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Audit finds control gaps, late filings and misclassified spending in Hillside Public School District
Summary
The district's FY2025 audit presented to the Board of Education identified multiple internal‑control weaknesses — including unencumbered purchase orders, untimely payroll filings, misclassified expenditures and student activity weak controls — and the auditor said corrective action plans will be required.
At the Board of Education meeting, auditors presented the fiscal year 2025 Annual Comprehensive Financial Report and Auditor's Management Report, detailing a string of control weaknesses and compliance lapses that the district must address.
The auditor told the board, "In testing of our claims, we noted several purchase orders were processed as confirming orders. This is where goods and services are procured prior to funds being encumbered on the accounting system," and recommended that funds be encumbered prior to procurement to avoid overspending. The auditor also reported payroll problems: the district did not maintain an analysis of balances in salary and payroll agency accounts, and several federal and state payroll tax forms were not filed in a timely manner.
Other findings included a missing March 15, 2025 e‑certification to the New Jersey Department of Treasury for taxation of administrator compensation, a compensated‑absence record showing at least one employee with vacation accruals beyond contract limits, and multiple budget lines that were overexpended or mischarged (for example, transfers to the capital projects fund and lease payments posted to incorrect budget lines).
The audit flagged vendor payments that exceeded the bid threshold without evidence of a governing‑body award in the minutes, and noted weaknesses in student activity fund controls — receipts and requisitions were not always issued or deposited promptly and supporting invoices or canceled checks were sometimes missing. The auditor said some findings have appeared in prior years and remain unresolved despite corrective action plans.
Board members asked whether the asterisks in the summary indicated recurring problems; the auditor confirmed an asterisk marks a prior‑year issue that was not fully corrected. The auditor said the district will prepare corrective action plans for unresolved items and that many findings are already being addressed or are in process.
The board was told the district's ACFR and AMR are available on the district website under the Business Office link for public review. The board did not take formal action on audit items during the meeting; follow‑up will include board review and approval of corrective action plans.
Ending: The auditor closed by emphasizing the need for improved accounting controls and timely filings; the district will bring corrective action plans to the board for approval and report back on resolution progress.
