New York State Comptroller DiNapoli releases municipal and school audits

On June 8, 2023, New York State Comptroller Thomas P. DiNapoli announced the local government audits set out below were issued during the week ending June 10, 2023.

Click on the text highlighted in color to access the complete audit report.

Town of Dix – Supervisor’s Control of Cash (Schuyler County) The former supervisor did not ensure all cash in his custody was properly collected and disbursed and did not provide oversight of the bookkeepers, who performed all financial duties, including online banking. The board did not adopt written policies and procedures for cash receipts and disbursements and online banking. In 2020, the former bookkeeper received $1,254 in dental and vision insurance through the town and paid $126 of the premium cost. There was no documentation to support why she was entitled to receive these benefits. The findings regarding the former bookkeeper were referred to outside law enforcement for review.

Brighton Central School District – Procurement (Monroe County) District officials did not demonstrate that certain goods and services related to the 2021-22 capital improvement project (CIP) were procured in accordance with district policies, statutory requirements and good business practices. Of the nine CIP contracts totaling $4.4 million awarded to vendors, officials could not show they competitively awarded two contracts, totaling $2.8 million. Instead of using competitive bidding, officials used vendors who were granted awards from group purchasing organization contracts. However, officials could not demonstrate that they performed cost-benefit analyses to determine if using these vendors was in the district’s best interest.

Onondaga Cortland Madison Board of Cooperative Educational Services (BOCES) – Cash Management (2023M-40) Over an 18-month period, officials missed an opportunity for BOCES to realize additional interest earnings totaling $310,865. Officials did not develop and manage a comprehensive investment program or develop procedures for the operation of the investment program in compliance with the board investment policy. Officials also did not invest available funds throughout the audit period in an authorized cooperative municipal investment fund that offered higher interest rates. They did not prepare monthly cash flow forecasts or ensure interest rate quotes were solicited to maximize earnings.

North Salem Central School District – Network User Accounts (Westchester County) In addition to finding sensitive information technology (IT) control weaknesses, auditors found that district officials should have developed procedures for granting, changing and disabling network user accounts and ensured staff disabled 181 unneeded network user accounts. Seven of these users left the district between 2011 and 2019.

Hilton Central School District – Network Access Controls (Monroe County) In addition to sensitive network access control weaknesses, district officials did not establish written policies or adequate written procedures for managing network user account access, including adding or disabling user accounts and permissions. The district had 230 unneeded enabled network user accounts, including those for former students, former employees and others who were no longer providing services to the district.

Amherst Central School District – Network User Account Access and Application User Accounts and Permissions (Erie County) District officials did not adequately secure user account access to the network or properly manage user accounts and permissions in financial and student information applications, leading to a significant risk that network resources, financial data and student information could be inappropriately altered, accessed, or used. In addition to sensitive control weaknesses that were communicated confidentially, officials did not disable unnecessary network user accounts or revoke unnecessary network user account access. As many as 1,570 accounts were unneeded but were not disabled and four accounts had unnecessary network administrative access. The district also did not disable application user accounts or properly restrict permissions in the financial and student information applications.

West Webster Volunteer Firemen’s Association, Inc. – Cash Disbursements (Monroe County) The board did not ensure that cash disbursements were properly approved, accurately recorded, had adequate supporting documentation and were for association purposes. Auditors found that 138 disbursements (28%) totaling $39,929 did not have an itemized invoice or receipt (or other such documentation) and a documented, specific association purpose. Five disbursements totaling $1,308 were not recorded in the accounting records. In addition, the board did not adopt adequate bylaws or written policies or enforce compliance with the limited bylaws and policies that it adopted or establish adequate controls over disbursements, such as auditing all claims and reviewing bank statements and canceled check images.

 

A public employee is entitled to separate counsel to be paid for by the jurisdiction where representation by the jurisdiction's attorney may result in a conflict of interest

The Village Board of Trustees [Board] commenced a CPLR Article 78 proceeding to compel the Mayor of the Village [Mayor] to perform certain official duties. In his answer, Mayor sought a judgment declaring that he is entitled to separate counsel in this proceeding with reasonable fees to be paid by the Village. Supreme Court granted Mayor's counterclaim, declaring that Mayor was entitled to separate counsel in this proceeding, with reasonable fees to be paid by the Village. The Board appealed.

The Appellate Division held that Supreme Court properly declared that Mayor was entitled to separate representation in this proceeding without the requirement that he first comply with the procedures outlined in the Code of the Village relating to defense and indemnification of Village employees.

The Appellate Division conceded that an attorney generally may not be compensated for services rendered to a municipal officer, even if for the benefit of the municipality, unless the attorney has been retained in accordance with statutory authority. However, opined the court, "[n]otwithstanding lack of specific statutory authority, a municipal ... officer possesses implied authority to employ counsel in the good faith prosecution or defense of an action undertaken in the public interest, and in conjunction with ... his official duties where the municipal attorney ... was disqualified from ... acting", citing Cahn v Town of Huntington , 29 NY2d 451, among other decisions.

In this instance, the Village attorney was unable to represent Mayor due to a conflict of interest as he was representing the Board in the matter. Thus, said the court, Mayor was entitled to engage counsel who did not have a conflict of interest. Further, noted the Appellate Division, Board acknowledged as much when it approved of retention of "conflict counsel" for Mayor prior to the commencement of this proceeding when it became apparent that Mayor was taking a position contrary to the Board's.

The Appellate Division then observed, "As the Supreme Court properly determined, the amount the Village pays for [Mayor's] separate counsel shall depend upon [Mayor's] submission, and the Village's approval, of a claim for reasonable fees."

Click HERE to access the Appellate Division's decision posted on the Internet.

Veterans Internship Program Bill Passed by New York State Legislature to be delivered to the Governor

On June 7, 2023, Senator Jim Tedisco (R,C-44th Senate District) and Assemblymember Marianne Buttenschon (D-Utica/Rome) announced that both houses of the New York State Legislature have passed their bipartisan Veterans Internship Program (V.I.P.) legislation to enable honorably discharged veterans to participate in the legislature’s annual paid legislative internship program that could help lead them to future employment.

Tedisco and Buttenschon’s V.I.P. legislation (S.291/A.1347) sets aside 10 percent of the current legislative internship program positions in the Senate and Assembly for veterans to see the inner workings of the representative democracy they put their lives on the line to defend.

Veteran participants in the Veterans Internship Program would receive a stipend that’s equivalent to what graduate students currently receive in the Senate ($50,000) and Assembly ($17,000). The Senate and Assembly internship offices would work with county veterans services agencies to identify and recruit eligible candidates. There will be no additional cost to taxpayers to implement the V.I.P. law.

Click HERE for information about this Internship Program.

Local fire districts audits published by the New York State Comptroller

On June 6, 2023 New York State Comptroller Thomas P. DiNapoli announced the publication of the local fire district audits listed below.

Click on the text highlighted in color to access the full text of the audit. 

 

Fort Hunter Fire District – Capital Reserve Funds (Montgomery County) The board did not properly manage the district’s three capital reserve funds. As a result, the board reduced its transparency of financial operations, and the public did not have an opportunity to exercise its rights to approve reserves by a vote. The board also did not properly establish the equipment capital reserve fund, develop a multiyear capital plan or clearly identify the source of funding for the capital reserves as a part of the budgeting process.

 

Hamlin Morton Walker Fire District – Pumper Truck Procurement (Monroe County) The board did not procure a $748,676 pumper truck in accordance with statutory requirements and good business practices. As a result, officials have less assurance that the purchase was made in the most prudent and economical manner. District officials could not show they sought competition or properly used a valid exception to the competitive bidding requirements.

 

Upper Jay Fire District – Board Oversight (Essex County) The board did not provide adequate oversight of district financial activities, which hindered its ability to monitor financial operations and increased the risk that improper claims could be paid. In addition, the board, as a whole, did not audit and approve claims for 57 check disbursements totaling $37,561 before payment and did not audit the treasurer’s 2021 records. While the treasurer is required to sign all checks, she signed only six of the 247 checks issued by the district during the audit period, and the remaining checks were signed by the chairman of the board or the commissioner. Also, the treasurer did not provide the board with monthly budget status reports.

 

Upper Jay Volunteer Fire Department – Financial Activities (Essex County) Department officials did not ensure financial activities were properly recorded and reported and funds were safeguarded, which hindered their ability to make informed financial decisions and increased the risk that errors or irregularities could occur. The treasurer did not properly record all financial transactions or prepare the required annual reports. Bank reconciliations were not prepared monthly, 43 deposits totaling $33,918 were not supported by adequate documentation, and 63 disbursements totaling $23,585 were not approved before payment.

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Voluntarily withdrawing from the labor market disqualifies an applicant seeking Workers' Compensation benefits

Claimant, a court reporter, sustained injuries when she fell from her chair at work resulting in the disturbing hardware from a lumbar fusion surgery earlier performed to address a non-work-related injury.

The hardware was later surgically removed and Claimant returned to work for the employer upon her physician's approval. Then terminated from her position, Claimant then worked sporadically as a freelance court reporter until she eventually ceased all employment. Ultimately the employer and its carrier [Carrier] raised the issues of Claimant's eligibility for Workers' Compensation Benefits.

After a hearing, a Workers' Compensation Law Judge [WCLJ] concluded that Claimant had causally-related wage losses and awarded benefits at temporary total disability rates and a comparable tentative rate for various dates over the relevant time periods, while "marking certain periods of time as lacking medical evidence" to support the claim. 

Carrier appealed and the Workers' Compensation Board [Board] reversed the WCLJ's ruling and denied Claimant's application for workers' compensation benefits. Essentially the Board held that Claimant's separation from employment was not causally-related within the meaning of the Workers' Compensation Law. Claimant appealed the Board's decision.

Citing Matter of Tomaine v City of Poughkeepsie Police, 178 AD3d 1256, the Appellate Division sustained the Board's determination. 

The court's decision also noted "Whether [Claimant] has voluntarily withdrawn from the labor market is a factual issue, and the Board's determination of that issue will not be disturbed if supported by substantial evidence."

The Appellate Division's decision further pointed out that in the event that a "claimant's loss of employment is due to a layoff — a factor other than his [or her] work-related injury — he [or she] bears the burden of establishing by substantial evidence that his [or her] disability contributed to his [or her] continued unemployment", citing (Matter of Gross v BJ's Wholesale Club, 29 AD3d 1051 and other decisions.

Noting that it is well settled that the Board, as the sole arbiter of the credibility of witnesses, has broad authority to resolve factual issues based on its determinations concerning the credibility of witnesses and drawing reasonable inferences from the evidence in the record. 

The Appellate Division opined that in the event the record evidence is inconsistent, "the Board is warranted in rejecting testimony that fails to find support in documentary or other impartial evidence".

As the Board had found Claimant's testimony "to be largely inconsistent and unsupported," the Appellate Division concluded that substantial evidence supported the Board's conclusion that Claimant's initial separation from employment and her continued unemployment thereafter was "voluntary and not due to her disability."

Click HERE to access the Appellate Division's decision posted on the Internet.