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January 10, 2012

 

DiNapoli: Harrietstown Officials Mismanaged Capital Projects at Adirondack Regional Airport


Harrietstown officials did not provide adequate oversight of capital projects at its Adirondack Regional Airport in Franklin County, leaving a $200,000 hole in the town's general fund, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. Auditors also found that airport officials could not account for more than 4,000 gallons of airplane fuel and overpaid sales taxes by $162,000.

"At a time when local governments should be paying even closer attention to their finances, our audit identified numerous financial missteps that went undetected for many years," DiNapoli said. "I urge town officials to act on the audit's recommendations immediately."

DiNapoli's auditors found that from 2005 to the end of 2010, the town bookkeeper inappropriately commingled financing sources from various airport capital projects and routinely borrowed money without town board authorization from the general fund, operating fund and other projects to make contractor payments. The town cannot recoup $200,000 because the projects the money was loaned to have insufficient funds to reimburse the general fund. If that money was written off as uncollectible, the town's general fund balance would have been reduced to just $74,000 as of Dec. 31, 2010. The general fund budget for 2011 was $1,152,692.

A review of 10 capital projects by auditors found no evidence that the town board effectively authorized nine of the projects totaling $3.5 million. The board failed to identify the projects to be undertaken and the financing source, and failed to establish the maximum amount to pay for the projects. Due to the lack of accounting protocols, the board was unable to monitor the revenues and expenditures related to each project or determine if any projects had deficits and required additional funding.

The town's former bookkeeper also failed to correctly complete the quarterly state sales tax returns for the period September 2007 through December 2010, resulting in sales tax payments that exceeded the airport's actual sales tax obligations by $162,000. Though the town later recouped its money, auditors found similar errors occurred in prior years and the town board failed to take any action to help ensure the filing of accurate sales tax returns.

DiNapoli's auditors also found that airport management did not perform periodic fuel reconciliations, and as a result, they could not account for 2,965 gallons of Jet A fuel costing $10,345 and 1,053 gallons of aviation gasoline costing $4,260 for the period January 1, 2010 through March 31, 2011.

DiNapoli's auditors recommended the board and town officials:

  • Approve all appropriate interfund loans and ensure there is a plan for repayment of each of them;
  • Review all loans currently outstanding to determine which, if any can be repaid.
  • Ensure that all interfund loan entries in the accounting software contain sufficient information to determine the purpose of such loans, when each was authorized and approved, and who made the entry;
  • Authorize each capital project by defining the project to be undertaken, establishing a maximum amount to be spent, and identifying the financing sources;
  • Oversee the status of each project by approving all appropriate expenditures in advance and requiring financial reports from the bookkeeper;
  • Require that complete and accurate accounting records are maintained for each capital project and the funds related to individual projects are properly segregated; and
  • Develop written procedures for the sales tax reporting process and assign someone separate from the preparation to review the returns for accuracy.

Town officials generally agreed with the recommendations and indicated they planned to take corrective actions.

A copy of the full audit can be found at: http://www.osc.state.ny.us/localgov/audits/towns/2012/harrietstown.pdf


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