Despite maintaining comprehensive, accurate and timely records, the treasurer did not file the district’s 2012 annual financial report with the Office of State Comptroller until April 2014. In addition, district officials used a request for proposal process to award the contract for auditing the district’s 2012 and 2013 financial statements. However, the audits have not been performed.
The board did adopt realistic and structurally balanced budgets based on historical trends. As a result, the village ended 2011-12 with an unplanned net operating deficit of $372,471. In addition, village officials need to improve their oversight of the budget. Improved monitoring will enhance their ability to react to external influences such as economic downturns and emergencies.
The board did not establish adequate controls to ensure the district’s financial activity was properly recorded and reported and that district money was adequately safeguarded. The board did not adequately segregate the secretary-treasurer’s duties, provide any additional oversight or implement other compensating controls when segregating duties was not practical.
While the treasurer does maintain up-to-date and accurate accounting records, the president and executive committee did not provide adequate oversight of the treasurer’s activities. Department officials were unaware of the need for additional controls over the cash disbursement process, such as an annual audit.
City officials did not ensure that internal controls over payroll processing provided for adequate segregation of duties. The payroll clerk performed all significant phases of the payroll process. She entered new employees, pay rates and employees’ time worked from their time records into the computerized payroll system, calculated withholding adjustments and finalized the payrolls.
The board does not provide adequate oversight of the department’s financial activities. The treasurer makes all deposits, disburses cash without the board’s prior approval, performs all record keeping functions and prepares bank reconciliations without independent oversight. Further, the board does not audit the individual claims for accuracy or examine them for supporting documentation.
Village officials do not adequately monitor water operations. Although village officials were aware of the aging infrastructure and potential for leaks, no one determined whether water was unaccounted-for. For example, the village has unaccounted-for water totaling 36.7 million gallons annually, or approximately 60 percent of the water produced. Village officials do not have written policies or procedures requiring the reconciliation of the water produced by the water system with the water billed to customers.
Counties can improve their controls to better ensure that hospitals and providers are charging appropriate rates. In seven (Chautauqua, Clinton, Erie, Jefferson, Orleans, Oswego and Rensselaer) of the eight counties audited, county officials did not pay the appropriate Medicaid diagnostic related group rates on 75 percent of the inpatient hospital claims.