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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Audits of Local Governments and School Districts

Chautauqua County – Internal Controls Over Selected Financial Activities (2011M-294)


Released: June 26, 2012 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to examine the County’s internal controls over certain investments, real property tax-related activities, and the County Home’s pharmacist contract and drug inventories for the period January 1, 2010, through October 4, 2011.

Background

Chautauqua County, which has a population of approximately 140,000, is located in the extreme southwestern corner of New York State. The County is governed by a 25-member Legislature. For 2011, the County adopted a budget of approximately $282 million.

Key Findings

  • The County failed in its obligation to protect taxpayers from losses related to imprudent investments in two Chautauqua County Industrial Development Agency (CCIDA) bonds totaling $5.3 million for the construction of speculation buildings. As a result of these investments, the County’s general fund balance has already been reduced by $1.8 million, and the County lost approximately $500,000 in interest revenue and approximately $94,000 in property tax revenue. Further, an additional $1.8 million is at risk in the second building.
  • Five individuals had unlimited administrative access to the collection system even though this level of access was not necessary or appropriate given their responsibilities and incompatible duties between collection and recording were not segregated.
  • We identified a lack of management oversight regarding the billing and collection of PILOT payments.
  • County officials have not solicited requests for proposals for a consulting pharmacist since 2002 and did not monitor the terms and conditions of the consulting pharmacist contract.

Key Recommendations

  • Ensure that all investments of County funds are safeguarded and backed by reliable revenue streams.
  • Establish and monitor policies and procedures over the administration of user accounts for tax collection, including restricting users’ access levels to those required to perform their respective jobs and to promote adequate segregation of duties.
  • Establish monitoring procedures to ensure that PILOT bills are properly calculated and payments are collected.
  • Periodically solicit competition for consulting pharmacist services, enter into written contracts for the services, and monitor the services provided.

Local Government and School Accountability Contact Information:

Phone: (518) 474-4037; Email: localgov@osc.state.ny.us
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236