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June 23, 2010

DiNapoli Audit:  Wallkill Had Huge Budget Imbalances;
Town Didn’t Seek
Best Price For Goods and Services

Between 2006 and 2008, the Town of Wallkill’s fund balance in the general and highway funds plummeted resulting in a general fund deficit of $525,000, according to an audit released by State Comptroller Thomas P. DiNapoli. The fund balance in the general fund fell by $4.3 million; the highway fund dropped by nearly $2 million.  Additionally, the town spent more than $1.7 million on contractors without seeking the best price.

“Now more than ever, the bottom line should be a top priority for local governments,” DiNapoli said.    “Wallkill let its budget get way out of balance and didn’t get competitive prices for services.  These are taxpayer dollars.  The town should be protecting those dollars.”

The sharp declines can be blamed on poor budgeting. Wallkill spent more than it budgeted for and overestimated revenues.  For example, officials overspent the police personnel services budget by more than $740,000 in 2008; legal contractual expenditures went over budget by over $236,000 in 2008; and building contractual expenditures were over budget by more than $112,000 in 2007.

In addition, the town did not adequately follow its own procurement policy. Of eight vendor transactions worth $1,764,554 that did not benefit from price competition, auditors found that five vendors, who were paid a total of $1,018,082, did not have a signed contract with the town or a rate schedule listing the fees charged. As a result, Wallkill officials did not assure they purchased goods and services of the best available quality, at the lowest possible price.

In addition to these findings, the town had an excessive number of open bank accounts:  41 bank accounts in 11 different banks with deposits totaling $9,981,557 as of October, 2009.  Although DiNapoli’s auditors were able to account for the money, the use of excessive bank accounts limits a town’s ability to properly manage and control its cash, and exposes town funds to errors and irregularities.

DiNapoli recommended that town officials:

  • Adopt realistic and structurally balanced budgets;
  • Prevent overspending and authorize budget transfers prior to accounts becoming overdrawn;
  • Ensure that all accounting entries are made in the appropriate accounts and correct fiscal year;
  • Require that the town’s independent public accountants issue audited financial statements timely;
  • Solicit competition when acquiring professional services;
  • Maintain written contracts for all professional service agreements; and
  • Keep the number of bank accounts to a minimum, except where special accounts are required.

With a few exceptions, town officials agreed with DiNapoli’s recommendations and indicated they would take corrective action.

Click here for a copy of the audit.


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