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State comptroller audits Merrick Academy books

By Ivan Pereira

The comptroller's office issued the audit of Merrick Academy Charter School Dec. 21 and made 17 recommendations concerning its financial oversight, disbursements, payroll services, and how it handles its equipment and inventory. One of the largest errors found in the audit was that the school had paid contractor Victory Schools Inc., a national corporation that manages schools across the country, $904,819 to oversee its operations during the 2004-2005 school year.”The fee for that year should have been $890,480…The error was made because Victory calculated the fee on the basis of [an] old agreement (22 percent of the school's gross revenues) rather than [a] revised agreement ($2,000 per student),” the audit said.Merrick Academy was closed for the holiday recess and could not be reached for comment.Paul Angello, the vice president of finance at Victory Schools, said in a response letter to the state comptroller's office that the old financial agreement went into effect after the original agreement ended in the 2005-2006 school year, but the contract was erroneously entered as the 2004-2005 year.”If the calculation was based upon the per pupil fee, the amount recorded was incorrect by $14,339,” Angello wrote in the letter. “However, the intent of all the parties to the [Merrick Academy] is that the term commences with the 2005/2006 school year, and therefor there was no overpayment.”Merrick was established in February 2000 by the state and is one of 41 charter schools approved by the State University of New York and chartered by the Regents of the State of New York. The school, which has an enrollment of around 500 students according to the audit, is funded primarily by the city Department of Education, which granted nearly $4.5 million in the 2006 fiscal year, according to the audit.The comptroller's office issued the audit after it found discrepancies and errors in its financial records for the last three fiscal years. The comptroller's office also found the school did not properly keep track of its petty cash fund, which is used for disbursements. The audit found that some of the finances were for staff luncheons and taxi fares and that there was an unaccounted $932 in reimbursement receipts during the end of the 2005 fiscal year.”The business manager distributed $2,891 from the fund. However, there were receipts to support only $1,859 for those disbursements,” the audit said.After examining school inventory records, which contained 224 items of electronic equipment valued at more than $83,000, according to the audit, the comptroller's office found that 15 laptops were not included in the records.The audit made many recommendations to the school to fix its errors by ensuring that the check register for the school-based account is kept up-to-date to avoid overdraft charges and ensure that newly acquired equipment is promptly recorded. Angello told the comptroller's office that it would adhere to its recommendations and keep better track of its records.”The school agrees and has subsequently implemented this control,” he wrote in response to many of the recommendations.Reach reporter Ivan Pereira by e-mail at ipereira@timesledger.com or by phone at 718-229-0300, Ext. 146.