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August 9, 2010

DiNapoli: Officials Are Correcting Town Of Islip's
Long-Standing Finance And Management Problems

Referring Report to DA to Investigate $12,250
Missing from Town Clerk’s Office



Town of Islip officials are correcting long-standing finance and management problems – some dating back 20 years – according to an audit released by State Comptroller Thomas P. DiNapoli.  DiNapoli released the audit today with Town Supervisor Phil Nolan at an Islip news conference.  The audit, which was requested by Nolan, covered the period January 2007 to August 2008.

DiNapoli’s report also noted that the town clerk’s office had a cash shortage of $12,250, which included: solid waste permit application receipts totaling $6,750; towing business licenses totaling $3,600; and commercial boat hauler permits and deposit differences totaling $1,900.  DiNapoli has referred his report to the Suffolk County District Attorney’s Office for further investigation.  Additionally, the Sayville Landfill closure project also poses a potential cost to the town, DiNapoli’s audit points out.

“We found a number of long-standing problems in the town that needed to be corrected to prevent future cash shortfalls and unwelcome tax increases,” said DiNapoli. “The good news is that the town is correcting these issues under the leadership of Supervisor Nolan, together with members of the town board.  They’ve been working closely with my auditors to address the issues we identified.  New York families are struggling to make ends meet.  Local governments have to make sure tax dollars are managed carefully.  Supervisor Nolan is working to make that happen.”

“When I took office, I inherited a mess left by the previous administration, which is exactly why I requested this audit nearly two years ago,” stated Supervisor Phil Nolan. “All of the issues identified in the audit report were long-standing practices, and we have corrected - or are in the process of correcting - every single one of them.  I am thankful to Comptroller DiNapoli for providing us with the information we need to continue our track record of keeping town taxes low and the bond rating high while following the letter of the law.”

DiNapoli’s auditors found that from 2006 to 2008, town officials unnecessarily designated $14.3 million a year in its fund balance. In addition, long-running and antiquated processes led the town comptroller to incorrectly charge approximately $10 million in revenues and expenditures to the wrong funds, which resulted in inequitable tax increases.
  • Village residents paid for $8,999,911 in debt service that should have been shared with all town residents;
  • Town residents living outside of the villages paid for $765,225 in expenses that should have been shared with village residents; and
  • The town comptroller incorrectly posted an operating surplus totaling $192,871 for the Division of Land Management.

Regarding the Sayville Landfill project – which has been delayed for about 23 years – closure could cost more than $15 million, even though town officials don’t believe the town is responsible for its closure.  Moreover, along with the Town of Islip Resource Recovery Agency, (IRRA) the town is a respondent to a State Department of Environmental Conservation (DEC) consent order, meaning it has a contingent liability if the IRRA does not have the resources to pay possible exorbitant fines.

Lastly, DiNapoli’s report noted that for at least 10 years town employees received leave time and other fringe benefits without board authorization, resulting in the town incurring more than $111,000 in unauthorized expenses.

DiNapoli recommended that:
  • The town clerk investigate why funds are missing and take steps to ensure cash, checks, receipts, permits are maintained in secure areas;
  • The town clerk assign cash drawer reconciliation to an employee who does not also collect cash and enter cash receipt transactions to the computer system;
  • As a respondent to the DEC consent order, the town should work with the IRRA to ensure that the Sayville landfill’s closure is completed in accordance with DEC regulations;
  • Create encumbrances that are valid commitments to expend to funds for specific purposes and ensure that each expenditure and revenue is classified in the proper fund;
  • Ensure that separation payments are reviewed and approved by the board prior to making those payments to individuals leaving town employment; and
  • Develop written policies for the accrual of and carry-over of leave time for employees.

Town officials generally agreed with DiNapoli’s recommendations, and indicated that they plan to take corrective action.

For a copy of the report, visit: http://www.osc.state.ny.us/localgov/audits/towns/2010/islip.pdf

 

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