DiNapoli's Office Completes Local Government Audits
New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of the City of Cortland -Financial Condition and Operational Improvement and Internal Controls Over Selected Financial Operations, the Village of Ellenville and the Genesee Falls Fire Company, Inc.
"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."
City of Cortland - Financial Condition and Operational Improvements (Cortland County)
DiNapoli's auditors found that the city council did not adopt realistic budgets based on historical or known trends. As a result, the City’s general fund financial condition has diminished in recent years. As of December 31, 2009, the general fund had a reported accumulated deficit of $149,117. The general fund’s financial condition is the result of the council’s failure to demand that city officials prepare accurate and reliable financial information, poor decisions in developing and adopting the annual operating budgets, poor controls over spending, and a lack of enforcement of revenue collection. The council did not monitor and oversee the city’s financial condition. Instead, the council completely relied on the former director and deputy to handle the city’s finances. These individuals did not prepare and maintain accurate financial records or prepare realistic budgets.
City of Cortland - Internal Controls Over Selected Financial Operations (Cortland County)
The city’s internal controls over payroll processing were not properly designed and not operating effectively. Auditors found that the Common Council and city officials did not have written payroll policies and procedures in place to ensure that personnel were compensated based on approved contractual provisions. The lack of guidance allowed staff to receive salary increases not supported by any contract. In addition, certain employees received separation payments based on unsupported leave balances, records maintained by the employee, or with accrual amounts that exceeded the amount allowed by contract. In addition, the council did not establish an adequate system of internal controls.
Village of Ellenville Internal Controls Over Selected Financial Activities (Ulster County)
DiNapoli's auditors found that the board overestimated revenues and did not establish adequate controls over user fee rates and billings. The village experienced deficits in its operating funds during the 2006-07, 2007-08, and 2008-09 fiscal years. The sewer fund and general fund also reported unreserved, unappropriated fund balance deficits at the end of 2008-09. Village officials used inter-fund advances and short-term debt financing to provide cash; however, these measures only perpetuated the Village’s financial problems. Auditors also found that the village’s investment accounts for its $4.5 million Mountain Property Reserve do not comply with investment standards outlined in General Municipal Law and are not properly secured.
Genesee Falls Fire Company, Inc., Internal Controls Over Cash Disbursements (Genesee County)
Auditor's found that the Genesee Falls Fire Company had virtually no controls over cash disbursements. The board did not effectively segregate the treasurer’s duties or implement compensating controls. The treasurer handles all aspects of the company’s financial operations, including receiving and disbursing funds, maintaining the financial accounting records, and receiving and reviewing bank statements. Auditors also found that the board did not ensure that all claims were properly audited and approved prior to payment. Furthermore, although the board required the use of a requisition form for all purchases, auditors found little evidence that such forms were used routinely.