Audits of Local Governments and School Districts
Town of Herkimer – Financial Management and Internal Controls Over Selected Financial Operations (2011M-288)
Released: March 30, 2012 -- [read complete report - pdf]
Purpose of Audit
The purpose of our audit was to review the Town's internal controls over selected financial operations for the period January 1, 2010, to April 30, 2011.
The Town of Herkimer is located in Herkimer County. The Town is governed by a Town Board which consists of four elected Board members and an elected Town Supervisor. The Town's 2011 adopted budget totaled approximately $2.5 million.
- Town officials consistently underestimated revenues and/or overestimated expenditures in three major operating funds. This resulted in operating surpluses and excessive fund balances in the three funds. For example, the town-wide general fund unreserved, unappropriated fund balance as of December 2010 was $657,525 or 84 percent of the ensuing year's budgeted expenditures for this fund.
- The Town has not properly maintained or reconciled a water receivable control record with individual customer account balances. In addition, the Board hasn't developed procedures to insure that receipts posted to customer accounts as paid, were actually deposited in the bank.
- The Town failed to adopt IT policies and procedures relating to acceptable computer use, security and disaster recovery planning, data backup procedures and procedures for the cleaning and removal of sensitive data from computers scheduled for disposal.
- Adopt budgets that contain more realistic revenue and expenditure estimates and develop a plan to reduce the unreserved, unappropriated fund balance in its operating funds.
- Ensure that a control account is properly maintained and reconciled with individual customer accounts and appoint someone independent of the cash collection process to ensure that receipts posted to customer accounts are supported by an amount deposited into the Town's bank account.
- Develop and adopt policies and procedures that address the acceptable use of computers, security and disaster recovery planning, data backup procedures and procedures for the removal of sensitive data from computers scheduled for disposal.
Local Government and School Accountability Contact Information:
Phone: (518) 474-4037; Email: firstname.lastname@example.org
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236