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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 Sullivan – Internal Controls Over Selected Financial Operations (2013M-267)


Released: December 27, 2013 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to evaluate the selected Town financial operations for the period January 1, 2011 to December 31, 2012.

Background

The Town of Sullivan is located in Madison County and has a population of approximately 15,340. The five-member Town Board is the legislative body responsible for the general management and control of the Town’s financial and operational affairs. The Town Clerk is an elected position. The Town Clerk is also the appointed Receiver of Taxes. In 2012, the total tax warrant was approximately $9.9 million.

Key Findings

  • The Town has excessive fund balances in the general – outside village, highway – town-wide and highway – outside village funds; the fire district; and the water and lighting districts that resulted from unrealistic budget estimates. The Board has not developed a financial and/or capital plan or established reserves.
  • We found significant weaknesses with how the Clerk handled the $17.1 million of tax and penalty payments. The Board has not established policies and procedures, and provided the proper oversight to ensure that Clerk properly performs all required duties related to her position as the Receiver of Taxes. Tax collections were not deposited in the bank or remitted to the Town and County in a timely manner. Tax collection money was not properly secured in the Clerk’s office and $3,140 went missing from the safe.
  • The Clerk did not perform bank reconciliations for the tax collection account. As a result, in 2011 the Clerk had $4,500 of unidentified funds. However, in 2012 the Clerk had to use approximately $4,200 of penalty moneys for other items including $2,900 to correct errors.

Key Recommendations

  • Develop a fund balance policy that establishes a reasonable amount of fund balance that should be maintained in order to meet the Town’s needs. Develop a formal plan to use the unexpended surplus funds in a manner that will benefit taxpayers. Develop and adopt comprehensive multiyear financial and capital plans.
  • Establish policies and procedures to provide adequate internal controls to ensure that tax money collected is recorded and deposited in an accurate and timely manner. Follow up with their bonding company and/or recoup the lost tax payment from the Receiver of Taxes.
  • Perform bank reconciliations to ensure that all moneys collected are properly safeguarded and recorded, and that deposit amounts correspond to receipts received and recorded.

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