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NYS Comptroller

THOMAS P. DiNAPOLI

Audits of Local Governments and School Districts

East Clinton Fire District – Internal Controls Over Financial Operations (2012M-194)


Released: February 4, 2014 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to examine internal controls over financial operations for the period January 1, 2011 to April 30, 2012.

Background

The East Clinton Fire District is located in the Town of Clinton, in Dutchess County. The District is governed by an elected five-member Board of Fire Commissioners and has 57 volunteer members. The District’s budgets for 2011 and 2012 were $515,500 and $524,500, respectively.

Key Findings

  • District officials improperly made gifts and non-interest bearing loans of public moneys to members of the District’s fire department in excess of $26,000, including the payment of personal expenses.
  • The District retained an independent contractor to perform the duties of Secretary-Treasurer. Town law requires that the positions of District Treasurer and District Secretary are public offices and may not be delegated to an independent contractor.
  • During our 16-month audit period, the District paid the Secretary-Treasurer a total of $118,940, of which $113,340 represents hourly payments using the Secretary-Treasurer’s $20 hourly rate. This would equate to the Secretary-Treasurer working over 11 hours a day, seven days a week, every week, for 16 months.
  • The Board did not have written policies and procedures over financial operations including investments, cash receipts and deposits. As a result, bank accounts totaling approximately $463,000 were listed as reserve funds even though the Board could not provide evidence that it met the legal requirements to establish reserves for those moneys.
  • The Board did not obtain the legally required independent annual audit and the Secretary-Treasurer did not file an annual 2011 financial report with the State Comptroller’s Office.

Key Recommendations

  • Confer with the District’s legal advisor about seeking reimbursement of previous gifts and loans made with public moneys.
  • Take steps, as may be necessary, to ensure that the Secretary-Treasurer is a duly selected and qualified public officer, rather than an independent contractor.
  • Ensure that there is a comprehensive written contract for each consultant that details the services to be provided and the pay rate for each service.
  • Adopt written policies and procedures covering financial activities including investments, cash receipts and deposits.
  • Obtain an independent audit of the District’s financial records on an annual basis and ensure that the AUD is filed within 60 days of the close of the fiscal year.

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