Internal audit finds grants-management gaps; district business office lays out corrective-action plan

Alex Lucas, an analyst with the district’s internal auditors, told the Poughkeepsie City School District board at its Nov. 19 workshop that an internal audit of grants management covering July 1, 2020, through Dec. 31, 2024, found procedural inconsistencies and documentation gaps that hinder tracing grant spending to line items.

The audit’s scope and methods focused on board policies, FS‑10 budget forms and payroll and goods-and‑services testing, Lucas said. "We began with a policy and procedures overview and tried to establish where the policies intersect with grants management," he said, and then reviewed FS‑10s and final cost reports to test budget‑to‑actual variances.

The audit identified several concrete problems: two grants lacked original FS‑10 budgets on file; multiple FS‑10 final reports showed inconsistent project codes and slightly varying grant names; testing found five cost centers that were overspent at or above the regulatory threshold (the lesser of $1,000 or 10%), which requires filing an FS‑10a amendment; and 32 cost centers were underspent against budget targets. Lucas said that “on the top line, 11 grants were underspent; eight of those by about 10% and three by about 25%.” He added that while totals reconciled in the ledger, the district’s accounting setup made it difficult to trace individual payments to specific grants.

In addition to missing or incomplete purchase orders and invoices, auditors found gaps in employee documentation tied to grant payrolls and at least one instance where an employee’s name was omitted from a cost report. Lucas said these issues primarily reflected weak record‑keeping and inconsistent naming conventions across budgets and final reports, which complicated external review and program oversight.

Helen Stanford, the district’s executive director of business, presented the business office’s corrective-action plan in response. Stanford said the office will increase oversight and introduce standard review procedures: program managers and the business office will review FS‑10 budgets and final reports; assistant superintendents will examine reports before final sign-off; the district has hired a grants coordinator to facilitate monitoring; and the business office will maintain centralized binders and use an appropriation status report to track spending and encumbrances during the grant year.

On software and process changes, Stanford said automation can help where salaries are charged fully to a grant and noted the district uses payroll interfaces and a system called Timepiece; she cautioned, however, that automation only reduces errors if the underlying inputs and coding are accurate. Several board members pressed staff for a clearer summary of audit scope — specifically, how much money and how many employees were covered — so the board can assess the magnitude of the findings. Staff agreed to provide summary charts in future audit committee and treasurer reports.

The board discussion identified next steps: establish a standardized FS‑10 budget‑to‑actual review, create a formal document‑retention policy, refine the grants‑coordinator role, improve program‑manager access to budget codes, and prepare an internal dashboard to monitor grant spending and reduce late or missing encumbrances. The corrective‑action plan as described focuses on internal controls and communication rather than immediate remedial spending. Stanford said the appropriation status report will be used to monitor ongoing spending and encumbrances so the district can identify underspending while grants remain active.

The board did not take formal vote action on these items at the workshop; staff said they will incorporate the audit recommendations into regular reporting and corrective‑action tracking at future meetings.