Clerical workers in the Copiague school district issued hundreds of electronically signed checks totaling millions of dollars without supervision by either of the system's two administrators empowered to sign checks, state auditors reported.
Audit results released over the weekend by the state comptroller's office found no evidence of fraudulent check payments by Copiague employees. Auditors warned, however, that lax supervision posed a risk for the district, which has an annual budget of $112.5 million.
"Because the Treasurer and District Clerk do not maintain custody of their signatures or supervise the check signing process, there is increased risk that their signatures could be used to generate unauthorized checks," stated the report issued by Comptroller Thomas DiNapoli's regional Hauppauge office.
Copiague authorities, in a response letter, thanked state auditors for their professional handling of the situation and said they recently corrected the problems cited.
"These changes address both supervision and back up coverage for staff charged with the printing of District checks," wrote Peter Michaelsen, the district's assistant superintendent for finance and operations.
The state's review dealt with Copiague's handling of checks covering payroll and accounts payable from July 2013 to April 2015.
Copiague, like other local school districts, authorizes a few district officials to sign checks. District policy allows signatures to be imprinted using a flash drive inserted into the computers of clerical workers, with passwords employed to activate check-signing software.
During the period reviewed, Copiague employees processed 7,300 general disbursement checks totaling $8.9 million. Auditors said they observed a payroll clerk printing 1,736 checks totaling $3,627,477 using a flash drive with the signatures of the district clerk and treasurer. Clerks rather than officials with authorized signatures maintained custody of the flash drive.
Neither official was present to supervise the use of their signatures, state auditors reported. The monitors added that they reviewed 50 checks totaling $111,198, and found them all legitimate.
Auditors recommended that the district tighten controls by requiring either the treasurer or another official acting in the treasurer's absence to keep custody of their signature flash card and to directly supervise the check-signing process.