wappingers central school district · 2015-08-28 · district operations and board of education...

Division of LocaL Government & schooL accountabiLity

o f f i c e o f t h e n e w y o r k s t a t e c o m p t r o L L e r

report of ExaminationPeriod Covered:

July 1, 2013 — November 6, 2014

2015M-135

WappingersCentral School District

Fuel Accountability

thomas p. Dinapoli

Page

AUTHORITY LETTER 1

INTRODUCTION 2 Background 2 Objective 2 Scope and Methodology 2 CommentsofDistrictOfficialsandCorrectiveAction 3

FUEL ACCOUNTABILITY 4 Recommendations 8

APPENDIX A ResponseFromDistrictOfficials 9APPENDIX B AuditMethodologyandStandards 11APPENDIX C HowtoObtainAdditionalCopiesoftheReport 12APPENDIX D LocalRegionalOfficeListing 13

Table of Contents

11Division of LocaL Government anD schooL accountabiLity

State of New YorkOffice of the State Comptroller

Division of Local Governmentand School Accountability August2015

DearSchoolDistrictOfficials:

AtoppriorityoftheOfficeoftheStateComptrolleristohelpschooldistrictofficialsmanagetheirdistrictsefficientlyandeffectivelyand,bysodoing,provideaccountabilityfor taxdollarsspent tosupportdistrictoperations.TheComptrolleroverseesthefiscalaffairsofdistrictsstatewide,aswellasdistricts’compliancewithrelevantstatutesandobservanceofgoodbusinesspractices.Thisfiscaloversight is accomplished, in part, throughour audits,which identify opportunities for improvingdistrictoperationsandBoardofEducationgovernance.Auditsalsocanidentifystrategiestoreducedistrict costs and to strengthen controls intended to safeguard district assets.

FollowingisareportofourauditoftheWappingersCentralSchoolDistrict,entitledFuelAccountability.This auditwas conducted pursuant toArticleV, Section 1 of theStateConstitution and theStateComptroller’sauthorityassetforthinArticle3oftheNewYorkStateGeneralMunicipalLaw.

This audit’s results and recommendations are resources for district officials to use in effectivelymanagingoperationsandinmeetingtheexpectationsoftheirconstituents.Ifyouhavequestionsaboutthisreport,pleasefeelfreetocontactthelocalregionalofficeforyourcounty,aslistedattheendofthis report.

Respectfullysubmitted,

Office of the State ComptrollerDivision of Local Governmentand School Accountability

State of New YorkOffice of the State Comptroller

2 Office Of the New YOrk State cOmptrOller2

Background

Introduction

Objective

Scope andMethodology

The Wappingers Central School District (District) is located in the Towns of East Fishkill, Fishkill, LaGrange, PoughkeepsieandWappinger, in Dutchess County, and the Towns of Kent andPhilipstowninPutnamCounty.TheDistrictisgovernedbytheBoardof Education (Board) which is composed of nine elected members. The Board is responsible for the general management and control of theDistrict’sfinancialandeducationalaffairs.TheSuperintendentofSchools(Superintendent)istheDistrict’schiefexecutiveofficerandisresponsible,alongwithotheradministrativestaff,fortheday-to-day management under the Board’s direction.

TheDistrictoperates15schoolswithapproximately11,470studentsand2,290employees.TheDistrict’sbudgetedappropriationsforthe2014-15fiscal yearwere approximately $212million,whichwerefundedprimarilywithStateaid,realpropertytaxesandgrants.

TheDistrict has approximately 300 vehicles,with about 260 usedfor student transport. The remainder are used for various support services, including mail couriers, foodservice and facilities andoperations.TheDistrict’svehiclefuelexpenditureswereabout$1.4millionin2013-14.

The objective of our audit was to review the District’s maintenance of fuelinventories.Ourauditaddressedthefollowingrelatedquestion:

• Did District officials ensure that the District’s fuel wasaccounted for?

Weexamined fuel accountabilityof theDistrict fromJuly1,2013throughNovember6,2014.

We conducted our audit in accordance with generally accepted governmentauditingstandards(GAGAS).Moreinformationonsuchstandards and the methodology used in performing this audit are includedinAppendixBofthisreport.Unlessotherwiseindicatedinthisreport,samplesfortestingwereselectedbasedonprofessionaljudgment,asitwasnottheintenttoprojecttheresultsontotheentirepopulation.Where applicable, information is presented concerningthe value and/or size of the relevant population and the sample selectedforexamination.


Comments ofDistrict Officials andCorrective Action

The results of our audit and recommendations have been discussed withSchoolDistrictofficialsand theircomments,whichappear inAppendixA,havebeenconsideredinpreparingthisreport.Districtofficialsgenerally agreedwithour recommendationsand indicatedthey planned to initiate corrective action.

The Board has the responsibility to initiate corrective action. Pursuant toSection 35 ofGeneralMunicipalLaw,Section 2116-a(3)(c)ofNewYorkStateEducationLawandSection170.12oftheRegulationsoftheCommissionerofEducation,awrittencorrectiveactionplan(CAP)thataddressesthefindingsandrecommendationsinthisreportmustbepreparedandprovidedtoourofficewithin90days,withacopyforwardedtotheCommissionerofEducation.Tothe extent practicable, implementation of the CAPmust begin bytheendof thenextfiscalyear.Formore informationonpreparingandfilingyourCAP,pleaserefertoourbrochure,Responding to an OSC Audit Report,whichyou receivedwith thedraft audit report.TheBoardshouldmaketheCAPavailableforpublicreviewintheDistrictClerk’soffice.


Fuel Accountability

Districtofficialsareresponsiblefordesigninginternalcontrolsovervehicle fuel inventories and monitoring adherence to these controls to ensurethatfuelinventoriesareadequatelysafeguardedandprotectedagainsttheriskofloss,wasteandmisuse.TheBoardshouldestablishpolicies and procedures to provide reasonable assurance that diesel and gasoline fuel will be used only for District purposes. To accomplishthis,inventoryrecordsshouldbemaintainedtoaccountfor the amount of fuel purchased and used.

Consumable commodities such as gasoline and diesel fuel should bemaintained in lockedorcontrolledenvironments,and theusageshould be tracked by vehicle and by individual users. For pumps not usingacomputerizedsystem,amanualrecordshouldbemaintainedofthedatesandamountsoffuelused,thevehiclereceivingthefuelandwhomitwaspumpedby.ItalsoisimportantforDistrictofficialsto review fuel transaction reports to ensure that fuel is used only for District purposes and that all fuel is accounted for.

Districtofficialsneedtoimprovetheiroversightoffueluse.Despitetheuseofafuelmanagementsystem,Districtofficialsdonotreviewsystem activity reports to identify anomalies regarding quantitiesdispensed, fueling times and the odometer readings entered byemployees. We found eight instances where the fuel volume dispensed exceeded thevehicle’s tankcapacityora reasonablevolumegiventheamountofmilesdrivenbetweenfill-ups.Wealsoidentified140instances where fuel was dispensed without an odometer reading and26instanceswheretheodometerreadingsforvehicleswerelessthanthepreviousreadingsforthosesamevehicles.Further,Districtofficialsdonot reconcile fuelpurchases to fueluse and remainingfuel or maintain an accurate list of assigned fuel keys and vehicles. Insomeinstances,fuelkeyandvehiclenumbersarenotuniqueandno logs are maintained to document the purpose each time a master key is used. Master fuel keys were used in 376 transactions todispense4,075gallonsoffuel.Finally,theDirectorofFacilitiesandOperationsdoesnotmaintainalogoffuelusageforthe275gallondiesel tank inhisDepartmentwhichhaddeliveries totaling$6,326during our period or have knowledge of who was reordering the fuel for that tank.As a result, theDistrict cannot properly account forhowmuchfuelispumpedintospecificvehiclesandbywhom.Thisreduces accountability and places the District at unnecessary risk for loss of fuel.


The District’s computerized fuel management system captures fuel transactions forfive fuelpumps1 through designated fuel keys assigned to vehicles. The Transportation Director oversees the fuel management system and assigns fuel keys to vehicles for use by the Transportation and other departments.2 The activity data captured by thefuelmanagementsystemincludeskeynumber,vehiclenumber,odometer reading, amount of fuel dispensed, date, time and pumpnumber. The fuel management system also reports a department identifier associated with the key and vehicle, and calculates thevehiclemileageusingthepriorodometerreading.Eachquarter,theTransportation Director prints the fuel transaction reports and sends themtotheBusinessOffice,wherefuelexpensesareallocatedbasedon activity.

Report Distribution and Reconciliation – The Transportation Director primarily uses the fuel transaction reports to monitor inventory and dailyfuellevelsinthestoragetanksforleaks.However,theBusinessofficeonlyusesthereportsforexpenseallocation–thereportsarenotsharedwiththedepartmentheadswhenexpensesarechargedtothem.Asaresult,Districtofficialsarenotmonitoringandreviewingusagefortheirdepartments.Forexample,theDirectorofFacilitiesand Operations told us that he has never seen a report of fuel activity forhisdepartment,norhadherequestedone.Inaddition,theBoarddoesnotrequireaperiodicreconciliationoffuelpurchases,fueluseand remaining fuel. The current Transportation Director followed procedures in place when she assumed the position and did not know if the reports had ever been shared.

FuelKeysandVehicleRecords – The Transportation Director does not have a complete and accurate record of all vehicles that use the fuel managementsystem,showingvehiclenumber,fuelkey,Department,andemployeeassignedtothevehicle.Forexample,therewere341distinct vehicle numbers3 on the fuel transaction report, but therewere389vehicle/keycombinationsonthereport.Masterfuelkeyswere available for usewhen vehicle fuel keyswere inoperable, tofillgascansor tofuelnewlypurchasedvehicles;however,nologswere maintained to document the purpose each time the master key wasused.Masterfuelkeyswereusedin376transactionstodispense4,075gallonsoffuel.Further,wefoundthattheassignmentofkeyandvehiclenumberswerenotuniqueandthatvehiclenumberscouldnotbetracedtoDistrictvehicles:

1 Four diesel pumps and one unleaded gasoline pump2 Facilities and Operations, Foodservice, Audio-Visual and Purchasing (mail

couriers)3 Includesvehiclesreplacedandleased


• Key number 859 was assigned to two different vehiclenumbers(116and841)indifferentdepartments,forthesameperiod.

• Key numbers 1184, 1262 and 1275 were assigned as

Transportation Department master fuel keys and assigned to Districtvehiclenumbers736,689and763,respectively,forsome or all of the same period.

• Keynumber1266wasenabledasamasterkeyfortwodays,but was not a replacement master key.

• Vehiclenumber998wasassignedtovehiclesintwodifferentdepartments at the same time using two different types of fuel.

• Vehiclenumber143couldnotbetracedtoDistrictrecordsofowned or leased vehicles.

The duplicate fuel key numbers in use were not identified by theTransportation Director because she did not routinely analyze or review the activity on the fuel transaction report or reference activity to a complete list of employee’s assigned key and vehicle numbers.

Quantities Dispensed and Fueling Times – We reviewed all transactions for reasonableness, including the amount of fueldispensedinonedayoronconsecutivedays,frequencyofre-fuels,vehicle fuel capacity and fueling at unusual hours or on weekends. Although there was significant fueling frequency,4 and weekend fueling activity, the explanations received for the activity werereasonable.However,we foundeight instanceswhere fuelvolumedispensed and recorded exceeded the vehicle’s tank capacity orreasonablenessforamountofmilesdrivenbetweenfill-ups.Variancesincludedfuelingtransactionsof16to35gallonsofunleadedgasolineforasedanwitha17gallongastank.Inaddition,30gallonsofdieselfuel were listed as dispensed for a trailer. The Director of Facilities andOperationswasunawareoftheactivity,andtoldusthathewouldinvestigate the transactions.

Furthermore, theTransportationDirector stated thatTransportationDepartment mechanics unlock the fenced area surrounding the diesel fuel tanks at 5 a.m. (if working overtime), and lock thembeforethesecondshiftendsat10:30p.m.However,theDirectorofFacilities and Operations did not ensure the gates surrounding the

4 TransportationDepartmenthad4,067instancesinwhich30ormoregallonsoffuelweredispensed in a single transaction. Facilities andOperationshad80transactionsinwhich30ormoregallonsweredispensedinasingledayorasasum in consecutive days.


unleadedgasolinefueltankweresecuredeachnight.Wefound1,825transactionsafter10:30p.m.andbeforeorat5a.m.Theseanomalieswere never reviewed for reasonableness. While these transactions couldbeforlegitimateDistrictpurposes,therecouldbeothersafternormal working hours that are not.

Odometer Readings – We reviewed transactions in which no odometer reading was entered or where the odometer reading entered was unreasonable, such as if it was less than the prior odometerreading for the vehicle. We found that odometer readings were not always entered when vehicles were being fueled, some odometerreadingswentbackward,andsometransactionswerenotreasonable.We identified 140 instances where fuel was dispensed without anodometerreadingbeingentered.Almosthalfofthetransactions(69of140)wereoriginatedbyemployeesofFacilitiesandOperations.Furthermore, we found 26 instances involving 17 vehicles wherethe odometer reading went backward – fuel was dispensed with an odometer reading that was less than the prior odometer reading entered. Also, a reviewof calculatedmiles showed355 instanceswhere reportedmileage between fueling exceeded 350miles; themajority being over 1,000miles, with the highest at 9,410miles.The Transportation Director could offer no explanation for theseanomalies.

Diesel Tank – Although the District has an electronic fuelmanagement system it does not account for all fuel purchased and used.TheDistricthasa275gallondieseltankusedbytheFacilitiesand Operations Department that is not part of the electronic system. Therearenomanual logsmaintainedtoindicatethedate,purpose,gallons and employee name when gallons are pumped. The Director of FacilitiesandOperationstoldexaminersamanualloghadneverbeenkeptandthetankwasseldomrefilled–suggestingmaybefivetimesper year; however, Department records showed 11 fuel deliveriesfor the periodwith $6,326 spent.The employeewho ordered fuelfor the Department was someone other than the employee whom the Director named.

The Transportation Director primarily uses the fuel transaction reportsfromthefuelmanagementsystemtoallocatefuelexpensesto non-Transportation Department users and to monitor inventoryanddailyfuellevelsinthestoragetanksforleaks.However,thefueltransaction reports are not shared with department heads so they can identifyanomaliesregardingthequantitiesdispensed,fuelingtimesandodometerreadings.Inaddition.Districtofficialsdonotreconcilefuel purchases to fuel usage or maintain an accurate list of assigned fuel keys and vehicles; in some instances fuel key and vehiclenumbersarenotuniqueandnologsaremaintainedtodocumentthe


purposewhenamasterkeyisused.Finally,theDirectorofFacilitiesandOperationsdoesnotlogfuelusagefora275gallondieseltankinthe Department or have knowledge of who is reordering fuel for that tank.Asaresult,theDistrictcannotproperlyaccountforhowmuchfuelispumpedintospecificvehiclesandbywhom.Thisreducestheaccountability and places the District at increased risk for loss or theft of fuel.

TheBoardshould:

1. Ensurereconciliationoffuelpurchases,fueluseandremainingfuel is performed periodically.

TheDirectorofFacilitiesandOperationsshould:

2. Research the fueling variances cited and seek recovery for the value any fuel taken for personal use.

3. Ensurethegatessurroundingtheunleadedgasolinefueltankare secured each night.

4. Review fuel transaction activity on a monthly basis to identify unusual transactions.

5. Maintain a log for fuel dispensed from thediesel fuel tanklistingdate,purpose,gallonsandemployeename.

6. Ensurethatnoindividualcanorderfuelfordeliverywithoutapproval.

TheTransportationDirectorshould:

7. Providefueltransactionreportstoalldepartmentheadsonamonthly basis so they can review fuel transaction activity to identify unusual transactions within their departments.

8. Establishacomprehensiverecordoffuelkeynumbers,vehiclenumbers and employees to whom vehicles are assigned,updatingtherecordasrequired.

9. Maintainalogofmasterkeytransactionscapturingthedate,vehiclenumber,employeeandpurposeformasterkeyuse.

10.Reviewfueltransactionactivityonamonthlybasistoidentifyunusual transactions.

Recommendations


APPENDIX A

RESPONSE FROM DISTRICT OFFICIALS

TheDistrictofficials’responsetothisauditcanbefoundonthefollowingpage.


APPENDIX B

AUDIT METHODOLOGY AND STANDARDS

OuroverallgoalwastoassesstheadequacyoftheinternalcontrolsandaccountabilityovertheuseofvehiclefuelfromJuly1,2013throughNovember6,2014.Toaccomplishourauditobjectiveandobtainvalidauditevidence,wepreformedthefollowingprocedures:

• We interviewed District officials and employees of the Transportation Department andFacilities and Operations Department to obtain an understanding of the fuel management system,includingfuelkeyauthorizationandfueldispensingprocedures.

• We interviewed the School Business Manager to determine if fuel purchases were reconciled tofueluse.Weobtainedandreviewedfinancialrecordsoffuelpurchasesmadeandgallonsdelivered.

• We interviewed Business Office employees to gain an understanding of the fuel expenseallocation process.

• WecomparedvehiclenumbersfromtheDistrict’sfixedassetlistandtheDepartmentallistofcars to the fuel transaction report to identify vehicles fueled that were not recognized District assets.

• Weobtainedthefueltransactionreportduringtheauditperiodconsistingof29,161transactions.Usingdatasortinganddatafilters,wereviewedallthetransactionsbyfuelkeynumber,vehiclenumber and Department number.

• Weperformedreasonablenesstestingassociatedwiththereconciliationoffuelusetopurchases,frequency of fueling, gallons dispensed per transaction, fueling times and the odometerreadings.

• We tested fuel key numbers to identify duplicate fuel key numbers and fuel key numbers used with more than one vehicle. We also sorted the data to identify the use of master keys.

• WesortedthetransactionsbyDepartmentandfilteredthedatabyfrequencyofaccessandthenumber of gallons of fuel pumped per transaction and in one day. We also compared the volume of gallons pumped to vehicle tank capacity to identify potentially fraudulent transactions.

• We sorted the fuel transaction report by time of day and day of week to identify unusual transactions. We also sorted the data to identify transactions in which no odometer reading was entered,andreviewedactivitytoidentifyinstanceswheretheodometerreadingenteredwasless than the prior odometer reading for the vehicle.

WeconductedthisperformanceauditinaccordancewithGAGAS.Thosestandardsrequirethatweplanandperform theaudit toobtainsufficient,appropriateevidence toprovidea reasonablebasisforourfindingsandconclusionsbasedonourauditobjective.Webelievethattheevidenceobtainedprovidesareasonablebasisforourfindingsandconclusionsbasedonourauditobjective.


APPENDIX C

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT

OfficeoftheStateComptrollerPublicInformationOffice110StateStreet,15thFloorAlbany,NewYork12236(518)474-4015http://www.osc.state.ny.us/localgov/

Toobtaincopiesofthisreport,writeorvisitourwebpage:


APPENDIX DOFFICE OF THE STATE COMPTROLLER

DIVISION OF LOCAL GOVERNMENTAND SCHOOL ACCOUNTABILITYAndrewA.SanFilippo,ExecutiveDeputyComptroller

GabrielF.Deyo,DeputyComptrollerNathaalieN.Carey,AssistantComptroller

LOCAL REGIONAL OFFICE LISTING

BINGHAMTON REGIONAL OFFICEH.ToddEames,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Suite170244 Hawley StreetBinghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313Email:[email protected]

Serving:Broome,Chenango,Cortland,Delaware,Otsego,Schoharie,Sullivan,Tioga,TompkinsCounties

BUFFALO REGIONAL OFFICEJeffreyD.Mazula,ChiefExaminerOfficeoftheStateComptroller295MainStreet,Suite1032Buffalo,NewYork14203-2510(716)847-3647Fax(716)847-3643Email:[email protected]

Serving:Allegany,Cattaraugus,Chautauqua,Erie,Genesee,Niagara,Orleans,WyomingCounties

GLENS FALLS REGIONAL OFFICEJeffreyP.Leonard,ChiefExaminerOfficeoftheStateComptrollerOneBroadStreetPlazaGlensFalls,NewYork12801-4396(518)793-0057Fax(518)793-5797Email:[email protected]

Serving:Albany,Clinton,Essex,Franklin,Fulton,Hamilton,Montgomery,Rensselaer,Saratoga,Schenectady,Warren,WashingtonCounties

HAUPPAUGE REGIONAL OFFICEIraMcCracken,ChiefExaminerOfficeoftheStateComptrollerNYSOfficeBuilding,Room3A10250VeteransMemorialHighwayHauppauge,NewYork11788-5533(631)952-6534Fax(631)952-6530Email:[email protected]

Serving:NassauandSuffolkCounties

NEWBURGH REGIONAL OFFICETennehBlamah,ChiefExaminerOfficeoftheStateComptroller33AirportCenterDrive,Suite103NewWindsor,NewYork12553-4725(845)567-0858Fax(845)567-0080Email:[email protected]

Serving:Columbia,Dutchess,Greene,Orange,Putnam,Rockland,Ulster,WestchesterCounties

ROCHESTER REGIONAL OFFICEEdwardV.Grant,Jr.,ChiefExaminerOfficeoftheStateComptrollerThePowersBuilding16WestMainStreet,Suite522Rochester,NewYork14614-1608(585)454-2460Fax(585)454-3545Email:[email protected]

Serving:Cayuga,Chemung,Livingston,Monroe,Ontario,Schuyler,Seneca,Steuben,Wayne,YatesCounties

SYRACUSE REGIONAL OFFICERebeccaWilcox,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Room409333E.WashingtonStreetSyracuse,NewYork13202-1428(315)428-4192Fax(315)426-2119Email:[email protected]

Serving:Herkimer,Jefferson,Lewis,Madison,Oneida,Onondaga,Oswego,St.LawrenceCounties

STATEWIDE AUDITSAnnC.Singer,ChiefExaminerStateOfficeBuilding,Suite170244 Hawley Street Binghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313

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