Audits of Local Governments and School Districts
Town of Litchfield – Internal Controls Over Selected Financial Activities (2012M-55)
Released: June 22, 2012 -- [read complete report - pdf]
Purpose of Audit
The purpose of our audit was to evaluate the internal controls over selected financial activities for the period January 1, 2010, to November 30, 2011.
The Town of Litchfield is located in Herkimer County and has a population of approximately 1,500 residents. The Town is governed by the Town Board (Board), which comprises four elected members and an elected Town Supervisor. For the fiscal year ended December 31, 2011, the Town's budgeted appropriations totaled about $170,000 for the general fund and $405,000 for the highway fund.
- We identified a former Board member (now the Town Supervisor) who had a 25 percent ownership interest in a local dairy farm operating as a limited liability company (LLC). This company essentially entered into a contract with the municipality when it purchased a surplus highway vehicle from the Town in January 2010 at a cost of $15,502. Because the Board member had a 25 percent ownership interest in the LLC, the Board member is deemed to have an interest in this contract.
- The Highway Superintendent does not maintain perpetual inventory records that collectively show the amount of beginning inventory, fuel purchased, fuel consumed, and the balance of fuel remaining. No one performs a physical inventory of the fuel on hand, and the Superintendent does not compare the mileage per maintenance records for specific vehicles to their fuel consumption records for reasonableness.
- The Board did not perform, or provide for, annual audits of the records and reports of the Supervisor, Town Clerk, Tax Collector, Town Justice or Code Enforcement Officer for fiscal years ended 2009 or 2010.
- Take appropriate actions, such as requiring training, to help ensure that the Town does not enter into contracts in which a Town officer or employee has a prohibited interest.
- Maintain perpetual inventory records that identify the beginning inventory, and the quantities of fuel purchased/delivered, dispensed, and on hand. Compare the fuel consumption records with pump meter readings and mileage recorded in the vehicle maintenance records to help verify the reasonableness of the recorded fuel usage.
- Annually audit, or cause to be audited, the financial records and reports of all Town officers and employees who receive or disburse moneys on behalf of the Town.
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