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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Audits of Local Governments and School Districts

Town of Olean – Internal Controls Over Selected Financial Activities (2012M-138)


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

Purpose of Audit

The purpose of our audit was to examine and evaluate the internal controls over payroll, cash disbursements, and sewer district billing and receipts for the period January 1, 2011, through May 3, 2012.

Background

The Town of Olean is located in Cattaraugus County and has a population of approximately 2,000 residents. The Town is governed by an elected Town Board, which is comprised of the Town Supervisor and four Council members. Budgeted appropriations for 2012 totaled approximately $800,000.

Key Findings

  • The Board did not have a procedure in place to ensure that only authorized wages and salaries were paid as intended, nor did the Board audit the records of the Supervisor, as required. As a result, the former Supervisor was able to process and make payroll payments that were not authorized by the Board to himself, the Town Clerk (who is his sister), and a highway department employee (who is his son), totaling more than $17,000.
  • The Board did not adopt policies and procedures for the cash disbursement process.
  • The Board had not established an adequate system of internal controls for the Town's sewer districts. Town officials could not ensure that services were billed to all benefitted property owners at Board-approved rates because local laws or resolutions establishing the rates were not available for our review.

Key Recommendations

  • Adopt policies and procedures for the payroll process and review payroll records during its annual audit, to ensure that only authorized amounts are being paid.
  • Adopt policies and procedures for the cash disbursement process to ensure that only claims audited and approved by the Board are paid.
  • Adopt policies and procedures for the proper billing and collecting of sewer district usage and capital costs. Properly establish sewer rates for each of the districts. Consult with legal counsel to determine the appropriate action to address those residents who were receiving sewer benefits, but were not being billed by the Town.

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