CPAs’ Role in the Stewardship of New York’s School Districts

This plan, which the NYSSCPA supports, is one of our state government’s more important initiatives in recent years, because nothing matters more to the future of our state than the proper education of its children. And nothing deserves more thoughtful scrutiny than its finances, which comprise an enormous part of the state budget.

Stronger, More Responsible Oversight

Hevesi’s plan has been submitted to the state legislature. Because not every part of the plan requires legislative action, some points are already moving ahead. In the wake of the scandals, Hevesi is also conducting detailed forensic audits at five districts and reviewing administrative expenses at 16 others.

In its entirety, the plan includes:

• Enhancing the effectiveness of the external audits that all school districts are required to obtain every year. This will include presenting the audit results to the full school board in a public meeting.
• Requiring audit committees in school districts to ensure that audit findings and other accountability issues receive adequate oversight. These committees would oversee the selection of both internal and external auditors, as well as oversee auditors’ work.
• Requiring a competitive RFP process for selecting auditors when contracts expire, or at least every five years. Current vendors that meet independence and other requirements will be allowed to compete. Auditor rotation is not required.
• Creating an internal audit function within each school district’s financial management team that performs internal auditing, particularly the testing of internal controls.
• Requiring six hours of financial oversight training for all newly elected school board members. The NYSSCPA will assist in implementing this plan, with 26 hands-on seminars to be held around the state for school board members, business administrators, and superintendents. This training will be part of an integrated course of study covering the fiduciary and other responsibilities of school board members.

No Quick Fixes

Hevesi’s plan will take time to develop and money to execute—more than $5 million each year. But that amount pales in comparison to the benefits of better financial management.

The discussions include requiring that the external audits of New York’s school districts comply with the Government Accountability Office’s (GAO) Government Auditing Standards, better known as the “Yellow Book,” which applies to both mandatory financial audits and to voluntary audit services that are subject to standards for performance audits.

School boards, the stewards of the tax dollars that we allocate for our children’s education, have an enormous responsibility. But sincere dedication to quality education is not enough. Serving in any area of financial responsibility within the educational system requires a financial education in itself. The people who accept that responsibility deserve the best available expertise wherever they need it. In the financial management arena, the CPA—the trusted professional—is the logical one to play this role.

Louis Grumet
Publisher, The CPA Journal
Executive Director, NYSSCPA
lgrumet@nysscpa.org

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