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Internal audit finds control gaps, recommends priorities for Newburgh City School District finance operations
Summary
An internal auditor told the Audit & Finance Committee in June that the district’s internal audit risk assessment and related reviews found timely-reconciliation lapses, staffing turnover, incomplete documentation for some settlements and petty-cash discrepancies, and recommended a set of priority fixes and next steps to the board.
Jennifer George of RPT CPAs presented an internal audit report and a required New York State internal audit risk assessment to the Newburgh City School District Audit & Finance Committee in June, summarizing findings about judgments and claims, special-education settlements, financial controls and operational risks across the 2022–23, 2023–24 and 2024–25 school years.
The report found no judgments-and-claims expenditures in 2022–23; two judgments-and-claims settlements totaling $9,280,000 in 2023–24 and two in 2024–25 totaling $7,300,000. Auditors were given supporting documentation for two special-education settlements from 2023–24 that totaled $13,750 but were not able to obtain a single printed account or consistent coding that isolated all special-education settlement expenditures. “We were not able to get a printout of the account where those special education settlement expenditures were coded,” George said during the committee presentation.
The auditor told the committee that all judgment-and-claim settlement agreements presented for review had been signed by the board president and the district notary, and that the two special-education settlements for which documentation was provided had been approved by the Board of Education in May 2024. Committee members asked why a discrete account or consistent coding was not in place for special-education settlements; a board member asked, “So my question is, why was she not able to obtain a list of the special ed settlement expenditures?” George and district staff said special-education settlements are sometimes services or placements rather than cash payouts and, historically, the district has not used a single dedicated account line for those items.
The report flagged several operational control issues tied to turnover in finance and accounting. At the time of fieldwork in March, bank reconciliations were completed only through September 2024, and treasurer’s reports for July, August and September 2024 were not provided to auditors until March 2025. The district’s audited financial statements for the year ended June 30, 2024 were not finished until December 2024, after the state filing deadline of Oct. 15; the federal single-audit was filed on time, the auditor reported. The auditor recommended prioritizing timely bank reconciliations and treasurer’s reports as the top corrective actions.
The review identified other specific matters and recommendations: maintain and complete required governance policies (the presentation noted the district’s policy manual is under revision and some legally required policies were not yet adopted); keep training documentation for board members who are required to complete fiscal and governance training; approve investment and bank account lists annually (the audit noted NYCLASS was not listed in reorganization minutes); update and reconcile petty-cash authorization (reorg minutes authorized $2,000 but the trial balance showed $8,034); finalize standard operating procedures and ensure purchasing and extra-classroom treasurer positions are filled permanently; scan and store personnel records electronically and move to electronic time sheets to reduce error; require the annual reorganization meeting to record authorization for district credit-card holders; and review Mosaic and MealViewer food-service data and USDA guidance so school nurses have up-to-date dietary and carbohydrate information for students.
Staffing and language-capacity gaps were also noted: the district had turnover in key finance positions and an acting purchasing agent at fieldwork, and auditors recommended evaluating transportation staffing because only one transportation department staff member spoke Spanish despite a student population that includes Spanish speakers.
The committee discussed several follow-up steps. District staff said they would take the feedback to relevant departments and the auditor offered to provide a final report. Committee members agreed the internal audit report should be sent to the full Board of Education for review; a committee member asked whether the auditor should wait for board approval before issuing the final report, and staff indicated it was acceptable to make the report public before full-board approval. The auditor told the committee she would issue the final report and send it to the board and make it available publicly prior to the next board meeting.
The committee did not adopt new policy on the spot; instead the presentation concluded with a list of suggested focus areas for the next year and a plan to forward the audit report and risk assessment to the full board for consideration and formal action.
