Comptroller Audits - Financial Management and Building Access Risks

Recent Comptroller audits highlight the importance of sound financial planning and effective procedures to control access to school buildings.

1. Financial Management and Financial Condition

Recent audits demonstrate that financial management risks can arise from both budget deficits and excessive budgetary surpluses.

In one audit (2026M-71), recurring operating deficits substantially reduced the district’s available fund balance and led the district to issue $8 million in revenue anticipation notes to address cash-flow needs. Contributing factors included reliance on appropriated fund balance, underestimated expenditures, and the failure to regularly review and update multiyear financial plans.

Another audit (2026M-13) found that a district repeatedly overestimated appropriations, underestimated revenues, and appropriated fund balance and reserves that were not needed to finance operations. These practices resulted in real property tax levies that were higher than necessary and caused surplus fund balances totaling $87.9 million, significantly exceeding the statutory limit. New York Real Property Tax Law § 1318 limits the amount of surplus funds that a school district can retain to no more than 4 percent of the budget. Any surplus fund balance in excess of the 4 percent limit must be applied to reduce the upcoming year’s real property tax levy or appropriately fund reserves. The audit found that the recalculated surplus fund balance exceeded the 4 percent legal limit by at least 3 percent in each of the five years reviewed.

The recommendations in both audits demonstrate that districts should prepare budgets using reasonable and supportable estimates, monitor actual results throughout the fiscal year, maintain current multiyear financial plans, and provide the Board of Education with complete information about fund balance and reserves.

2. Building Access

The Comptroller’s building access audits identified weaknesses involving active badges or key fobs that were no longer needed, individuals having multiple access cards, shared devices that could not be adequately tracked, the absence of periodic account reviews, and lack of written procedures for adding accounts in the system or issuing devices. Some audits also found that responsibilities for managing employee and non-employee access were not clearly assigned or documented.

The issues identified included both employee and non-employee accounts. An audit (S9-26-18) found that while District officials properly managed and monitored the active access accounts and devices, they did not ensure that non-employee badges issued to first responders remained active. The Comptroller’s office recommended that the District monitor and reconcile badges issued to first responders to ensure required badges are active, so they can access school buildings when needed.

In general, the recommendations to the districts include maintaining written access-control procedures, promptly deactivating unnecessary accounts and recovering badges and key fobs, avoiding duplicate or shared credentials, completing required background checks before granting access, and regularly reconciling access-system records against authorized users.

We Can Help

Please contact our office if you have questions about the legal requirements relating to your district’s financial management or building access procedures or practices, or if your district is subject to a Comptroller audit. We can assist with responding to audit inquiries, reviewing records requested by auditors, developing corrective action plans, and communicating with auditors throughout the audit process to help ensure responses are accurate, complete, and appropriately framed.