Executive Summary

Eastern Suffolk BOCES ranked as the largest BOCES in the State, in terms of total general fund expenditures, for the 1997-98 school year ($180,987,747).

The pie chart illustrates general fund expenditures by program for the 1997-98 school year.

Background and Scope of the Audit

The audit examined management practices, records and documentation related to selected areas of Eastern Suffolk BOCES’ operations for the period July 1, 1997 through June 30, 1998. These areas included Administration, Employment Preparation Education (EPE) Program, Operations and Maintenance, and other select CO-SERs. This was a financial related audit and the objectives were to: determine if cost allocations and transfers were accurate and reasonable; determine if services comply with Department approved specifications and provide a cost savings to school districts; verify that only reasonable and necessary costs were incurred; verify that the budgetary process provides control over the expenditure of funds; and verify the accuracy and reliability of data reported for EPE.

Audit Results

Presented below is a summary of the significant audit findings developed in response to the audit’s objectives.

· EPE contact hours were overstated for intake and assessment, the GRASP program, and testing. These overstatements, as well as some other miscellaneous errors, caused Eastern Suffolk BOCES to receive an excess of $218,460 in EPE funds.

· A pre-school special education program deficit was inappropriately funded from general fund revenues and not disclosed in the financial statements.

· Eastern Suffolk BOCES paid for unnecessary meal expenses.

· There are opportunities to improve management processes related to: bank reconciliations; control over vehicle usage; accounting for year-end encumbrances; equipment inventory; and incurring unnecessary or unreasonable expenses.

Table of Contents

Introduction..................................................................................................................................................... 1

Background.................................................................................................................................................... 1

Objectives, Scope and Methodology................................................................................................ 1

Comments of Eastern Suffolk BOCES Officials.......................................................................... 2

Employment Preparation Education.............................................................................................. 3

Intake Assessment Hours................................................................................................................................ 3

GRASP and Testing Contact Hours.............................................................................................................. 4

Other Contact Hours Overstated.................................................................................................................. 6

Undocumented Cost Allocations................................................................................................................... 6

Recommendations....................................................................................................................................... 8

Comments of Eastern Suffolk BOCES Officials.......................................................................... 8

Auditor's Note................................................................................................................................................ 8

Cooperative-Services (CO-SERs)......................................................................................................... 10

Hiring of Consultant - Not in Compliance with Policy...................................................... 10

Preschool Special Education Deficit............................................................................................ 11

Comments of Eastern Suffolk BOCES Officials....................................................................... 12

Auditor's Note.............................................................................................................................................. 12

Administrative Expenditures.............................................................................................................. 14

Meal Expenses of Non-BOCES Staff.................................................................................................. 15

Meals for Various Meetings................................................................................................................ 16

Undocumented Expenses...................................................................................................................... 16

Recommendations..................................................................................................................................... 17

Comments of Eastern Suffolk BOCES Officials....................................................................... 17

Opportunities to Improve Management Processes............................................................ 18

Bank Reconciliations.............................................................................................................................. 18

Vehicle Mileage Logs.............................................................................................................................. 18

Accounting for Year-End Encumbrances.................................................................................. 19

Equipment Inventory............................................................................................................................... 20

Certain Expenses Not Reasonable or Necessary.................................................................... 21

Recommendations..................................................................................................................................... 22

Comments of Eastern Suffolk BOCES Officials....................................................................... 23

Auditor's Note.............................................................................................................................................. 23

Schedule 1 – Schedule of Audit Findings

Appendix A – Contributors to the Report

Appendix B – Comments of Eastern Suffolk BOCES Officials

Appendix C – Audit Review Proceedings

Introduction

Background

Boards of Cooperative Educational Services (BOCES) are voluntary, cooperative associations of school districts that have joined to provide educational programs or services more economically than each could offer by itself, and are authorized by Section 1950 of the Education Law. BOCES may provide such services as special education for students with disabilities, occupational education, academic and alternative programs, summer school, staff development, computer services, educational communications, and cooperative purchasing. Today, there are 38 BOCES in New York State and all but 13 of the 705 school districts in the State are members.

Each BOCES submits an annual Cooperative Services Application (CO-SER) to the State Education Department (Department) for approval of each program and service offered to districts. After the BOCES obtains approval and determines budgeted program costs, it notifies the districts of available programs and the applicable rates.

Districts that belong to a BOCES are called component districts and are required to collectively pay the BOCES’ administrative costs. Districts that actually use the programs offered by a BOCES, called participating districts, are required to pay for the costs of those programs. Costs charged to the districts are based on budgeted costs and are adjusted at the year-end to reflect actual costs. Typically, a refund is issued to the districts to reconcile differences.

Eastern Suffolk BOCES, headquartered in Patchogue, New York, serves 52 component districts, which enroll more than 156,000 students. During the 1997-98 school year, Eastern Suffolk BOCES was the largest of the 38 BOCES in the State, with $180,987,747 in general fund expenditures.

Objectives, Scope and Methodology

Pursuant to Sections 305 and 1950 of the Education Law, we audited management practices, records and documentation related to select operations of Eastern Suffolk BOCES for the period July 1, 1997 through June 30, 1998. This was a financial related audit and our objectives were to:

· determine if cost allocations and transfers between funds and among CO-SERs are accurate and reasonable;

· determine if services comply with Department approved specifications and provide measurable cost savings to school districts;

· verify that only reasonable and necessary costs were incurred;

· verify that the budgetary process provides reasonable control over the expenditure of funds; and

· verify the accuracy and reliability of data reported to the Department for Employment Preparation Education aid.

To accomplish our objectives, the audit reviewed applicable laws, regulations, policies and procedures; interviewed Department and Eastern Suffolk BOCES management and staff; examined records and supporting documentation; sampled transactions on a non-statistical basis; and reviewed the CPA audited financial statements.

There is no process within Eastern Suffolk BOCES to assess the extent to which Eastern Suffolk BOCES’ services provide a savings to school districts. The audit was unable to develop a methodology to independently assess the savings. As a result, that portion of the second audit objective was not accomplished.

We conducted our audit in accordance with Government Auditing Standards issued by the Comptroller General of the United States. An audit includes examining, on a test basis, evidence-supporting transactions recorded in the accounting and operational records and applying other audit procedures considered necessary in the circumstances. An audit also includes assessing the estimates, judgments and decisions made by management. We believe that the audit provides a reasonable basis for our findings, conclusions and recommendations.

Comments of Eastern Suffolk BOCES Officials

Eastern Suffolk BOCES officials’ comments to the matters contained in this report have been included where appropriate. Their final comments will be included as Appendix B to the final report.

Employment Preparation Education

Eastern Suffolk BOCES operates an Employment Preparation Education (EPE) Program. This categorical aid program targets students 21 years of age or older and is designed to provide instruction that leads to a high school or equivalency diploma. Eastern Suffolk BOCES received a total of $1,527,802 in EPE aid for the period July 1, 1997 through June 30, 1998, based on 369,928 contact hours of instruction.

EPE aid is generated based on the number of contact hours that are provided. Section 168.4 of the Regulations of the Commissioner of Education states that EPE Program funds may be spent for personal services, employee benefits, equipment, supplies and materials, contractual services, travel expenditures, staff development and training, and other expenditures approved by the Commissioner. These expenditures are to be only for EPE Program purposes.

Education Law 3602 requires that State aid payable in the following year be reduced by the amount of any excess revenue. Eastern Suffolk BOCES overstated intake assessment hours and inaccurately reported GRASP, testing, and other miscellaneous contact hours. The total value of the overstated contact hours is $218,460. The audit report will be used by the Department to adjust future aid received by Eastern Suffolk BOCES.

Intake Assessment Hours

According to a memorandum sent from the Department to all BOCES District Superintendents dated October 1995, career counseling, evaluation and intake assessment hours are eligible for EPE aid with two stipulations. The first is that a teacher conducts these program activities. Second, to ensure that EPE revenues paid to BOCES are appropriate, the number of reported contact hours must be clearly documented. Any undocumented or overstated contact hours will be questioned upon audit.

Eastern Suffolk BOCES records 12 contact hours for entrance into English for Speakers of Other Languages (ESOL) or Adult Basic Education/General Education Diploma (ABE/GED) class. The 12 hours cover testing, student meetings, and placement in class. A standard three hours are also recorded for entrance to the jail program. BOCES had no documentation to support these initial contact hours, such as records of the dates, times, activities, or the name of the teacher who provided the services.

EPE records for a sample of 24 students who attended classes during reporting period one (July through December of 1997) were examined. The sample found that 19 students were reported for at least 12 hours of intake and 2 students at the jail were reported for 3 hours of intake. The remaining three students did not attend a literacy class, but instead attended a vocational education class and/or participated in the GRASP program or took a “Test of Adult Basic Education (TABE).” The audit found an average of over 25 hours were claimed for the 19 students because several students were credited with 12 hours for other literacy classes they attended or transferred to.

Most of the 19 students had at least 24 hours of intake reported, although the audit noted 36 hours reported for 3 students and 60 hours reported for 1 student. Eastern Suffolk BOCES provided a description of the intake process, but could not justify why the process took 12 hours or why there was no documentation to support the 12 hours. Traditional student enrollment for the year, not including nontraditional and adult occupational education, was 2,397 for period one and 2,023 for period two. Using the lower enrollment of 2,023 students multiplied by 12 hours, the estimated impact of this procedure is 24,276 hours (2,023 x 12). This is a conservative figure, since Eastern Suffolk BOCES may have claimed multiple intakes for the same student.

The BOCES computer system used to record and accumulate contact hours may be programmed to charge 12 hours for literacy students who enroll in a class. An additional 12 hours are charged for any additional classes or class transfers.

Eastern Suffolk BOCES has overstated the intake assessment hours provided to students. Not only is Eastern Suffolk BOCES unable to document the 12 hour charge, but some students were charged as much as 60 hours. This is not reasonable. Eastern Suffolk BOCES needs to revise the intake reporting to comply with the October 1995 memorandum to the District Superintendents concerning the EPE Program. As a result, Eastern Suffolk BOCES has overstated EPE contact hours by 24,276 hours and EPE aid by $100,260 (24,276 x $4.13/hr.).

GRASP and Testing Contact Hours

Section 168.2 of the Regulations of the Commissioner of Education (Regulations) defines nontraditional modes of instruction as external high school diploma programs, correspondence programs, televised general educational development programs, and such other EPE programs that are not conducted in regular classrooms during a regular school day as may be approved by the Commissioner. Giving Rural Adults a Study Program (GRASP) is an example of a nontraditional program.

Education Law and Department guidelines define contact hours eligible for EPE aid. For the GRASP program, Eastern Suffolk BOCES is limited to 12 contact hours per hour the teacher worked. This is further limited to one teacher hour per actively enrolled student. A student is considered actively enrolled if the student completes and turns in a completed home study packet (packet) once in a two-week period. Therefore, for every packet turned in, 12 contact hours may be claimed.

According to a memorandum sent from the Department to all BOCES District Superintendents dated October 1995, career counseling and evaluation, and intake assessment hours are eligible for EPE aid provided that these program activities are conducted by a teacher. According to Department officials, EPE aid can be claimed for initial testing (like TABE), but it should be claimed as traditional EPE, meaning one contact hour for every hour spent taking the test. For GRASP students, the testing should also be claimed as traditional hours.

Contact hours are claimed when GRASP packets are prepared for students. The audit found several examples where many packets were sent out and never returned. Some packets were even “reworked,” meaning the same subject matter was sent out again and another 12 hours were claimed. It some cases, Eastern Suffolk BOCES staff would continue to send out home study packets even though few were returned. Eastern Suffolk BOCES should consider only students who return the home study packets as actively enrolled, especially for an independent study course like GRASP.

Since GRASP hours were claimed for home study packets sent instead of received, the audit conducted an initial sample of 50 students and determined that 38 percent of the contact hours claimed were inappropriate. In order to project the sample to the entire GRASP population, the audit selected an additional 81 students and again found the total error rate was approximately 38 percent.

As a result of the statistical sample, we are 95 percent certain that GRASP contact hours eligible for aid is between 30,594 and 40,483 hours (standard deviation +/- 4,944.46 hours). Giving Eastern Suffolk BOCES the benefit of the upper limit, the audit estimates that the total GRASP hours eligible for EPE aid amounts to 40,483 hours. Since Eastern Suffolk BOCES originally reported 56,424 GRASP hours, the audit is questioning 15,941 hours (56,424 – 40,483).

An additional 19,740 contact hours were claimed for TABE tests. Eastern Suffolk BOCES was multiplying the actual duration of the two-hour test by 12 for a total of 24 contact hours. For students who qualified for GRASP, an additional 12 hours were claimed for their first home study packet, for a total of 36 hours. Only actual testing hours are permitted for EPE aid. These hours are not considered nontraditional and therefore cannot be multiplied by 12. As a result, only 2 hours for the test should be reported. Since the audit did not have sufficient detail to determine which students were reported at 24 or 36 hours, a conservative approach was taken and the audit questioned 22 of the 36 hours (61 percent). If the audit multiplies 19,740 hours by 61 percent, the total is 12,041 questioned hours.

The financial impact of the GRASP statistical projection and the questioned TABE hours is as follows:

Questioned Hours
GRASP	15,941
TABE	12,041
Total	27,982
Dollar Value (hours multiplied by $4.13)	$115,566

The audit determined that Eastern Suffolk BOCES overstated GRASP contact hours by 27,982, resulting in an overpayment of $115,566.

Other Contact Hours Overstated

Under Section 168.2 of the Regulations, a contact hour for EPE is 60 minutes of instruction given by a teacher in approved program component areas. To ensure that EPE revenues paid to the district or BOCES are appropriate, the number of reported contact hours must be clearly documented.

Fifty student records were sampled, representing 15,507 (4.2 percent) of the total 369,928 contact hours reported. In addition to the GRASP issues previously reported, the audit found the following:

· Scanner Errors, Input Errors – scanning errors led to an overstatement of 545 hours for 12 students. Eastern Suffolk BOCES’ computerized attendance records can be improperly scanned if there are errant markings on the attendance records. Most scanning errors were minimal – 4 to 8 hours. In addition, there were three input errors, but for larger numbers of hours (324 hours, 135 hours, 15 hours).

· Vocational Education Class Hours – Eastern Suffolk BOCES was reporting one additional contact hour for EPE students attending secondary vocational education classes. The attendance roster showed a three-hour class, but four hours were reported. This resulted in an overstatement of 209 hours for 3 students. Eastern Suffolk BOCES officials explained that students spent one additional hour with an EPE instructor to review their work and the material from the previous class; however, there is no separate attendance record for this additional hour. Students who attended the vocational class were assumed to have attended the additional hour.

· Unreported Hours – Eastern Suffolk BOCES did not report 116 contact hours for 3 students. The reason could not be determined.

· Attendance Record of Class Time - The audit noted that Eastern Suffolk BOCES’ attendance records only track the number of days attended, not the number of hours. Eastern Suffolk BOCES assumes students attend the class for the entire class period. Past experience has shown that this is rarely the case.

Scanner errors, although more frequent, are usually less significant while input errors and unreported hours are very infrequent, but can be more significant. Vocational class hours need to be properly documented. In general, attendance records would be more accurate by recording the number of hours the student spends in class, otherwise reported contact hours will not be reliable. In total, the audit questions 638 hours, or $2,635 (638 x $4.13 EPE rate).

Undocumented Cost Allocations

Section 168.4 of the Regulations states that EPE Program funds may be spent only for personal services, employee benefits, equipment, supplies and materials, contractual services, travel expenditures, staff development and training, and other such expenditures as approved by the Commissioner. Such expenditures shall be made only for EPE Program purposes.

The Office of the State Comptroller’s Financial Management Guide for Local Governments (Guide), Volume 1, Subsection 1.1040, states that, in order to provide "full cost" information, methods must be devised to allocate indirect costs to the areas that benefit from such activities. Generally Accepted Accounting Principles allow any method that produces an equitable cost distribution, and is adequately documented. The documentation would be of a nature that a prudent person, familiar with functions of the organization, could determine that the methods and the underlying basis for the allocation are reasonable and consistent.

The Adult Education Director is responsible for the following programs:

Eastern Suffolk BOCES

Adult Education Programs

1997-98 Expenses

CO-SER Name	CO-SER #	Expenses In Dollars	% of total
Health Occupation Cluster	913	1,106,023	28
EPE Traditional Program	984	1,511,747	38
Adult Education Program	992	1,351,711	34
Total		$3,969,481	100

Most of his salary (75.5 percent) was charged to the EPE Program, even though EPE accounts for only 38 percent of the total program expenses he is responsible for. None of his salary was allocated to CO-SER 992 - Adult Education Program. The Director could not document the basis for the 75.5 percent allocation. He did inform the audit that his allocation was based on available funding and added that EPE is usually charged 40 percent of his salary. Availability of funding is not proper justification for allocating salary costs. A more reasonable figure would be 38 percent of the Director’s salary, or $45,963. This results in an overcharge to EPE of $45,375.

The audit was also unable to determine the amount of operations and maintenance (O&M) charges that were allocated to the Adult Education programs. Adult Education classes are held at the Brookhaven Technical Center (BTC), the Islip Technical Center (ITC), Sherwood at Holbrook, the Harry B. Ward Technical Center, and the New York Technical Center. The Annual Financial and Statistical Report of BOCES (SA-111) does not show any O&M charges to any Adult Education CO-SERs listed above. Eastern Suffolk BOCES officials agreed that O&M was not charged to EPE or the Adult Education program for 1997-98, but no reason was provided.

Eastern Suffolk BOCES does not accurately reflect the true cost of operating the EPE and Adult Education programs. The allocation of the Director’s salary overstates the true cost of the EPE Program and understates the cost of the other Adult Education programs by approximately $45,375. The allocation of O&M seems to understate the true cost of the EPE and Adult Education programs. Since EPE revenue cannot exceed actual expenditures, it is imperative that expenditures are allocated accurately.

There is no fiscal effect from this finding because the revenue adjustment from the finding of GRASP contact hours is much greater than this expense adjustment.

Eastern Suffolk BOCES officials indicated that there is no regulatory definition of documentation. Because of this they dispute the audit finding that documentation was unavailable. They particularly question the audit position that an actively enrolled student must be demonstrated by the receipt of a completed packet and believe that any contact with the student constitutes actively enrolled.

Eastern Suffolk BOCES officials indicated they will continue to document their claim according to existing guidelines and within the constraints of the computer system.

Recommendations

1. Revise the current procedure for intake assessment hours to report only actual and documented time spent. Make any computer programming changes, as needed.

2. Report GRASP contact hours only for the packets sent, as long as the previous packet was received. Students should be considered inactive after not returning two packets.

3. Report TABE as traditional contact hours, not nontraditional where the hours are multiplied by 12.

4. Increase monitoring of reported contact hours to ensure eligible students are claimed and contact hours are properly documented.

5. Document the basis for allocating personal service and O&M costs to the EPE Program. Refrain from charging expenses to EPE based on the availability of funds.

Comments of Eastern Suffolk BOCES Officials

Eastern Suffolk BOCES officials disagree with the recommendations. They believe that their documentation is in compliance with existing guidelines.

Auditor's Note

Eastern Suffolk BOCES’ State aid claims were unsupported in many instances. In regard to GRASP hours, the Department’s audit review process (see Appendix C) has upheld audit findings of the same nature as noted in this audit report. Eastern Suffolk BOCES needs to reassess the substantiality of documents and related processes for claiming EPE aid.

Cooperative-Services (CO-SERs)

BOCES must obtain the prior approval of the Commissioner of Education before providing any service. The Cooperative Service Application (CO-SER) is the document used to request this approval. The BOCES Administrative Handbook #2, Criteria - Guidelines for Approval of BOCES Services, delineates the minimum standards for the approval of service programs. A service proposal must be submitted for any service that is new to a given BOCES. The audit found that Eastern Suffolk BOCES did not follow their own policy in hiring a consultant, and the general fund was used to fund the pre-school special education deficit.

Hiring of Consultant - Not in Compliance with Policy

Eastern Suffolk BOCES Policy 5151 addresses the hiring of relatives. According to the policy “A candidate with a relative who is employed by or is a member of the BOCES will be hired only if his or her qualifications are truly superior to those of other candidates. If two persons are equally qualified, the one who is not a relative will be hired. If relatives are employed in the same school program, service or administrative unit, every effort will be made to ensure that one relative does not directly supervise another. For purposes of this policy, relative shall be defined as spouse, brother, sister, child, mother, father, grandmother, grandfather, grandchild, or any other relative or person living in the household of the employee or member of the BOCES.

The Executive Officer will disclose when reviewing the personnel report at the regular Board meeting any family or other relationship that exists between proposed staff members and current staff members or BOCES members, as well as any specific supervisory relationships which will be established pursuant to paragraph 2, above.”

The policy for hiring relatives refers to the selection process, which would favor the hiring of someone who is not a relative if the persons involved were equally qualified. The consultant in question is the father of the Associate Superintendent. Documentation was not available regarding the selection process for this consultant. The consultant was paid $26,560 during the audit period. To ensure that there was no favoritism involved in selecting this consultant, Eastern Suffolk BOCES should maintain documentation that the person was the most qualified. Eastern Suffolk BOCES officials stated that the individual was hired based on a component district’s recommendation.

Because Eastern Suffolk BOCES contracted with a relative of a high-ranking Eastern Suffolk BOCES official, this may create the appearance that relatives receive favoritism in the consultant selection process.

Preschool Special Education Deficit

Education Law, Section 1950(4)(d), states that any component district which does not elect to participate in a specific cooperative service shall not be required to pay any share of the expenditures. Furthermore, Section (4)(f) states that BOCES shall receive all reimbursements from public funds for services, allocate the cost of BOCES activities and shared services to component school districts, and apportion surpluses and assessments for services on the basis of participation to those components. In addition, Section (cc) states that BOCES may establish and maintain a program of reserves not to exceed three percent of the annual budget to cover property loss and liability claims. Eastern Suffolk BOCES funded a stipulation of settlement of an audit disallowance from funds that should have been refunded to school districts.

Eastern Suffolk BOCES terminated its Special Education Preschool Programs in June 1997. The special education preschool program is a State/county funded program. The Office of the Comptroller for Suffolk County conducted closeout audits of BOCES’ preschool programs for the years 1990-91, 1991-92, and 1992-93. The audit determined that Eastern Suffolk BOCES had been funded for costs which are not allowable under the methodology or based on undocumented allocations. Eastern Suffolk BOCES and Suffolk County entered into a settlement that called for the repayment of $6.5 million, half payable to Suffolk County, half to the Department.

Eastern Suffolk BOCES used general fund surplus without notifying affected school districts. In addition, the funding was obtained through an arbitrary methodology which made no attempt to distribute the costs of the settlement to the home districts of the children that benefited from the services.

Eastern Suffolk BOCES retained surplus funds from the general fund, which are due to component districts, to pay for the audit settlement. There is no mention in Eastern Suffolk BOCES’ 1997-98 financial statements of a reserve fund established to pay pending audit disallowances. Eastern Suffolk BOCES officials were asked to provide details about how the $6.5 million audit settlement was financed. The School Finance Manager said that $5.8 million had been withheld from component district refunds and had accumulated in the account “Other Liabilities.” The remaining $700,000 would come from the current year’s (1999-2000) fund balance.

These funds should have been refunded to component districts. Instead, the amount was charged to many individual CO-SERs. For example, some of the costs of the stipulated settlement were charged to the following CO-SERs in the 1997-98 school year:

· Occupational Education ($402,231 or 20.4%),

· Special Occupational Education ($295,583 or 15%),

· Special Education Option 3 ($135,851 or 6.9%),

· Special Education 12-1-4 ($136,940 or 6.9%),

· Handicapped Transportation ($139,745 or 7.1%), and

· School Age Summer Training ($119,442 or 6.1%)

The amount of the charges and the CO-SERs charged were based on the availability of funds in those CO-SERs. Eastern Suffolk BOCES has been retaining refunds due to component school districts to pay for the deficit generated by the Preschool Programs. Eastern Suffolk BOCES officials have indicated that this has been going on for quite a while with Board approval. However, component districts were not notified of this practice.

Eastern Suffolk BOCES overstated its General Fund expenditures to pay for a deficit from the Special Aid Fund. This results in over-billing for all Eastern Suffolk BOCES services. By charging the expenses to CO-SERs, there is likelihood that participant component districts received BOCES aid on the settlement of an audit disallowance for a preschool program that does not involve local school district funds. This raises a question with statutory authority and/or policy regarding the use of Eastern Suffolk BOCES’ reserve funds to finance a non-BOCES aidable program. This matter will be referred to appropriate Department staff for review.

In addition, districts are assuming a portion of the $6.5 million operating deficit of the Preschool Program, regardless of their participation in the program.

Eastern Suffolk BOCES officials state that they believe the appointment of the consultant was consistent with Eastern Suffolk BOCES policy, and indicated that they will continue to notify school districts of program balances.

Recommendations

6. Maintain documentation that the hiring of relatives of Eastern Suffolk BOCES officials was in compliance with internal policies.

7. Notify affected school districts when withholding refunds due to them as part of the annual reconciliation process.

Comments of Eastern Suffolk BOCES Officials

Eastern Suffolk BOCES officials disagree with recommendation number 6, and believe that they already comply with number 7.

Auditor's Note

The Board should establish documentation requirements to avoid a potential public perception of nepotism in the hiring of employees. In regard to the payment of the preschool deficit, the ultimate source of the settlement is the component school districts through reductions in reconciliation payments.