Purpose of Audit

The purpose of our audit was to examine selected District financial activities for the period July 1, 2010, through January 3, 2012.

Background

The Pawling Central School District is located in the Town of Pawling in Dutchess and Putnam counties. The District is governed by the Board of Education, which comprises seven elected members. The District’s budgeted expenditures for the 2011-12 fiscal year were $35.8 million, which were funded primarily with State aid and real property taxes.

Key Findings

• The Board did not provide adequate oversight of the District’s capital projects and tax certiorari reserve funds. District officials overfunded the High School Roof project and burdened District taxpayers with $1.3 million in unnecessary borrowing. Further, the District paid approximately $579,300 in tax certiorari claims from July 1, 2009 through June 30, 2012 from the general fund instead of using the tax certiorari reserve.
• The District’s Audit Committee acted outside the scope of its authority.
• The District paid four professional service providers (legal, architectural, internal audit, and external audit) $233,894 during the audit period without first soliciting competition.
• The Board did not properly segregate the Treasurer’s and Deputy Treasurer’s duties over cash disbursements.

Key Recommendations

• Adopt a formal process for capital projects that includes a requirement for a written plan that clearly defines the scope of the project, sources of funding, maximum cost projections, project budget, timeline and other criteria at the onset of the project. Require District officials to pay appropriate tax certiorari claims from the reserve fund.
• Limit the Audit Committee’s activities to the scope of what is included in its charter.
• Amend the District’s purchasing policy and procedures to include guidelines for procuring professional services and ensure that District officials adhere to them.
• Segregate the duties of the Treasurer and Deputy Treasurer so that they do not control all aspects of any financial transaction. Maintain control of the facsimile signature at all times.