Makes internal audit functions optional by school districts unless an audit by the comptroller reveals deficiencies; provides that where deficiencies are found, school districts shall perform bi-annual internal audits until the comptroller conducts another audit of such school district.
TITLE OF BILL: An act to amend the education law, in relation to making internal audit functions optional by school districts unless an audit by the comptroller reveals deficiencies
PURPOSE OR GENERAL IDEA OF BILL: To reduce the duplicative and onerous requirement of mandatory internal annual audits
SUMMARY OF SPECIFIC PROVISIONS: Section 1 - amends subdivisions one, two and seven of section 2116-b of the Education Law, as added by Chapter 263 of the Laws of 2005 and to add a new subdivision eight to change the requirement mandated by current law for school districts to perform internal audits annually. Subdivision 1, 2 and 7 remove the requirement for annual review and update of the internal audit function. New section 8 provides that the internal audit function will be optional for school districts, unless a deficiency is found by the Comptroller's Office in one of their regular audits, in which case, the school district would be required to perform bi-annual internal audits until the next Comptroller's audit.
Section 2 - provides that this act shall take effect on the first day of July next succeeding the date on which it shall have become law.
JUSTIFICATION: School districts are required by Education Law 2116-a to obtain annual external audits. The requirement that they also perform an internal audit each year, essentially duplicating the same efforts put into the external audit, is wasteful and represents an unfunded mandate that puts yet one more financial burden on school districts that are facing challenging reductions in state aid. In addition to the annual external audits, school districts also must deal with regular audits by the Comptroller. One district has reported that within one twelve month span, they had to tear business office workers away from their usual duties to work with auditors for five separate audits - two internal audits, two external audits and one Comptroller audit. It is critical that the state begin to reduce wasteful and duplicative mandates on our schools to reduce costs, and by extension real property taxes on our residents and businesses.
PRIOR LEGISLATIVE HISTORY: 2011 - S.4556 - PASSED SENATE 2012 S.4556 -- RULES
FISCAL IMPLICATIONS: Savings to school districts across the state.
EFFECTIVE DATE: This act shall take effect on the first day of July next succeeding the date on which it shall have become law.
STATE OF NEW YORK ________________________________________________________________________ 2502 2013-2014 Regular Sessions IN SENATE January 18, 2013 ___________Introduced by Sens. RANZENHOFER, DeFRANCISCO -- read twice and ordered printed, and when printed to be committed to the Committee on Educa- tion AN ACT to amend the education law, in relation to making internal audit functions optional by school districts unless an audit by the comp- troller reveals deficiencies THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivisions 1, 2 and 7 of section 2116-b of the education law, as added by chapter 263 of the laws of 2005, are amended and a new subdivision 8 is added to read as follows: 1. No later than July first, two thousand six, each school district shall establish an internal audit function to be in operation no later than the following December thirty-first. Such function shall include: (a) development of a risk assessment of district operations, including but not limited to, a review of financial policies and procedures and the testing and evaluation of district internal controls; (b)
[an annu- al]A review and update of such risk assessment; and (c) preparation of reports [, at least annually or more frequently as the trustees or board of education may direct,]which analyze significant risk assessment findings, recommend changes for strengthening controls and reducing identified risks, and specify timeframes for implementation of such recommendations. 2. School districts of less than eight teachers, school districts with actual general fund expenditures totaling less than five million dollars in the previous school year, or school districts with actual enrollment of less than three hundred students in the previous school year shall be exempt from this requirement. Any school district claiming such exemption shall [annually]certify to the commissioner that such school district meets the requirements set forth in this subdivision.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD05240-01-3 S. 2502 2
7. Nothing in this section shall be construed as requiring a school district in any city with a population of one hundred twenty-five thou- sand or more to replace or modify an existing internal audit function where such function already exists by special or local law, so long as the superintendent of the district
[annually]certifies to the commis- sioner that the existing internal audit function meets or exceeds the requirements of this section. 8. NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, THE INTERNAL AUDIT FUNCTION ESTABLISHED PURSUANT TO THIS SECTION SHALL BE OPTIONAL BY ALL SCHOOL DISTRICTS UNLESS THE COMPTROLLER FINDS DEFICIEN- CIES IN THE AUDIT PERFORMED PURSUANT TO SECTION THIRTY-THREE OF THE GENERAL MUNICIPAL LAW. IF DEFICIENCIES ARE FOUND BY THE COMPTROLLER, SCHOOL DISTRICTS SHALL PERFORM BI-ANNUAL INTERNAL AUDITS UNTIL THE COMP- TROLLER CONDUCTS ANOTHER AUDIT OF SUCH SCHOOL DISTRICT. S 2. This act shall take effect on the first of July next succeeding the date on which it shall have become a law.