ACCOUNTING OF FUNDS
Accounting and reporting procedures will be developed to facilitate analysis and evaluation of the District’s financial status and fixed assets. The District will use the Uniform System of Accounts for School Districts.
Books and records of the District will be maintained in accordance with statutory requirements.
Provision will be made for the adequate storage, security, and disposition of all financial and inventory records.
The Board has entered into a written agreement with designated banks and trust companies for online banking and electronic or wire transfers, which includes the implementation of a security procedure for all transactions. The District Treasurer, with a separate established user name and password, will have the authority to process online banking transactions. The Business Office Clerk or Deputy Treasurer, with a separate established user name and password, will be responsible for online banking transactions in the event the District Treasurer is not available.
Electronic or Wire Transfers
Procedures will be implemented specifying who is authorized to initiate, approve, transmit, record, review and reconcile electronic transactions. At least two individuals will be involved in each transaction. Authorization and transmitting functions will be segregated and whenever possible the recording function will be delegated to a third individual.
The District will enter into written wire transfer security agreements for District bank accounts which will include established procedures for authenticating wire transfer orders.
All wire transfers must be authorized by the District Treasurer. Dual approval controls will be established for non-routine wire transfer orders.
The Internal Auditor will periodically confirm that wire transfers have appropriate signatures, verification and authorization of proper personnel.
Education Law Section 2116-a
General Municipal Law Article 2 Section 5-a
Reserve funds (essentially a legally authorized savings account designated for a specific purpose) are an important component in the District’s financial planning for future projects, acquisitions and other lawful purposes. To this end, the District may establish and maintain reserve funds in accordance with New York State Laws, Commissioner’s regulations and the rules and/or opinions issued by the Office of the New York State Comptroller, as applicable. The District will comply with the reporting requirements of Article 3 of the General Municipal Law of the State of New York and the Governmental Accounting Standards Board (GASB) issued GASB Statement Number 54, Fund Balance Reporting and Governmental Fund Type Definitions.
Any and all District reserve funds will be properly established and maintained to promote the goals of creating an open, transparent and accountable use of public funds. The District may engage independent experts and professionals, including but not limited to, auditors, accountants and other financial and legal counsel, as necessary, to monitor all reserve fund activity and prepare any and all reports that the Board may require.
Periodic Review and Annual Report
The Board will periodically review all reserve funds. The District will also prepare and submit an annual report of all reserve funds to the Board. The annual report will include the following information for each reserve fund:
a) The type and description of the reserve fund;
b) The date the reserve fund was established and the amount of each sum paid into the fund;
c) The interest earned by the reserve fund;
d) Capital gains or losses resulting from the sale of investments of the reserve fund;
e) The total amount and date of each withdrawal from the reserve fund;
f) The total assets of the reserve fund showing cash balance and a schedule of investments; and
g) An analysis of the projected needs for the reserve fund in the upcoming fiscal year and a recommendation regarding funding those projected needs.
The Board will utilize the information in the annual report to make necessary decisions to adequately maintain and manage the District’s reserve fund balances while mindful of its role and responsibility as a fiduciary of public funds.
The Superintendent will develop any necessary and/or appropriate regulations to implement the terms of the Board’s policy.
EXTRACLASSROOM ACTIVITY FUND
An extraclassroom activity fund will be established for activities conducted by students whose financial support is raised other than by taxation or through charges of the Board.
All extraclassroom activities will be approved by the Board. The building principal will maintain an up to date register of all extraclassroom activities that are approved or discontinued. Each extraclassroom activity will have a faculty advisor appointed by the building principal. A Central Treasurer and a Faculty Auditor will oversee all financial aspects of extraclassroom activities. The annual District audit will include all extraclassroom activity funds.
All extraclassroom activity funds will be handled in accordance with the financial procedures illustrated by Finance Pamphlet No. 2, the Safeguarding, Accounting and Auditing of Extraclassroom Activity Funds, 2008, published by the New York State Education Department. All commitments and contracts will be the sole responsibility of the extraclassroom activity club giving rise to the transaction, regardless of a change in advisors, membership or officers.
Proper books will be kept and all moneys deposited in appropriate accounts as set up by the Board. These accounts will be subject to audit. All transactions involving extraclassroom funds will be on a cash basis and no accounts will remain unpaid at the end of the school year. Funds will be invested in accordance with the Board’s Fiscal Management Policy on the “Investment of District Funds”.
The extraclassroom activities of the District are not included in the exemption granted to the District from New York State sales tax. Without exception, clubs and activities are prohibited from using the school’s tax exemption. The Central Treasurer will be responsible for filing the periodic sales tax returns for the extraclassroom activity funds.
Funds of discontinued extraclassroom activities, those inactive for one year and of graduating classes will revert to the account of the general student organization or student council and will be expended in accordance with the organization’s constitution.
The building principals, with approval of the Superintendent, will set up procedures for receipt and payment from the extraclassroom activity fund in their respective schools.
8 New York Code of Rules and Regulations (NYCRR) Part 172
PETTY CASH FUNDS AND CASH IN SCHOOL BUILDINGS
Petty Cash Funds
A petty cash fund of not more than $100 will be maintained in the District Office (controlled by the District Treasurer), and $50 in each school building in a secure location (controlled by the building principal). Payments from petty cash funds may be made for materials, supplies, or services only when payment is required upon delivery. At the time of reimbursement, an itemized statement of expenditures, together with substantiating receipts, must be submitted.
Cash in School Buildings
Not more than $250, whether District or extraclassroom funds, will be held in the vault in the Main Office of each District school building. Under no circumstances will cash be left in classroom areas or desks. The District will not be responsible for funds left unprotected.
All funds, whether District or extraclassroom funds, will be deposited prior to close of school each week. Only authorized personnel designated by the building administrator will be allowed in the Main Office vault.
Education Law §§ 1604(26), 1709(29) and 2503(1)
8 NYCRR § 170.4
PUBLICATION OF DISTRICT’S ANNUAL FINANCIAL STATEMENT
In compliance with Education Law, the Board is required to publish a financial statement, including a full, detailed account of moneys received and moneys expended, at least once a year, during either July or August. This annual financial report will be in the form prescribed in Commissioner’s regulations.
The law requires that the information be published in one public newspaper which is published in the District. If no public newspaper is published in the District, then the District must use a newspaper having general circulation in the District. If no public newspaper is published in the District, and there is no newspaper having general circulation in the District, then the District must provide the information to the taxpayers by posting copies in five public places in the District.
Education Law Sections 1610, 1721, 2117, 2528 and 2577
8 New York Code of Rules and Regulations (NYCRR) Section 170
MAINTENANCE OF FISCAL EFFORT (TITLE I PROGRAMS)
A Local Educational Agency (LEA) may receive its full allocation of Title I funds if the combined fiscal effort per student or the aggregate expenditures of state and local funds with respect to the provision of free public education in the LEA for the preceding fiscal year was not less than 90% of the combined fiscal effort per student or the aggregate expenditures for the second preceding fiscal year.
In determining an LEA’s compliance with the maintenance of effort requirement, the State Educational Agency (SEA) will consider the LEA’s expenditures from state and local funds for free public education. These include expenditures for administration, instruction, attendance, health services, student transportation services, plant operation and maintenance, fixed charges, and net expenditures to cover deficits for food services and student body activities.
The SEA will not consider the following expenditures in determining an LEA’s compliance with the maintenance of effort requirements:
a) Any expenditures for community services, capital outlay, and debt service;
b) Any expenditures made from funds provided by the federal government for which the LEA is required to account to the federal government directly or through the SEA.
The Board assigns the School Business Official the responsibility of reviewing, as part of the budgeting process, combined fiscal effort so that expenditures of state and local funds with respect to the provision of free public education per student and in the aggregate for any fiscal year are not budgeted at less than 90% of the combined fiscal effort per student or the aggregate of expenditures for the preceding fiscal year or as otherwise authorized based upon allowances of the SEA, including all applicable local, State and Federal regulations.
Title I of the Elementary and Secondary Education Act of 1965, as amended by the No Child Left Behind Act of 2001
34 Code of Federal Regulations (CFR) Part 200
USE OF FEDERAL FUNDS FOR POLITICAL EXPENDITURES
The Board prohibits the use of any federal funds for partisan political purposes or expenditures of any kind by any person or organization involved in the administration of federally-assisted programs.
This policy refers generally, but is not limited to, lobbying activities, publications, or other materials intended for influencing legislation or other partisan political activities.
In recognition of this stricture, the Board assigns the Purchasing Agent the responsibility of monitoring expenditures of federal funds so that said funds are not used for partisan political purposes by any person or organization involved in the administration of any federally-assisted programs.
OMB Circular A-87 Cost Principles for State, Local and Indian Tribal Governments (revised May 10, 2004) Compliance Supplement for Single Audit of State and Local Governments (revised June 27, 2003)
Districts must have internal controls in place to ensure that the goals and objectives of the District are accomplished; laws, regulations, policies, and good business practices are complied with; operations are efficient and effective; assets are safeguarded; and accurate, timely and reliable data are maintained.
The Pine Bush Central School District’s governance and control environment will include the following:
a) The District’s code of ethics addresses conflict of interest transactions with Board members and employees. Transactions that are less-than-arm’s length are prohibited. Less-than-arm’s length is a relationship between the District and employees or vendors who are related to District officials or Board members.
b) The Board requires corrective action for issues reported in the Certified Public Accountant’s (CPA’s) management letter, audit reports, the Single Audit, and consultant reports.
c) The Board has established the required policies and procedures concerning District operations.
d) The Board routinely receives and discusses the necessary fiscal reports including the:
1. Treasurer’s cash reports,
2. Budget status reports,
3. Revenue status reports,
4. Monthly extra-classroom activity fund reports, and
5. Fund balance projections (usually starting in January).
e) The District has a long-term (three to five years) financial plan for both capital projects and operating expenses.
f) The District requires attendance at training programs for Board members, business officials, treasurers, claims auditors, and others to ensure they understand their duties and responsibilities and the data provided to them.
g) The Board has an audit committee to assist in carrying out its fiscal oversight responsibilities.
h) The District’s information systems are economical, efficient, current, and up-to-date.
i) All computer files are secured with passwords or other controls, backed up on a regular basis, and stored at an off-site location.
j) The District periodically verifies that its controls are working efficiently.
k) The District requires all staff to take vacations during which time another staff member performs the duties of the staff on vacation.
8 New York Code of Rules and Regulations (NYCRR) Section 170.12
ALLEGATIONS OF FRAUD
Reporting and Investigations of Allegations of Fraud
All Board members and officers, District employees and third party consultants are required to abide by the District’s policies, administrative regulations and procedures in the conduct of their duties. Further, all applicable federal and/or state laws and regulations must be adhered to in the course of District operations and practices. Any individual who has reason to believe that financial improprieties or wrongful conduct is occurring within the School System is to disclose such information according to the reporting procedures established by the District. The reporting procedures will follow the chain of command as established within the department or school building or as enumerated in the District’s Organizational Chart. In the event that the allegations of financial improprieties/fraud and/or wrongful conduct concern the investigating official, the report will be made to the next level of supervisory authority. If the chain of supervisory command is not sufficient to ensure impartial, independent investigation, allegations of financial improprieties/fraud and/or wrongful conduct will be reported as applicable, to the Internal Auditor (if available), or the Independent (External) Auditor, or the School Attorney, or the Board. The District’s prohibition of wrongful conduct, including fraud, will be publicized within the District as deemed appropriate; and written notification will be provided to all employees with fiscal accounting/oversight and/or financial duties including the handling of money.
Upon receipt of an allegation of financial improprieties/fraud and/or wrongful conduct, the Board or designated employee(s) will conduct a thorough investigation of the charges. However, even in the absence of a report of suspected wrongful conduct, if the District has knowledge of, or reason to know of, any occurrence of financial improprieties/fraud and/or wrongful conduct, the District will investigate such conduct promptly and thoroughly. To the extent possible, within legal constraints, all reports will be treated as confidentially and privately as possible. However, disclosure may be necessary to complete a thorough investigation of the charges and/or to notify law enforcement officials as warranted, and any disclosure will be provided on a “need to know” basis. Written records of the allegation, and resulting investigation and outcome will be maintained in accordance with law.
Based upon the results of this investigation, if the District determines that a school official has engaged in financial improprieties/fraudulent and/or wrongful actions, appropriate disciplinary measures will be applied, up to and including termination of employment, in accordance with legal guidelines, District policy and regulation, and any applicable collective bargaining agreement. Third parties who are found to have engaged in financial improprieties/fraud and/or wrongful conduct will be subject to appropriate sanctions as warranted and in compliance with law. The application of such disciplinary measures by the District does not preclude the filing of civil and/or criminal charges as may be warranted. Rather, when school officials receive a complaint or report of alleged financial improprieties/fraud and/or wrongful conduct that may be criminal in nature, law authorities should be immediately notified.
An appeal procedure will also be provided, as applicable, to address any unresolved complaints and/or unsatisfactory prior determinations by the applicable investigating officer(s).
Protection of School Employees who Report Information Regarding Illegal or Inappropriate Financial Practices
Any employee of the District who has reasonable cause to believe that the fiscal practices or actions of an employee or officer of the District violates any local, state, federal law or rule and regulation relating to the financial practices of the District, and who in good faith reports such information to an official of the District, or to the Office of the State Comptroller, the Commissioner of Education, or to law enforcement authorities, will have immunity from any civil liability that may arise from the making of such report. Further, neither the District, nor employee or officer thereof, will take, request, or cause a retaliatory action against any such employee who makes such a report.
Prohibition of Retaliatory Behavior (Commonly Known as “Whistle-Blower” Protection)
The Board also prohibits any retaliatory behavior directed against any witnesses and/or any other individuals who participate in the investigation of an allegation of illegal or inappropriate fiscal practices or actions. Follow-up inquiries will be made to ensure that no reprisals or retaliatory behavior has occurred to those involved in the investigation. Any act of retaliation is prohibited and subject to appropriate disciplinary action by the District.
Knowingly Makes False Accusations
Any individual who knowingly makes false accusations against another individual as to allegations of financial improprieties/fraud may also face appropriate disciplinary action.
Education Law Section 3028-d
An Audit Committee has been established by Board resolution. The Audit Committee may consist of:
a) The Board as a whole;
b) A subcommittee of the Board; or
c) An Advisory Committee that may include, or be composed entirely of persons other than Board members if, in the opinion of the Board, such membership is advisable to provide accounting and auditing expertise.
Persons other than Board members who serve on the advisory committee will be independent and will not:
1. Be employed by the District;
2. Be an individual who within the last two years provided, or currently provides, services or goods to the District;
3. Be the owner of or have a direct and material interest in a company providing goods or services to the District; or
4. Be a close or immediate family member of an employee, officer, or contractor providing services to the District. A “close family member” is defined as a parent, sibling or nondependent child; an “immediate family member” is a spouse, spouse equivalent, or dependent (whether or not related).
The Audit Committee will consist of at least three members who should collectively possess knowledge in accounting, auditing, financial reporting, and District finances. They will serve without compensation, but will be reimbursed for any actual and necessary expenditure incurred in relation to attendance at meetings. Employees of the District are prohibited from serving on the Audit Committee. Members of the Audit Committee will be deemed District Officers, but will not be required to be residents of the District.
The role of the Audit Committee will be advisory unless the Audit Committee consists of at least a quorum of Board members, and any recommendations it provides to the Board will not substitute for any required review and acceptance by the Board.
The Audit Committee will develop and submit to the Board for approval a formal, written charter which includes, but is not limited to, provisions regarding the committee’s purpose, mission, duties, responsibilities and membership requirements.
The Audit Committee will hold regularly scheduled meetings and report to the Board on the activities of the Committee on an as needed basis, but not less than annually. The report will address or include at a minimum:
a) The activities of the Audit Committee;
b) A summary of the minutes of the meeting;
c) Significant findings brought to the attention of the Audit Committee;
d) Any indications of suspected fraud, waste, or abuse;
e) Significant internal control findings; and
f) Activities of the internal audit function.
The responsibilities of the Audit Committee include the following:
a) Provide recommendations regarding the appointment of the External (Independent) Auditor for the District;
b) Meet with the External (Independent) Auditor prior to commencement of the audit;
c) Review and discuss with the External (Independent) Auditor any risk assessment of the District’s fiscal operations developed as part of the Auditor’s responsibilities under governmental auditing standards for a financial statement audit and federal single audit standards if applicable;
d) Receive and review the draft annual audit report and accompanying draft management letter and, working directly with the External (Independent) Auditor, assist the Board in interpreting such documents;
e) Make a recommendation to the Board on accepting the annual audit report; and
f) Review every corrective action plan developed by the District and assist the Board in its implementation.
Corrective Action Plan
Within 90 days of receipt of the report or management letter, the Superintendent will prepare a corrective action plan approved by the Board in response to any findings contained in:
a) The annual external audit report or management letter;
b) A final audit report issued by the District’s internal auditor;
c) A final report issued by the State Comptroller;
d) A final audit report issued by the State Education Department; or
e) A final audit report issued by the United States or an office, agency or department thereof.
The corrective action plan must be filed with the State Education Department, and if appropriate, must include the expected date(s) of implementation. To the extent practicable, implementation of the corrective action plan should begin no later than the end of the next fiscal year.
Additional responsibilities of the Audit Committee include: assisting in the oversight of the Internal Audit Function including, but not limited to, providing recommendations regarding the appointment of the Internal Auditor; reviewing significant findings and recommendations of the Internal Auditor; monitoring the District’s implementation of such recommendations; and participating in the evaluation of the performance of the Internal Audit Function.
The Audit Committee may conduct an Executive Session in accordance with Public Officers Law Section 105 pertaining to the following matters:
a) To meet with the External (Independent) Auditor prior to commencement of the audit;
b) To review and discuss with the External (Independent) Auditor any risk assessment of the District’s fiscal operations developed as part of the Auditor’s responsibilities under governmental auditing standards for a financial statement audit and federal single audit standards if applicable; and
c) To receive and review the draft annual audit report and accompanying draft management letter and, working directly with the External (Independent) Auditor, assist the Board in interpreting such documents;
Any Board member who is not a member of the Audit Committee may be allowed to attend an Audit Committee Meeting, including an executive session of the Audit Committee, if authorized by a Board resolution. However, if such Board member’s attendance results in a meeting of a quorum of the full Board, any action taken by formal vote may constitute official Board action.
Education Law Sections 2116-c, and 3811-3813
Public Officers Law Sections 105(b), 105(c) and 105(d)
8 New York Code of Rules and Regulations (NYCRR) Section 170.12(d)
INTERNAL AUDIT FUNCTION
The District has established an Internal Audit Function which includes:
a) Development of a risk assessment of District operations including, but not limited to, a review of financial policies, procedures and practices;
b) An annual review and update of such risk assessment;
c) Annual testing and evaluation of one or more of the District’s internal controls, taking into account risk, control weaknesses, size, and complexity of operations;
d) Preparation of reports, at least annually or more frequently as the Board may direct, which analyze significant risk assessment findings, recommend changes for strengthening controls and reducing identified risks, and specify timeframes for implementation of such recommendations.
The District is permitted to utilize existing District personnel to fulfill the Internal Audit Function, but such persons will not have any responsibility for other business operations of the District while performing Internal Audit Functions. The District will also be permitted to use inter-municipal cooperative agreements, shared services to the extent authorized by Education Law Section 1950 or independent contractors to fulfill the Internal Audit Function as long as the personnel or entities performing this Function comply with any regulations issued by the Commissioner of Education and meet professional auditing standards for independence between the auditor and the District.
Personnel or entities serving as the Internal Auditor and performing the Internal Audit Function will report directly to the Board. The Audit Committee will assist in the oversight of the Internal Audit Function on behalf of the Board.
Education Law Sections 1950, 2116-b and 2116-c
8 New York Code of Rules and Regulations (NYCRR) Section 170.12(d)
MEDICAID COMPLIANCE PROGRAM POLICY
The District will comply with New York State and federal laws and regulations related to the District’s participation as a provider of care, services or supplies under the Medicaid program.
The District as a provider receiving or submitting Medicaid claims of at least $500,000 in any consecutive twelve-month period, has established and implemented a Medicaid Compliance Program designed to detect and prevent fraud, waste and abuse.
As required by the New York State Office of the Medicaid Inspector General (hereinafter referred to as the OMIG), the District’s Medicaid Compliance Program is comprised of the following core elements:
a) Written policies and procedures that describe compliance expectations as embodied in a code of ethics applicable to all District personnel, including Board members. Such compliance expectations or standards of conduct will include provisions designed to: implement the operation of the Medicaid Compliance Programs; provide guidance to employees and others on dealing with potential compliance issues; identify how to communicate compliance issues to appropriate personnel; and describe how issues are investigated and resolved;
b) A designated employee who will be responsible for the day-to-day operation of the Medicaid Compliance Program. This employee’s job duties may be exclusively related to Medicaid compliance issues or may be combined with other duties, provided that the Medicaid compliance portions of the employee’s duties are satisfactorily fulfilled. The designated employee will report directly to the District Superintendent or the Superintendent’s designee and will also periodically report directly to the Board on the District’s Medicaid Compliance Program activities;
c) Training and education of all affected District employees and other persons associated with the District’s Medicaid Compliance Program, including, but not limited to, members of the District’s Board. Such training will occur periodically and will be made a part of any required training or orientation for new employees, Board members, volunteers and/or others on dealing with the District’s Medicaid Compliance Program;
d) Communication lines and processes directed to the District’s designated employee who will be responsible for the day-to-day operation of the Medicaid Compliance Program. Such communication lines and processes will be accessible to all District employees, Board members, volunteers and others associated with the District’s Medicaid Compliance Program. The communication lines and processes are designed to allow employees to report compliance issues, including the anonymous and confidential good faith reporting of any practice or procedure related to Medicaid reimbursement of school or preschool supportive health services, that an employee believes is inappropriate;
e) Disciplinary procedures that encourage good faith and fair dealing in the District’s Medicaid Compliance Program by all affected individuals. Such disciplinary procedures will include procedures that articulate expectations for reporting and assisting with the resolution of compliance issues and also provide sanctions for the failure to report suspected problems and participating (either actively or passively) in non-compliant behavior;
f) A system for the routine identification of Medicaid compliance risk areas in the District’s Medicaid Compliance Program. Self-evaluation of such risk areas may be accomplished by, but not necessarily limited to, internal audits and external audits, as appropriate;
g) A system for responding to, investigating, correcting and reporting compliance issues as they are raised, including the development of procedures and systems to reduce the potential for recurrence, identifying and reporting compliance issues to the OMIG and refunding overpayments; and
h) A policy of non-intimidation and non-retaliation against any person for the good faith participation in any aspect of the administration of the District’s Medicaid Compliance Program including, but not limited to, the reporting of potential issues, assisting as a witness with any investigation, evaluation, audit, remedial actions or reporting to appropriate officials as provided in Sections 740 and 741 of the New York State Labor Law.
Retention of Medicaid Records
On March 10, 2010, the State Education Department, Special Aids and Medicaid Unit, notified districts of a Settlement and Compliance Agreement between New York State and the federal agencies. This Agreement states that the January 2002 record retention directive is no longer in effect and districts may return to the normal retention policy.
The following records require a minimum six year retention period from the date services were paid:
a) All documents relating in any manner to Medicaid reimbursement for services;
b) All documents relating in any manner to referrals, prescriptions or orders for these services;
c) All documents relating in any manner to the provision of these services including, but not limited to, the following:
1. The dates that services were provided;
2. The identification and qualifications of the professional who provided the services or under whose direction the services were provided;
3. Progress and other notes, memoranda, correspondence, reports and other documents relating to services rendered; and
d) All Individualized Education Programs (IEPs) for Medicaid-eligible students.
Questions related to the School Supportive Health Services Program (SSHSP) or the Preschool Supportive Health Services Program (PSHSP) retention policy should be directed to the STAC, Special Aids and Medicaid Unit within the New York State Education Department.
Social Services Law Section 363-d
18 New York Code of Rules and Regulations (NYCRR) Part 521