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NYS Comptroller

THOMAS P. DiNAPOLI

Audits of Local Governments and School Districts

West Webster Volunteer Firemens' Association, Inc. – Internal Controls Over Financial Operations (2012M-212)


Released: December 14, 2012 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to examine the internal controls over the Association's financial operations for the period January 1, 2011, to August 9, 2012.

Background

The Association is located in the Town of Webster in Monroe County. The Association is governed by a five-member Board of Directors, which is responsible for managing the Association's overall fiscal activities and safeguarding its resources. The Association received $168,126 in revenue from fundraising, donations, foreign fire insurance premiums, and other activities in 2011.

Key Findings

  • The Board has allowed the Treasurer to perform incompatible duties.
  • The Treasurer is also the general manager of the financial institution where the Association maintains its general checking account.
  • The Treasurer did not prepare monthly bank reconciliations.
  • The Board's review of the Treasurer's financial reports are not adequate because the Board does not examine bank statements and canceled checks or verify deposits in transit and outstanding checks.
  • The Treasurer incorrectly classified more than $1 million of equity as a liability on the Association's financial reports as of December 31, 2011.
  • 121 paid claims (26 percent) totaling $62,000 lacked supporting documentation, such as bills, invoices, and vendor statements.

Key Recommendations

  • Establish written policies and procedures that adequately segregate the financial-related duties of the Treasurer or provide for effective compensating controls over his duties.
  • Do not maintain Association funds in a financial institution managed by the Treasurer or any other Board member.
  • Prepare monthly bank reconciliations and submit them to the Board for review.
  • Review the monthly bank reconciliations and compare them to the monthly reports, bank statements, and canceled checks that the Treasurer currently submits.
  • Ensure that all reports filed with regulatory agencies are accurate, and file amended returns, if necessary.
  • Ensure that all purchases are supported by adequate documentation before recommending that claims be approved by Association members for payment.

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