Phelps in Ontario County. The District, which is governed by an elected seven-member Board of Education, operates five schools with approximately 2,000 students. Budgeted general fund appropriations for the 2016-17 fiscal year total approximately $47.6 million.

Key Findings

  • The District regularly adopted unrealistic budgets that overestimated appropriations and appropriated fund balance and reserves were not used to finance operations as budgeted.
  • The District did not establish a reserve plan which details the District’s intentions for funding reserves, determines how much should be accumulated and how and when the funds will be used to finance related costs.
  • The District has not developed formal multiyear financial or capital plans.
  • Incompatible duties over the claims and accounts payable processes are not adequately segregated and mitigating controls have not been implemented.

Key Recommendations

  • Adopt budgets that include the District’s actual needs, and discontinue the practice of adopting budgets that result in the appropriation of fund balance and reserve funds that will not be used.
  • Develop a reserve plan which clearly communicates to District residents the purpose and intent for establishing each reserve fund, the manner in which the Board will fund and maintain each reserve fund and the optimal or targeted funding levels and applicable rationale and conditions under which each fund’s assets will be used or replenished.
  • Develop a comprehensive multiyear financial and capital plan.
  • Ensure that incompatible duties are appropriately segregated or that appropriate mitigating controls exist.

Local Government and School Accountability Contact Information:

Phone: (518) 474-4037; Email: localgov@osc.state.ny.us
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236