N.Y. Education Law § 2116-b: Internal audit function

§ 2116-b. Internal audit function. 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 annual 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 one thousand five 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.

3. The commissioner, in consultation with the comptroller, is

authorized to promulgate regulations with respect to the internal audit

function as is necessary for the proper performance of its duties,

including standards, qualifications and training for audit personnel. In

developing such regulations, the commissioner shall consider the

differing needs, capabilities and environments of school districts of

varying sizes across the state.

4. A district shall be permitted to utilize existing district

personnel to fulfill this function, but such persons shall not have any

responsibility for other business operations of the district while

performing such function.

5. A district shall be permitted to use (a) inter-municipal

cooperative agreements, (b) shared services to the extent authorized by

section nineteen hundred fifty of this title, or (c) independent

contractors, to fulfill this function as long as personnel or entities

performing the internal audit function comply with any regulations

issued by the commissioner and meet professional auditing standards for

independence between the auditor and the district.

6. Personnel or entities performing the internal audit function shall

report directly to the trustees or board of education of each district.

The district audit committee established under section twenty-one

hundred sixteen-c of this article shall assist in the oversight of the

internal audit function on behalf of the trustees or board.

7. Nothing in this section shall be construed as requiring a school

district in any city with a population of one hundred twenty-five

thousand 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

commissioner that the existing internal audit function meets or exceeds

the requirements of this section.