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October 13, 2011

Comptroller DiNapoli Releases Municipal Audits

New York State Comptroller Thomas P. DiNapoli today announced the recently released audits for the Town of Amity, Town of Bolton, Village of Hobart, Town of Lewiston, Village of Valley Stream, Village of Walden and Wayne County.

"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."

Town of Amity - Financial Condition (Allegany County)
From the 2005 through the 2010 fiscal years, the town highway funds have experienced operating deficits of more than $456,000. The board also included $77,000 in fund balance that did not exist in the budgets. As a result, the town’s highway funds have significantly declined in fund balance over the past several years, which impacts town operations in the 2011 fiscal year. If the board does not reduce spending levels, the town will experience a cash flow shortfall in October.

Town of Bolton - Water and Sewer District Financial Condition and Conflict of Interest (Warren County)
For a three-year period ending December 31, 2010, the board increased revenue projections to make it appear that there were sufficient revenues to keep pace with increasing operating expenditures; however, the board did not increase user rates to support the increase in projected revenues. This resulted in revenue shortfalls, annual operating deficits and accumulated fund balance deficits in the water and sewer districts. The financial stress of the water and sewer districts caused the board to rely on inter-fund loans totaling approximately $2.5 million from the general fund and the community development fund to finance operations. As of December 31, 2010, the districts had accumulated fund deficits totaling $899,335 with approximately $1.7 million in inter-fund loans outstanding. The board and town officials do not have a plan for repaying this money to the appropriate funds. Finally, auditors found that the town has been doing business with a company that is owned by a board member and his wife.

Village of Hobart - Financial Condition and Internal Controls Over Conflicts of Interest (Delaware County)
The board has not adopted realistic budgets or, when appropriate, used accumulated fund balance to lessen the tax burden of village residents. Instead, the board adopted budgets that did not consider actual needs or past expenditures. As a result, the village has accumulated significant fund balances in its three operating funds. The village’s tax levy and water and sewer rates were higher than necessary to fund operations. Further, the village has more than $175,500 in capital reserves, but has no planned capital projects. Auditors also found that a village trustee, as sole owner of a hardware store, had a prohibited interest in contracts with the village during a portion of the audit period.

Town of Lewiston - Internal Controls Over Financial Operations (Niagara County)
The town installed drainage improvements that were unnecessary or not the town’s responsibility. Taxpayers paid at least $32,000 for questionable drainage projects. The town also failed to ensure that its fuel supplies were adequately safeguarded against the risk of loss or misuse.  As a result, the unleaded fuel tank balance was 662 gallons less than what the fuel management system reported.
The Highway and Recreation Departments did not consistently follow the requirements of the town’s procurement policy to ensure that they obtained goods and services at the lowest cost. Finally, the Recreation Department did not maintain appropriate records to ensure that all amounts due for travel baseball and the town’s annual baseball tournaments were properly collected, failing to collect over $18,000 for registration fees and uniform reimbursements.  It also treated some participants unfairly by excusing others from paying the required registration fees.

Village of Valley Stream - Internal Controls Over Information Technology (Nassau County)
The board has not adopted sufficient policies and procedures to address all facets of the village’s IT system and has not provided security awareness training. Further, village officials need to improve controls over virus protection and network access. Finally, the board has not adopted a formal disaster recovery plan.

Village of Walden - Internal Controls Over Selected Financial Activities (Orange County)
Auditors found poor controls of the disbursement of funds associated with BAN proceeds. In addition, the majority of journal entries reviewed were incomplete, and bank reconciliations were not completed in a timely manner. The board authorized retirement payments to three individuals totaling $91,959 for vacation days that exceeded the amounts calculated based on the Civil Service Employee Association CSEA contract terms. In addition, fuel usage logs were not maintained, physical inventories of fuel were not taken, and the village paid $7,554 more for gasoline than was necessary. In total, approximately 30 percent of the water processed in 2009 and 2010 could not be accounted for in excess of industry standards. Auditors estimated that the two-year cost for unaccounted for water to be $454,400. Finally, internal controls over procurement and information technology also need to be improved.

Wayne County - Internal Controls Over Dependent Eligibility
Auditors review of the files of a sample of 52 dependents, selected randomly from the 1,149 dependents enrolled in the plan, found no evidence of any documentation showing that these dependents met any of the eligibility criteria. Of the 52 dependents tested, 13 individuals could not provide evidence of dependent status, and are potentially ineligible for coverage. Participants lacked such documentation because none of the boards have adopted policies that require verifying dependents’ eligibility before enrolling them in the plan and procedures for monitoring eligibility status. Based on a $2,000 to $5,000 annual savings per dependent and our 25 percent exception rate, the potential savings could range from $574,500 to $1,436,250 annually.


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