Town of Butternuts – Disbursements (2021M-62)

Issued Date
August 06, 2021

[read complete report - pdf]

Audit Objective

Determine whether the Town of Butternuts (Town) Board provided adequate oversight of the disbursement process.

Key Findings

The Board did not provide adequate oversight of the disbursement process and exceeded its authority under New York State Town Law (Town Law) by authorizing insurance claims and annual contracts to be paid before audit and approval.

The Board also exceeded its authority under New York State General Municipal Law (GML) by allowing a third-party vendor direct access to the Town’s bank account that, at times, had more than $500,000 on deposit. In addition, the Board allowed debit cards to be used, which resulted in a circumvention of the Town’s disbursement controls.

While the 142 disbursements totaling $142,200 we reviewed were for proper purposes and adequately supported, the Board, although required to do so pursuant to Town Law, did not audit and approve 53 of these claims totaling $15,600 before payment.

Key Recommendations

  • Audit and approve all claims before payment, except as authorized by law.
  • Discontinue the use of debit cards.
  • Discontinue allowing the service provider access to the Town bank account.

Town officials agreed with our recommendations and indicated they will take corrective action. Appendix B includes our comment on an issue raised in the Town’s response letter.