Purpose of Audit

The purpose of our audit was to assess the District’s financial management and procurement process for the period July 1, 2012 through January 7, 2014.

Background

The Pine Valley Central School District (District) is located in several towns in Chautauqua and Cattaraugus Counties, and is governed by an elected nine-member Board of Education. There are two schools in operation within the District, with approximately 615 students and 145 full-time employees. The District’s general fund budgeted expenditures for the 2013-14 fiscal year total $15 million.

Key Findings

• District officials did not ensure that budgets were realistic or maintain reserves in accordance with statutory requirements.
• The District’s reserve policy does not address the need for maintaining certain reserve balances or under what specific circumstances they will be used or replenished.
• The District has accumulated in excess of $2.4 million that should be used to benefit taxpayers by paying off debt, financing one-time expenditures, funding necessary reserves and/or reducing property taxes, in accordance with applicable statutory requirements.
• There are no provisions in the District’s purchasing policy indicating when officials must obtain quotations or requests proposals for procurements below competitive bidding thresholds.
• The purchasing policy and guidelines do not address oversight of the procurement process to ensure compliance.

Key Recommendations

• Develop and adopt budgets that include realistic estimates for appropriations based on contractual and historical data and ensure that unexpended surplus fund amounts are within statutory limits.
• Revise its reserve fund policy to address the District’s need for maintaining certain funding levels and the conditions under which the funds will be used or replenished.
• Develop and implement a plan for using the reserve fund surplus balances in a manner that benefits District taxpayers and is in compliance with statutory provisions.
• Revise its procurement policy by prescribing the procedures and documentation requirements for purchases not subject to competitive bidding requirements.
• Require strict adherence to the requirements of its purchasing policy and require the claims auditor to regularly monitor for compliance during the audit of claims.