New York State Comptroller Thomas P. DiNapoli today announced the following local government and school audits were issued.
The board and supervisor did not provide adequate oversight of non-payroll disbursements. As a result, the town made duplicate payments totaling $79,806, and has an increased risk that errors or irregularities could occur and remain undetected and uncorrected. Auditors found the board and supervisor did not: segregate duties or implement compensating controls relating to non-payroll disbursements; establish procedures to detect and prevent duplicate payments from occurring; or conduct or ensure an annual audit of the supervisor’s records and reports was performed, as required.
The board and district officials did not properly manage fund balance and reserves. The board and district officials’ consistent practice of appropriating fund balance that is not needed and maintaining unreasonable reserve balances circumvents the statutory limit on surplus fund balance and lacks transparency. The district annually appropriated over $1.3 million of fund balance they did not need or use to finance operations; therefore, taxpayers were taxed more than necessary. The district, on average, annually over-estimated appropriations by $3.2 million (9.9%) and maintained four reserves totaling $6.6 million without demonstrating they were reasonably funded.
The board and district officials did not ensure that all project change orders were submitted as required to the State Education Department (SED) for approval. As a result, officials created a risk that SED could reduce the district’s building aid reimbursement for all unapproved work. For the 151 change orders reviewed totaling about $3.8 million: 122 (81%) totaling approximately $2.7 million were not submitted to SED, as required. In addition, six change orders totaling $155,173 were approved by the commissioner for only $74,002 and the assistant superintendent was not aware that they were approved and had no explanation for the difference in the amount received.
Village officials did not properly record and account for all capital assets. As a result, the village has an increased risk its assets could be lost, stolen or misused without detection. The board did not adopt a written capital asset policy or conduct periodic inventories and officials did not maintain a complete and current capital asset list. Auditors were unable to definitively locate 32 of 35 assets reviewed to the village’s asset list because the asset, purchase invoice and asset list did not contain specific identifying information.
The board did not adequately monitor cash receipts and disbursements. Due to the lack of oversight and compensating controls, there is an increased risk that errors and irregularities could occur and remain undetected and uncorrected. The treasurer performed nearly all aspects of the cash receipts and disbursements processes, and the board did not establish controls to help ensure cash was safeguarded. The board did not review, or designate anyone to review, bank statements and canceled check images, bank reconciliations and bank transfers, or compare receipts with deposits to help ensure cash was accounted for and records were accurate. The board also did not ensure village officials reviewed and certified all payroll payments to provide assurance employees received accurate pay. In addition, the treasurer paid 49 claims totaling $258,182 without the board’s audit and approval.
Officials did not adequately manage and monitor network user accounts to help prevent unauthorized use, access, or loss. In addition to sensitive information technology control weaknesses that were communicated confidentially to officials, auditors found that officials did not: disable 17 unneeded network user accounts or review and disable 76 potentially unneeded user accounts.
The assessor did not properly administer all of the real property tax exemptions reviewed and did not ensure applicants provided documentation required to grant an exemption or maintain the documentation. Auditors reviewed 58 exemptions totaling $2.7 million and found that 32 exemptions (55%) totaling $1.4 million lacked one or more pieces of documentation needed to verify eligibility and the assessor’s exemption calculation. Because each exemption impacts the tax roll, a miscalculated or inappropriately granted exemption can cause inequity among taxpayers.
The board and officials did not effectively manage fund balance. From 2020 through 2022, restricted fund balance declined by $676,641 (66%). As of Dec. 31, 2022, unrestricted fund balance was $34,092, which was less than 4% of the 2023 appropriations. The board underestimated expenditures by nearly $1.5 million (45%) and underestimated revenues by $215,772 (8%) for 2020 through 2022. The district also did not have a written multiyear financial plan or adequate capital plan, which inhibits the board and officials from effectively managing finances and addressing future operating and capital needs.