State Audit Finds $19,000 in
Questionable Charges in
The City of Hudson
City Puts New Policies in Place
State auditors found $19,000 in questionable credit card charges for Internet dating services, clothing purchases and cash advances in the City of Hudson, according to an audit released today by State Comptroller Thomas P. DiNapoli.
“Too often local governments are vulnerable to credit card abuses because they fail to have proper safeguards in place,” DiNapoli said. “The City of Hudson is a prime example. This abuse could have been prevented with adequate internal procedures. Taxpayers shouldn’t foot the bill for on-line dating services, groceries and concert tickets.”
City of Hudson officials requested the audit in August 2006. Auditors found internal controls over credit card usage to be seriously deficient, largely because the city and common council failed to establish written policies and procedures for monitoring and using credit cards. In some cases, auditors could not identify who made questionable purchases because the city did not require employees to submit receipts for credit card purchases. The insufficient oversight allowed for credit card statements to be diverted and $19,000 in questionable purchases to be made with city credit cards.
Auditors also identified $3,000 in unreasonable travel and reimbursement claims. The absence of travel and employee reimbursement policies, coupled with weak claims processing guidelines, allowed travel and employee expenses to be paid without proper approval, itemization and supporting documentation.
Questionable purchases and unreasonable reimbursements included:
- $3,600 in cash advances at ATMs,
- $1,900 in Western Union cash transfers,
- $977 in goods from grocery and clothing stores,
- $205 for Internet dating services,
- $198 for tickets to events at the Pepsi Arena (now known as the Times Union Center),
- $148 for a stereo,
- $114 for funeral-related food costs,
- $30 for dry cleaning and
- $25 for a fruit basket.
The audit also found the city did not properly monitor if it received credit card statements, which allowed one city official to divert credit card bills and use credit cards undetected for several months. The Columbia County District Attorney’s office has since brought charges against this former city official.
The audit recommends the city and common council:
- establish written protocol for using and monitoring city credit cards and ensure that credit card bills are received;
- thoroughly review credit card claims and reconcile credit card statements with receipts to ensure all purchases are legitimate;
- create written travel and employee expense reimbursement policies and procedures; and
- thoroughly examine all travel and reimbursement expenses and documentation.
The audit also advised the city and common council to investigate questionable purchases, travel and expense reimbursements identified by auditors and recover funds where appropriate.
The city generally agreed with the findings and recommendations of the audit and has agreed to pursue corrective action. The city recently implemented new policies requiring documentation for all goods purchased and defining improper credit card usage.
Click here to view the audit.