Town of Southampton - Board of Trustees of the Freeholders and Commonalty – Trustee Oversight (2013M-39)

Issued Date
May 17, 2013

Purpose of Audit

The purpose of our audit was to determine if Trustees were effectively monitoring cash management to adequately safeguard assets.

Background

The Dongan Patent established the Board of Trustees of the Freeholders and Commonalty of the Town of Southampton (Trustees) in 1686. The Patent granted the Trustees title and authority to manage approximately 25,000 acres of underwater land, rights of ways to the water, marshland and common areas located in the Town of Southampton, Suffolk County (Town). The Trustees comprise five elected members and are separate from, and in many respects independent of, the Town Board. The Trustees’ primary function is to protect, preserve and regulate the land and water ways that are under the Trustees’ control. The Trustees’ operating expenditures for 2012 totaled $384,930.

Key Findings

  • The Trustees need to improve their monitoring of cash management. The Trustees have not adopted an investment policy, which resulted in excess cash balances of $38,097 that were not covered by the Federal Deposit Insurance Corporation (FDIC) insurance.
  • The Trustees did not develop procedures to ensure that deposits were made timely and intact, resulting in cash receipts, totaling $13,322, being deposited anywhere from 11 days to 21 days after receipt. Although we found all deposits to be intact, the failure to deposit Trustee receipts in a timely manner increases the risk that moneys received will not properly accounted for, that moneys could be lost or stolen, or that the Trustees will lose interest that could have been earned if moneys had they been deposited timely.

Key Recommendations

  • Adopt an investment policy setting forth the parameters under which money can be invested, and requiring FDIC coverage or other security for bank accounts.
  • Develop procedures to address the timeliness of depositing cash receipts.