The chief fiscal officer of the Village of Little Valley (Village) is the Clerk-Treasurer, who is appointed by the Mayor, subject to the approval by the Board of Trustees (Board). The current Clerk-Treasurer, Tammy L. Buchhardt, has held her position since 1999. It is, and has been, her responsibility to, among other things: have custody of all moneys belonging to the Village, maintain the Village’s accounting records, file required financial reports, prepare and present claims for payment, prepare payrolls, sign checks, and keep a record of the proceedings of the Board of Trustees.

During an audit of the Village, we noted numerous deficiencies in the internal control structure governing the use of Village assets. Our initial review found a significant number of cash disbursements that were made for questionable purposes that directly benefited the Clerk-Treasurer. Due to the number and the nature of the disbursements in question, we extended our audit and focused our efforts on activities involving the use of the Village’s assets by and/or for the Clerk-Treasurer.

Scope and Objectives

The objective of our audit was to evaluate the policies and procedures of the Village to determine whether assets administered by the Clerk-Treasurer were properly used and adequately safeguarded from loss or misuse. Our audit addressed the following question for the period June 1, 2002 through March 11, 2004*:

• Are internal controls over assets administered by the Clerk-Treasurer appropriately designed and operating effectively?

* In order to get a better understanding of certain transactions or types of transactions we extended our testing as far back as January 1, 2000.

Audit Results

Internal controls over assets administered by the Clerk-Treasurer were poorly designed, inadequately monitored, and frequently disregarded. As a result, cash disbursements of more than $72,000 related to the Clerk-Treasurer were for poorly documented and/or questionable purposes. For example:

• Items totaling at least $3,388 were purchased for private purposes with her Village credit card.
  
• Expense reimbursements aggregating to $3,153 were paid to the Clerk-Treasurer that were not sufficiently supported by documentation for us to establish their propriety.
  
• Payments for compensatory time amounting to $3,792 were made to the Clerk-Treasurer, which were not supported by her employment agreements with the Village.
  
• The Clerk-Treasurer was overpaid for retroactive pay increases by $919.
  
• Compensation to the Clerk-Treasurer for three pay periods in 2003 exceeded her approved rate of pay by 57%, resulting in overpayments aggregating to $2,725.
  
• Compensation for fringe benefits totaling $23,376 made to the Clerk-Treasurer did not have applicable payroll taxes deducted, thereby exposing the Village to regulatory penalties by the State and/or Federal governments.
  
• Reimbursements to the Clerk-Treasurer for medical insurance payments amounting to $1,751 exceeded the amount approved in her employment agreements with the Village.

The Mayor and Board would have readily noted the lack of support for many of these payments if they had been properly performing their responsibilities to review and approve claims for payment. Furthermore, Board members have not demanded repayments from the Clerk-Treasurer or reported the apparent theft of Village funds to law enforcement officials.

Many of these cash disbursements were paid directly to the Clerk-Treasurer, based solely on information she provided and/or on calculations she prepared. When we expressed our concerns to the Mayor and Board about the issues mentioned above, they seemed skeptical rather than indignant. This raises the concern of whether they understood the seriousness of the issues and the need to address them quickly and vigorously.

Comments of Local Officials

The results of our audit and recommendations have been discussed with Village officials and their comments, which appear in Appendix A, have been considered in preparing this report. Village officials generally agreed with our recommendations and indicated they planned to initiate corrective action.