Comptroller DiNapoli Releases Municipal Audits
New York State Comptroller Thomas P. DiNapoli today announced his office completed the audits of the Village of Altamont, Birdsall Fire Company, Inc., Town of Brookfield, Village of Delhi, East Pembroke Fire District, Town of Elbridge, Village of Endicott, Farmersville Volunteer Fire Department, Inc., Hammondsport Fire District, Town of Junius, Livonia Joint Fire District, Lysander Fire District, Town of Minisink, Protecting Personal, Private, and Sensitive Information (PPSI) When Disposing of or Reusing Electronic Equipment, Village of Silver Creek, Town of Springwater, Village of West Winfield and the Town of Yates.
"My office's audits of local governments improve their financial management practices," DiNapoli said. "These audits are tools for local officials to make sure proper policies and procedures are in place to protect taxpayer dollars and provide the best possible service these taxpayer dollars can deliver."
Village of Altamont – Board Oversight (Albany County)
The board could improve its monitoring of fiscal operations. Specifically, the board did not adopt policies establishing responsibilities and duties for officials and employees involved with maintaining accounting records. The board also did not segregate the treasurer’s duties, conduct annual audits, or adequately monitor actual results of operations against budget estimates.
Birdsall Fire Company, Inc. – Internal Controls Over Financial Operations (Allegany County)
The board did not provide adequate oversight of company financial activity. The president did not appoint an audit committee and there was no indication in the minutes that an audit was conducted of the treasurer’s records. The minutes did not indicate what bills the board approved for payment and auditors found no evidence that the bills were reviewed or signed by the president and secretary, as required.
Town of Brookfield – Town Clerk (Madison County)
The clerk did not deposit, disburse and report clerk fees, real property taxes and other monies that were received in a timely and accurate manner. Collected taxes were not deposited intact and the clerk did not remit collections in a timely manner. The board did not perform an audit of the clerk’s books, records, receipts, canceled checks or check images.
Village of Delhi – Computerized Data and Assets (Delaware County)
User access within the network and financial software was not limited based on job duties, and certain employees shared user accounts. The clerk-treasurer is the system administrator for the three financial software modules. In addition, the deputy clerk-treasurer and assistant clerk all have full user access rights to the payroll and utility modules. The deputy clerk-treasurer uses the clerk-treasurer’s user account to access the accounting module. Although the financial software tracks the date and time of the user’s log-in and log-off, there is no comprehensive audit log that identifies specific transactions and times.
East Pembroke Fire District – Internal Controls Over Financial Operations (Genesee County)
The board did not audit the treasurer’s records and reports, which would have provided assurance that the treasurer was performing her duties in a satisfactory manner. The treasurer failed to complete and file an annual financial report, as required by law, since the 2005 fiscal year. Auditors found no evidence that the board reviewed claims before they were paid. The treasurer also did not perform monthly bank reconciliations. The district did not properly remit foreign fire insurance moneys to the East Pembroke Volunteer Fire Department.
Town of Elbridge – Internal Controls Over Selected Financial Operations (Onondaga County)
The board did not implement adequate internal controls to ensure fuel was purchased in the most prudent and economical way. Town officials could have saved $9,500, or approximately 20 percent, if they had purchased gasoline and diesel from an Office of General Services contract vendor. The supervisor did not have control over his facsimile signature and was not involved in the check-signing process. The supervisor’s secretary used the supervisor’s signature disk to make payments without his supervision. Town officials have not implemented procedures to ensure that backup tapes are stored in a secure off-site location, and also have not established formal policies or procedures to address potential disasters resulting in damages to equipment and data.
Village of Endicott – Selected Financial Operations (Broome County)
Two village employees received $15,445 in salaries and benefits that were not authorized by the board. The mayor exceeded his authority in solely approving these additional benefits. Auditors also found that four village employees were overpaid a total of $1,000 for health insurance buyouts and another employee received a duplicate check for $1,543 because the village lacked adequate internal controls over disbursements. Although the dollar amounts of these overpayments are relatively small, and the employee repaid the $1,543 overpayment, the control weaknesses identified were significant. Village officials did not ensure that computerized data was properly safeguarded.
Farmersville Volunteer Fire Department, Inc. – Internal Controls Over Financial Operations (Cattaraugus County)
Although auditors found that the treasurer maintained adequate records, the committee did not provide adequate oversight of department financial activities. The treasurer did not submit monthly or annual financial reports to the committee. While the treasurer indicated that he provided a verbal report of the finances each month to the committee, no evidence was found in the minutes that this occurred. While the president and chief indicated that the committee audited the treasurer’s records, they did not provide any documentation to demonstrate that this had occurred. No evidence was found in the minutes or on the bills and vouchers that they were approved by the president and secretary, or the committee.
Hammondsport Fire District – Internal Controls Over Financial Operations (Steuben County)
The board has not established written policies and procedures to govern financial operations, such as purchasing, investments, cash receipts and disbursements, information technology, and asset disposal. The board did not present and adopt a budget that was in accordance with town law and OSC’s prescribed format. The board has not adequately segregated the secretary-treasurer's duties. The board did not require the computerized financial system to be backed up, which has resulted in a loss of cash receipts and disbursements data, and the late filing of the 2009 and 2010 annual reports.
Town of Junius – Board Oversight (Seneca County)
The board has not established policies required by law and sound business practices, causing a lack of segregation of duties of key employees who collect cash and purchases not being monitored and controlled. The board did not receive or require sufficient financial information from the supervisor to monitor the town’s financial operations or for use in the preparation of the budget. The board failed to formally approve benefits provided to town officials and employees.
Livonia Joint Fire District – Internal Controls Over Financial Operations (Livingston County)
District officials told auditors that they had adopted policies and procedures for purchasing, investments, and code of ethics, as required by statute, but were not able to provide auditors with formal policies. If the board had adopted such policies in the past, their value is limited if they are not readily available for reference and guidance, and if they are not periodically reviewed, updated, and disseminated to relevant officials. The board has not ensured that written procedures concerning financial recording and reporting were developed. Despite the lack of formal policies and procedures over financial operations, auditors found that the district’s accounting records were well-organized and monitored.
Lysander Fire District – Internal Controls Over Financial Operations (Onondaga County)
The board has not adopted an investment policy as required by statute. While the treasurer provides the board with various financial reports on a monthly basis, the treasurer does not provide any reports showing budget vs. actual activity. The district’s fund balance has declined from $17,779 in 2008 to only $671 at the end of 2010. Only one board member reviews and signs each claim and the minutes lack specifics as to the claim numbers and dollar amounts audited and approved by the board to be paid. Although the custodial and disbursing functions are vested in the treasurer by statute, a private contractor disburses payroll by accessing the district’s bank account and withdrawing enough funds to cover payroll and payroll taxes and for fees for its services without submitting claims for audit and approval.
Town of Minisink – Board Oversight and Financial Condition (Orange County)
The supervisor did not provide adequate training and oversight of the clerk, which resulted in transactions that were incorrectly recorded in the trust and agency fund, general ledgers that were not up-to-date and monthly reports that lacked essential information. The board did not audit the records and reports of the supervisor, clerk, planning board or justices for 2009 or 2010. The board did not implement procedures for the preparation of financial reports. Consequently, the supervisor did not provide appropriate information, which caused the board to adopt budgets that overestimated revenues. This caused the town-wide general fund balance to decline from $370,140 in 2005 to a deficit fund balance of $156,733 in 2010. As a result, the supervisor advanced moneys held in a trust and agency account to the town-wide general fund, which is not allowed by law.
Protecting Personal, Private, and Sensitive Information (PPSI) When Disposing of or Reusing Electronic Equipment
Only two of the eight entities audited, Fulton and Steuben Counties, had written policies covering the removal of PPSI from computers and related electronic equipment before it is discarded or reused; and only one entity, Steuben County, had written procedures detailing the steps to take to protect PPSI on such equipment. At the start of the audit, none of the entities had written procedures for removing PPSI from the hard drives of copiers before they are discarded. None of the entities had implemented a written method of classifying the security risk of all the types of electronic data they store. While five entities had adopted breach notification policies, as required by statute, staff at three of these entities told us they did not know the steps to follow if a breach occurred. The other three entities had not developed a breach policy at all.
Village of Silver Creek – Property Acquisition (Chautauqua County)
The board was unable to demonstrate that the purchase of a building for $725,000 was the most prudent use of taxpayer resources because the village paid more than twice the apparent market value. Village officials could not demonstrate that they fully evaluated or considered the long-term costs or potential consequences of purchasing and renovating an older facility rather than constructing a new building. Because the board decided to purchase a used building rather than construct a new facility, village officials have no assurance how much, if any, federal and state reimbursement will be received. As a result, village taxpayers could potentially become responsible for the full cost – more than $900,000 – of the building and improvements.
Town of Springwater – Internal Controls Over Selected Financial Operations (Livingston County)
The town purchased property for almost $13,000 without the public’s knowledge, has not put this property into use for a town purpose, and may incur additional costs to keep it. Town officials also purchased a truck for $91,750, without ensuring that bid specifications solicited competition. There is a lack of segregation of duties over the water and sewer billing and collections as the superintendent performs all the functions of billing and collection process, with no oversight. The board has not established and adopted written policies and procedures governing the billing, collection, and enforcement of water and rents, establishing sewer charges, and billing adjustments. The town does not have a contractual agreement with the firm performing accounting services for them.
Village of West Winfield – Internal Controls Over Selected Financial Operations (Herkimer County)
The board did not adequately segregate the clerk-treasurer’s duties and did not audit or contract for the audit of the clerk-treasurer’s financial records. The clerk-treasurer did not maintain adequate and complete records and did not provide the board with adequate monthly or annual financial reports. The board also needs to improve its oversight of the billing and collection of ambulance fees. A trustee is the sole owner and managing member of a fabrication/equipment rental limited liability company (LLC). During the village’s 2010-11 fiscal year, the village made payments to the LLC totaling $2,630. As the sole owner and managing member of the LLC, the trustee is deemed to have an interest in the contracts because he is a member of a firm, partnership or association which has contracted with the village. Because the trustee, as a member of the board, had the power to audit and approve claims for payment, that interest is prohibited.
Town of Yates – Water Improvement Area Capital Charges (Orleans County)
The annual special assessment charge levied by the board upon real property located in Water Improvement Area #4 was excessive. For the last five completed fiscal years (2006 through 2010), auditors found that the assessment charges exceeded debt service costs by approximately $21,000 to $40,000 annually. Consequently, results of operations have generally produced year end surpluses which have increased the Water Improvement Area #4 fund balance. The reported unreserved, unappropriated fund balance in this fund was $387,659 at December 31, 2010, which was 123 percent of its total appropriations of $316,200 for 2011. Town officials did not lower the special assessment charge to an amount that was sufficient to fund debt service charges. The board did not distribute this charge to benefited parcels in an equitable manner. Beginning in 2001, town officials did not charge an assessment to parcels that did not have water service available.