School District Accountability, Questions and Answers
August 25, 2006
Please provide any comments to the Office of Audit Services at firstname.lastname@example.org or 518-473-4516.
1. Who must audit claims of a school district or BOCES?
Education Law requires that the school district and BOCES boards audit and approve each claim prior to payment. The Education Law authorizes a board to adopt a resolution to appoint a claims auditor to perform this important function. When the office of the claims auditor has been established and filled, all powers and duties of the board with respect to auditing, allowing, or rejecting all claims against the district shall be exercised only by the claims auditor during continuance of such office.
2. May the board appoint one of its members or a committee of some of its members to audit the claims?
No. The law does not provide for the delegation of this responsibility to one or some of the board members.
3. What are the duties of the claims auditor?
The claims auditor is responsible for ensuring that only legitimate claims against the district and BOCES are paid. In general, the claims auditor must ensure that proper documentation and itemization are provided, the payment is for a legal purpose, and the transaction was properly authorized prior to approving the voucher or invoice for payment.
4. May the board audit only certain types of claims such as legal bills and leave the balance of the claims for the review and approval of the claims auditor?
No. The board has the authority to audit all claims or to delegate the full responsibility to the claims auditor. There is no provision in law to permit the board to only audit a certain type of claim. However, nothing would prevent the board from requiring the claims auditor to report on the audit of a certain type of claims or provide documentation for the board’s review.
5. Who can be appointed the claims auditor?
An individual who has the necessary knowledge and skills to effectively audit the claims can be appointed the claims auditor. However, the claims auditor may not be:
- a member of the board,
- the board clerk or treasurer of the district,
- the superintendent or district superintendent of schools,
- any official of the district or BOCES responsible for business management,
- the purchasing agent,
- clerical or professional personnel directly involved in accounting or purchasing functions of the district or BOCES, or under the direct supervision of the superintendent or the district superintendent of schools,
- the individual or entity responsible for the internal audit function, or
- the independent auditor responsible for the annual external audit.
If an existing claims auditor holds one of the above positions, that person is not in compliance with current legal requirements, and should be removed from the position.
6. What kind of qualifications does the claims auditor need to have?
The claims auditor should have knowledge in educational financial operations, pertinent legal requirements, purchasing policies, accounting systems and procedures, and other areas that are deemed necessary. The board needs to ensure that the claims auditor receives training in these areas, as appropriate. State law does not require the claims auditor to be a certified public accountant (CPA) or a certified internal auditor (IPA).
7. Can more than one individual be appointed to the claims audit function?
Section 1709(20)(a) permits a board to appoint a claims auditor. There is no provision in law to permit the board to appoint more than one claims auditor. However, a board may contract with a firm to provide claims audit services, but the board should designate an individual from the firm as the claims auditor. In addition, the board may employ one or more people in the claims audit office under the supervision of a single claims auditor.
8. Is there mandatory training for the claims auditor?
No. There is no requirement for the claims auditors to obtain training. However, it is recommended that claims auditors periodically receive training to maintain and improve their proficiency.
9. Does the claims auditor need to be an employee of the district or BOCES?
No. The claims auditor may be an employee of the district or BOCES, an independent contractor, or an individual employed through an inter-municipal cooperative agreement or through shared services.
10. Are there restrictions as to who can perform the claims audit function?
Yes. The individual appointed as the claims auditor must be independent and have no other responsibilities related to business operations of the district or BOCES, and cannot be a close or an immediate family member of an employee, officer or contractor providing services to the district or BOCES. In addition, if the claims audit function is performed by an independent contractor, the individual and his or her employer may not have any other contracts with the district or BOCES and should not provide any goods or services to the district or BOCES. In addition, the individual and his or her employer may not be a close or an immediate family member of anyone who has responsibilities related to the business operations of the district or BOCES, or have other contracts with the district or BOCES.
11. What is the definition of a close or an immediate family member?
A close family member is defined as a parent, sibling, or non-dependent child. An immediate family member is defined as a spouse, spouse equivalent, or dependent (whether or not related).
12. If a BOCES and district use an inter-municipal cooperative agreement for the claims audit function, are there any restrictions as to who should hire and pay the employee?
Yes. BOCES and districts should be careful to avoid any appearance of conflict of interest. For example, if a BOCES that participates in the inter-municipal cooperative agreement with several districts also provides material or significant services to those districts, it may not be appropriate for the BOCES to hire and pay the claims auditor since the individual would be required to audit the district claims for payments for services provided by the BOCES. There is a concern that the employee has a fiduciary responsibility to his or her employer (the BOCES) and may not be perceived as being objective in reviewing the BOCES claims for payment.
13. Can a BOCES employee be appointed as the claims auditor for a school district?
Yes. However, the BOCES and the employee must meet the requirements specified in the regulations and the guidance provided in this document. It may not be appropriate, therefore, for a BOCES to provide this service to its component districts, since most of these districts would have material and significant contract payments to that BOCES.
14. Can the internal auditor or the external independent auditor be appointed the claims auditor?
No. This is specifically prohibited by the regulations. Because of concerns with actual or perceived lack of independence, neither the internal auditor nor the external auditor can be appointed the claims auditor. If such an appointment were permitted, the internal auditor and external auditor would be performing a management function and in effect, could be called on to audit their own work.
15. Can the superintendent’s secretary be appointed the claims auditor?
No. The regulations specifically prohibit any clerical or professional personnel under the direct supervision of the superintendent from such appointment.