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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Audits of Local Governments and School Districts

Village of Flower Hill – Internal Controls Over Selected Financial Operations (2012M-119)


Released: December 21, 2012 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to review the Village’s internal controls over selected financial operations for the period June 1, 2010, to September 30, 2011.

Background

The Village of Flower Hill is located in the Town of North Hempstead, in Nassau County and has a population of 4,600 residents. The Village is governed by an elected Board of Trustees which consists of a Mayor, and six Trustees. The Village’s general fund expenditures totaled $2.9 million for the 2010-11 fiscal year.

Key Findings

  • Village officials prepared budgets that significantly underestimated revenues and overestimated expenses in each of the fiscal years from 2006-07 to 2010-11 for a combined total of $8.6 million in budget variances.
  • The former Clerk-Treasurer did not properly account for and maintain moneys held in a fiduciary capacity. Since at least 2007, the former Clerk-Treasurer remitted payroll withholdings from the agency bank account, but did not transfer corresponding amounts from the general fund to cover the payments.
  • The Board has not established adequate controls over fringe benefits provided to the Board.
  • The individuals named as the Village building inspector and code compliance officer serve the Village as independent contractors rather than as public officers.
  • Access to the Village’s financial accounting system is not appropriately controlled and monitored.

Key Recommendations

  • Establish a policy and develop procedures for preparing realistic and structurally balanced budgets, using actual financial results from prior years and other relevant and available data.
  • Formalize procedures to prevent moneys held in a fiduciary capacity from being advanced to other funds.
  • Ensure that past payments for insurance expenditures were in accordance with the law and should seek to recover any unauthorized payments.
  • Review the Village’s relationship with the individuals performing the discretionary building inspection and code enforcement functions.
  • Ensure that each employee is assigned a unique user account and that employees do not share user accounts.

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