Town of Petersburgh · Division of LocaL Government & schooL accountabiLity o f f i c e o f t h e n...

Division of LocaL Government & schooL accountabiLity

o f f i c e o f t h e n e w y o r k s t a t e c o m p t r o L L e r

report of ExaminationPeriod Covered:

January 1, 2013 — August 31, 2014

2015M-169

Town of PetersburghInternal Controls Over

Selected Financial Operations and the Justice Court

thomas p. Dinapoli

Page

AUTHORITY LETTER 1

EXECUTIVE SUMMARY 2

INTRODUCTION 4 Background 4 Objective 4 Scope and Methodology 5 CommentsofLocalOfficialsandCorrectiveAction 5

PURCHASING 6 Recommendations 8

TRANSFER STATION REVENUE 9 Recommendations 11

JUSTICE COURT 12 MonthlyAccountabilities 12 Pending Case Files 13 Timeliness of Deposits 14 Recommendations 15

APPENDIX A ResponseFromLocalOfficials 16APPENDIX B AuditMethodologyandStandards 18APPENDIX C HowtoObtainAdditionalCopiesoftheReport 20APPENDIX D LocalRegionalOfficeListing 21

Table of Contents

11Division of LocaL Government anD schooL accountabiLity

State of New YorkOffice of the State Comptroller

Division of Local Governmentand School Accountability December2015

DearTownOfficials:

A toppriorityof theOfficeof theStateComptroller is tohelp localgovernmentofficialsmanagegovernment resources efficiently and effectively and, by so doing, provide accountability for taxdollarsspenttosupportgovernmentoperations.TheComptrolleroverseesthefiscalaffairsoflocalgovernmentsstatewide,aswellascompliancewithrelevantstatutesandobservanceofgoodbusinesspractices.Thisfiscaloversightisaccomplished,inpart,throughouraudits,whichidentifyopportunitiesforimprovingoperationsandTownBoardgovernance.Auditsalsocanidentifystrategiestoreducecosts and to strengthen controls intended to safeguard local government assets.

FollowingisareportofourauditoftheTownofPetersburgh,entitledInternalControlsOverSelectedFinancialOperationsandtheJusticeCourt.ThisauditwasconductedpursuanttoArticleV,Section1oftheStateConstitutionandtheStateComptroller’sauthorityassetforthinArticle3oftheNewYorkState General Municipal Law.

This audit’s results and recommendations are resources for local government officials to use ineffectivelymanagingoperationsand inmeeting theexpectationsof their constituents. Ifyouhavequestionsaboutthisreport,pleasefeelfreetocontactthelocalregionalofficeforyourcounty,aslistedat the end of this report.

Respectfullysubmitted,

Office of the State ComptrollerDivision of Local Governmentand School Accountability

State of New YorkOffice of the State Comptroller

2 Office Of the New YOrk State cOmptrOller2

Office of the State ComptrollerState of New York

EXECUTIVE SUMMARY

The Town of Petersburgh (Town) is located in Rensselaer County and has a population of approximately 1,600. The Town is governed by an elected Town Board (Board), which iscomposedofthe Town Supervisor (Supervisor) and four council members. The Board is responsible for overseeing theTown’soperations, financesandoverallmanagement.TheSupervisorservesasboththechieffinancialofficerandchiefexecutiveofficer.AbookkeeperassiststheSupervisorbymaintainingtheaccounting records.

Forthe2015fiscalyear,theTown’sbudgetedappropriationstotaled$891,816forthegeneral,highwayandwaterfunds.Theseappropriationswerefundedprimarilybyrealpropertytaxes,salestax,userfees and State aid.

TheTowndoesnothaveacentralizedpurchasingofficeandpurchasesare initiatedbydepartmentheads. The Board and department heads are responsible for ensuring purchases are made in accordance with the Board’s adopted procurement policies and applicable laws and regulations. The Town Clerk (Clerk) is responsible for the sale of transfer station tickets and permits and the recording of transfer station revenue. The Town’s Justice Court is administered by two elected Justices who remitted approximately$31,779infines,feesandsurchargestotheSupervisorduringourauditperiodtobedistributedbetweenNewYorkStateandtheTown.

Scope and Objective

WeexaminedtheTown’sinternalcontrolsoverpurchasing,thetransferstationrevenuesprocessedbytheClerk’sofficeandtheJusticeCourt’soperationsfortheperiodJanuary1,2013throughAugust31,2014.WeexpandedourscopebacktoOctober2012toreviewtheTownofficials’useofcreditcardsandtoJanuary2010toreviewtheinventoryandsaleoftransferstationpermitsandtickets.Inaddition,weexpandedourscopebacktoJune2003toreviewtheJusticeCourt’srecords.Ourauditaddressedthefollowingrelatedquestions:

• Did the Board ensure that goods and services were procured in an economical manner?

• Did the Clerk properly account for the sale and inventory of transfer station tickets and permits?

• DidtheJusticesaccuratelyandcompletelycollect,record,depositandreportCourtmoneysina timely manner?


Audit Results

The Board did not ensure that purchases were made in an economical manner. We reviewed 68 purchasestotaling$335,122andfoundthataggregatedpurchasesforheatingoilanddieselfuelwerenotcompetitivelybidasrequiredbyGeneralMunicipalLaw.WealsodeterminedthatTownofficialscouldhavesavedmorethan$5,300(5percent)duringourauditperiodbyusingacountycontracttomakethesepurchases.Townofficialsalsomade19purchasestotaling$42,558withoutobtainingthenecessary quotes as required by the Town’s purchasing policy. This occurred because the Board did not monitor and enforce compliance with statutory requirements and the Town’s purchasing policy. Additionally,theBoarddidnotreviewpurchasesmadeusingTowncreditcards.Wereviewedall46creditcardpurchasesmadeduringourauditperiodtotaling$5,609andfoundtheygenerallywereforappropriateTownpurposes.However,iftheBoarddoesnotimproveitsoversightandmonitoringofthepurchasingprocess,theTownisatriskofpayingforpurchasesfornon-Townpurposesorpayingmore than necessary for goods and services.

The Clerk did not properly account for the sale and inventory of transfer station tickets and permits. TheTownhadtwoClerksduringourauditperiod:theformerClerkresignedinMay2014andthecurrentClerktookofficeinthesamemonth.Wecompared2010ticketsalesto2013ticketsalesanddeterminedthenumbersolddecreasedby4,193,or47.6percent.Thedifferencein these tickets isvaluedat$8,386.In2014,theClerkssold7,921transferstationtickets,whichexceededthe4,622totalticketssoldin2013by71percent.Asimilarpatternofdecreasesinthenumberofannualpermitssoldalsooccurredbetween2011through2013,beforeasubstantialincreaseoccurredin2014.Wealsofoundashortageof2,164ticketswithavalueof$4,328betweenNovember15,2010andAugust31,2014.Further,wereconciledthepermitsfromApril1,2014throughAugust31,2014andfoundtherewere24permits,valuedat$360,thatcouldnotbeaccountedfor.BecauseTownofficialsdidnotestablishadequateproceduresoverthesale,inventoryandaccountingofticketsandpermits,shortagesoccurred that were not detected.

WeidentifiedsignificantinternalcontrolweaknessesintheCourt’sfinancialoperations.TheJusticesdid not perform monthly accountabilities or bank reconciliations. We documented 35 discrepancies totaling$3,811whenreviewingtheJustices’finesandfeesaccounts.Wealsofoundthat27depositstotaling$4,156weremadeaslateas31daysafterreceipt.Further,outofapproximately1,800pendingcases,48shouldhavebeenclosedand14couldhavebeensubmittedtotheNewYorkStateDepartmentofMotorVehicles’(DMV)ScofflawProgram1fornon-payment.Bynotenforcingfinecollections,theTown could be forfeiting revenues.

Comments of Local Officials

The results of our audit and recommendationshavebeendiscussedwithTownofficials, and theircomments,whichappearinAppendixA,havebeenconsideredinpreparingthisreport.Townofficialsgenerally agreed with our recommendations and indicated they planned to initiate corrective action.

1 DMV’sScofflawProgramallowslocaljusticecourtstonotifytheDMVwhenanindividualhasanunresolved(failuretopaythefineorfailuretoappearonthecourtdate)trafficticketfora60-dayperiod.Whenthisoccurs,theDMVnotifiestheindividualandgivesthem30additionaldaystoaddresstheissue.Iftheindividualhasnottakenaction,thentheDMVsuspendstheindividual’slicenseuntiltheyaddresstheoutstandingticket.


Background

Introduction

Objective

The Town of Petersburgh (Town) is located in Rensselaer County and has a population of approximately 1,600. TheTown providesvariousservices to its residents, including roadmaintenance, snowremoval,fireprotection, street lighting,water services andgeneralgovernmental support.

TheTown is governed by an electedTownBoard (Board), whichis composed of the Town Supervisor (Supervisor) and four council members. The Board is responsible for overseeing the Town’s operations, finances and overall management. The Supervisorservesasboththechieffinancialofficerandchiefexecutiveofficer.AbookkeeperassiststheSupervisorbymaintainingtheaccountingrecords.Forthe2015fiscalyear,theTown’sbudgetedappropriationstotaled $891,816 for the general, highway andwater funds.Theseappropriationswere funded primarily by real property taxes, salestax,userfeesandStateaid.

TheTowndoesnothaveacentralizedpurchasingofficeandpurchasesare initiated by department heads. The Board and department heads are responsible for ensuring purchases are made in accordance with the Board’s adopted procurement policies and applicable laws and regulations. The Town Clerk (Clerk) is responsible for the sale of transfer station tickets and permits and the recording of transfer station revenue. The Town’s Justice Court (Court) is administered by twoelectedJustices,whoremittedapproximately$31,779 infines,fees and surcharges to the Supervisor during our audit period to be distributedbetweenNewYorkStateandtheTown.

Theobjectiveofourauditwas toreviewvariousselectedfinancialoperations and the Justice Court. Our audit addressed the following relatedquestions:

• Did the Board ensure that goods and services were procured in an economical manner?

• Did the Clerk properly account for the sale and inventory of transfer station tickets and permits?

• Did the Justices accurately and completely collect, record,deposit and report Court moneys in a timely manner?


Scope andMethodology

Comments ofLocal Officials andCorrective Action

Weexamined theTown’scontrolsoverpurchasing, transferstationoperations and the Justice Court’s operations for the period January 1,2013 throughAugust31,2014.Weexpandedourscopeback toOctober 2012 to reviewTown officials’ use of credit cards and toJanuary 2010 to review the inventory and sale of transfer stationpermitsandtickets.Inaddition,wealsoexpandedourscopebacktoJune2003toreviewtheJusticeCourt’srecords.

We conducted our audit in accordance with generally accepted governmentauditingstandards(GAGAS).Moreinformationonsuchstandards and the methodology used in performing this audit are includedinAppendixBofthisreport.Unlessotherwiseindicatedinthisreport,samplesfortestingwereselectedbasedonprofessionaljudgment,asitwasnottheintenttoprojecttheresultsontotheentirepopulation.Where applicable, information is presented concerningthe value and/or size of the relevant population and the sample selectedforexamination.

The results of our audit and recommendations have been discussed withTownofficials,andtheircomments,whichappearinAppendixA,havebeenconsideredinpreparingthisreport.

The Board has the responsibility to initiate corrective action. Awrittencorrectiveactionplan(CAP)thataddressesthefindingsandrecommendations in this report should be prepared and forwarded toourofficewithin90days,pursuanttoSection35oftheGeneralMunicipalLaw.FormoreinformationonpreparingandfilingyourCAP, please refer to our brochure, Responding to an OSC Audit Report,whichyoureceivedwiththedraftauditreport.Weencouragethe Board to make this plan available for public review in the Clerk’s office.


Purchasing

General Municipal Law (GML) generally requires that purchase and publicworkcontractsinexcessof$20,000and$35,000,respectively,duringafiscalyearbepubliclyadvertisedforbidsandawarded tothe lowest responsiblebidder. In lieuof advertising for bids, localgovernmentsmay use certain contracts awarded by theNewYorkStateOfficeofGeneralServicesorotherdesignatedorganizations.2 GML also requires local governments to adopt written policies and procedures governing all procurements of goods and services not requiredbylawtobecompetitivelybid,includingthedollarlevelsatwhich written and verbal quotes will be required and the documentation ofactionstaken.Inaddition,iftheTownisgoingtousecreditcardstomakepurchases, theBoardshouldadoptacomprehensivecreditcard policy that specifically designates authorized users, purchaseprocesses and the documentation required to support the purchases.

The Board did not ensure that goods and services were procured in aneconomicalmanner.Wereviewed68purchasestotaling$335,122and found that aggregated purchases for heating oil and diesel fuel werenotcompetitivelybidasrequiredbyGML.HadTownofficialspurchasedthisoilandfuelusingacountycontract,theycouldhavesavedmorethan$5,300(5percent)duringourauditperiod.Townofficialsalsomade19purchasestotaling$42,558withoutobtainingthe necessary verbal or written quotes as required by the Town’s purchasing policy. This occurred because the Board did not monitor and enforce compliance with statutory requirements and the Town’s purchasingpolicy.Additionally,theBoarddidnotprovideadequateoversightoftheuseofTowncreditcards.Asaresult,theTownisatriskofpayingforpurchasesfornon-Townpurposesorpayingmorethan necessary for goods and services.

Purchasing – Prior to our fieldwork, the Board had not formallyreviewedandupdatedtheTown’spurchasingpolicy.However,TownofficialshadwrittenproceduresinplacetoguideemployeeswiththeTown’spurchasingprocesses.AfterwebroughttheBoard’slackofanupdatedpurchasingpolicytoitsattention,itadoptedthesewrittenproceduresaspartoftheupdatedpurchasingpolicyonFebruary24,2014.ThepolicyrequiresTownemployeestoobtainanddocumentthree quotes for purchases and public works contracts between $1,000 and $4,999 and for highway-related purchases and public

2 Asanalternativetosolicitingcompetition,townsmay“piggyback”oncontractsthat have been extended to local governments by certain other governments.Use of these contracts constitutes an exception to the competitive biddingrequirements.


workscontractsup to$19,999.However, thepolicydoesnot statewhether the quotes should be verbal or written. The policy requires competitive bidding for non-highway related purchases and publicworkscontractsexceeding$5,000andforhighwayrelatedpurchasesandpublicworkscontractsexceeding$20,000.

Wereviewed68purchasestotaling$335,122madeduringourauditperiod to determine if they were made in accordance with GML’s competitivebiddingrequirementsortheBoard-adoptedpolicywhenapplicable.Thesepurchaseswereeachinexcessof$1,000;therefore,ataminimum, theyrequiredadherence to theTown’sprocurementpolicy.3Wefoundexceptionswith23purchases,totaling$144,998,as detailed below.

• Twopurchasesofheatingoil,one for$23,127 in2014andanother for$28,317 in2013,werenotcompetitivelybidorpurchased off of State or county contract. Had the Town purchasedtheheatingoiloffofthecounty’scontract,itcouldhavesavedatotalof$1,426(6percent)in2013and$1,720(6percent)in2014.

• Twopurchasesof diesel fuel, one for $35,677 in2013 andanother for$15,319 in2014,werenotcompetitivelybidorpurchased off of State or county contract. Had the Town purchasedthedieselfueloffofthecounty’scontract,itcouldhavesavedatotalof$790(2percent)in2013and$1,420(9percent)in2014.

• Nineteenpurchasestotaling$42,558,rangingbetween$1,030and$7,805,weremadewithoutobtainingthenecessaryquotesas required by the Town’s purchasing policy. These purchases consisted of drainage culverts, highway department trucktires,electricalcontractorservicesandtheinstallationofanelectric door opener. We researched tire prices and determined thattheTowncouldhavesaved$150(14.5percent)forasetof four tires if it had purchased them from another vendor. We also researched culvert prices and determined that the Town paid a fair price for these purchases.

Townofficialscouldnotexplainwhytheydidnotseekcompetitionfor these purchases.

Credit Cards−TheBoardadoptedacreditcardpolicyonMay21,2012 and provided Town credit cards to the Supervisor and the

3 See Appendix B for more details on the methods we applied to select thepurchases for review.


Recommendations

former Clerk.4According to the policy, the authorized credit cardusers are required to obtain supporting documentation at the time of purchase. If the supporting documentation is not obtained ormissing, the cardholdermust submit a statementwhich details thedateofpurchase,thevendor’snameandanexplanationforwhythesupporting documentation ismissing. In addition, eachmonth, theBoard must verify and approve each purchase listed on the monthly credit card statement.

The Board did not monitor credit card use and ensure that credit card purchases were for legitimate Town purposes. The Board did not reconcile the documentation for credit card purchases with the credit card statements to ensure documentation for all purchases was listed on the statements. The Board also did not adequately review the documentation to determine if the purchases were for legitimate Town purposes. We reviewed all 46 credit card purchases5totaling$5,609toensurethattheywereforappropriateTownpurposes.ExceptforminorissueswhichwediscussedwithTownofficials,wefoundthesepurchases were for appropriate Town purposes.

When purchases are made without complying with competitive bidding and the Town’s procurement policy requirements, Townofficialsandtaxpayerscannotbeassuredthatgoodsandservicesareprocuredinthemostprudentandeconomicalmanner.Itisessentialthat the Board provides adequate oversight of the use of Town credit cards to prevent and detect unauthorized purchases. TheBoardshould:

1. Ensure thatTownofficialscomplywithGML’scompetitivebidding requirements and obtain oral and written competitive quotes when required by the Town’s purchasing policy.

2. Modify its purchasing policy to clarify when oral or written quotes should be obtained.

3. Perform a thorough review of credit card purchases each month that includes a comparison between documentation provided for credit card purchases and the monthly credit card statements.

4 TheformerClerkresignedinMay2014.5 We reviewed all credit card purchases back to when the Town began using them inOctober2012.


Transfer Station Revenue

The Clerk is responsible for collecting moneys for the sale of transfer station tickets and permits, accounting for and depositingthe collections in a timely manner and remitting the collections to theSupervisor. In addition, theClerk should reconcile thenumberof tickets purchased and sold and maintain a current inventory of all transfer station ticketsandpermits in stock.Anaccurate inventoryis an effective tool to assist in accounting for the sales of tickets and permits.Furthermore,NewYorkStateTownLawrequirestheBoardto complete an annual audit of the Clerk’s records. Permits and Tickets−TheresidentsoftheTownsofPetersburghandBerlin share a transfer station located in Berlin. Town residents are grantedaccesstothetransferstationwhentheypurchasea$15permit.Thepermitsareeffectiveforoneyear,fromMay1throughApril30.Townresidentsareallowedtodisposeofonebagoftrashforeach$2ticketpurchased.TheTownhadtwoClerksduringourauditperiod:theformerClerkresigned inMay2014and thecurrentClerk tookofficethesamemonth.FromJanuary1,2010throughDecember31,2014,thecurrentandformerClerkscollectedandrecorded$91,312inrevenueforthesaleof1,322permitsand35,741tickets.

Townofficialshavenotestablishedadequateproceduresoverthesale,inventory and accounting of the transfer station tickets and permits. The Town does not have written procedures that require the periodic reconciliationofticketspurchasedtoticketssold,andneitherClerkmaintained an accurate inventory of tickets.

Weanalyzedticketsandpermitssoldfromfiscalyears2010through2014.We identified a significant decline in the number of ticketssoldfrom2010through2013beforethenumberincreasedin2014,asindicatedinFigure1.Whencomparing2010ticketsalesto2013ticketsales,thenumbersolddecreasedby4,193,or47.6percent.Thedifferenceintheseticketsisvaluedat$8,386.In2014,theClerkssold7,921transferstationtickets;thisexceededthe4,622totalticketssoldin2013by71percent.Asimilarpatternofdecreasesinthenumberofannualpermitssoldalsooccurredbetween2011through2013,beforeasubstantialincreaseoccurredin2014.


Figure 1: Number of Transfer Station Tickets and Permits Sold Per Year2010 2011 2012 2013 2014

Total Tickets Sold 8,815 7,763 6,620 4,622 7921

Variance From Previous Year N/A (11.9%) (14.7%) (30.2%) 71.4%

Total Permits Sold 263 267 242 234 316

Variance From Previous Year N/A 1.5% (9.4%) (3.3%) 35%

Townofficialscouldnotexplainwhythenumberofticketsandpermitsalesdecreasedforanextendedperiodoftimebeforereboundingin2014.

The Clerk purchases tickets from an outside supply vendor to replenish theticketinventory.NeithertheformernorcurrentClerkcountedthetickets purchased to ensure they received the same number of tickets orderedfromthevendor,andtheydidnotreconcilethetotalticketson hand with the number of tickets purchased and sold. We performed acountof ticketsonhandasofAugust31,2014andcompared itto the difference between total tickets purchased and sold between November15,20106andAugust31,2014pertheTown’srecords.Wefoundashortageof2,164ticketswithavalueof$4,328.

Thepermits,whichgrantresidentsaccesstothetransferstationforanannualperiodbetweenMay1andApril30,areprovidedtotheClerkbytheTownofBerlin.Uponreceivingpermitsforanewyear,theformer Clerk disposed the unsold permits for the prior year without first counting themor reconciling the number of permits providedby Berlin to the number of permits sold and remaining on hand. We reconciledthepermitsfromApril1,2014throughAugust31,20147

and found therewere24permitsvalued at $360 that couldnotbeaccounted for. We were not able to reconcile permits for the prior years because the former Clerk did not maintain any documentation to account for the disposition of the ending permits inventory.

BecauseTownofficialsdidnot establishadequateproceduresoverthesale,inventoryandaccountingofticketsandpermits,shortagesoccurred that were not detected.

BoardAudit−TownLaw requires theBoard to conductorobtainan annual audit of the records and reports of anyTown officer or

6 TherewasnoinventoryofticketsasofNovember15,2010,whichwasthefirstdateofticketspurchasedduringourauditperiod.IftherewereanyticketsonhandasofNovember15,2010,therewouldhavebeenagreaternumberofticketsthatwerenotaccountedforasofAugust31,2014.

7 TheTownstartedtosellthepermitsfortheperiodMay1,2014throughApril30,2015inApril2014.


employee who received or disbursed moneys on behalf of the Town in the preceding year. The purpose of this annual accounting is to provide assurance that public moneys are handled properly (i.e.,depositedinatimelymanner,accuratelyrecordedandaccountedfor),to identify conditions that need improvement and to provide oversight of theTown’s financial operations.TheBoard did not perform anannual audit of the Clerk’s records during our audit period. The Board’sfailuretoexaminetheClerk’srecordsdiminishesitsabilityto sufficientlymonitor the Clerk’s financial operations and ensurerevenues from permit and ticket sales are adequately accounted for.

4. The Clerk should periodically reconcile the number of tickets purchased and permits provided from the Town of Berlin tothenumberofticketsandpermitssoldandonhand.Anydiscrepancies should be investigated and resolved in a timely manner.

5. The Board should perform an annual audit of the Clerk’s records to ensure the sales of permits and tickets are adequately accounted for. The audit should also include a review of the Clerk’sreconciliationsforpermitsandticketspurchased,soldand on hand.

Recommendations


Justice Court

Awell-designed systemof internal controls is necessary to ensurethat cash received by the Court is safeguarded and that Court activity is properly recorded and reported. Justices are responsible for adjudicating cases brought before them and for the accounting and reportingofall relatedCourtfinancialactivities.NewYorkCodes,Rules and Regulations require the Justices to maintain complete,accurate and timely accounting records, reconcile bank accountswithrecordedcashactivity,maintainseparatebankaccounts,depositmoneysinatimelymanner,andreportCourtactivitytotheJusticeCourtFund(JCF)accuratelyandinatimelymanner.Finally,eachJusticeisrequiredtomaintainanofficialbankaccountinhisorhername to account for the collection and disbursement of Court moneys.

We identified significant internal control weaknesses in theCourt’sfinancialoperations.The Justicesdidnotperformmonthlyaccountabilities or bank reconciliations. We reviewed the Justices’ fines/feesaccountsandbailaccountsanddocumented35discrepanciestotaling$3,811.Wealsofoundthat27depositstotaling$4,156werenot made in a timely manner. These weaknesses increase the risk that Court funds could be lost or misappropriated without detection. Further,outofapproximately1,800pendingcases,48shouldhavebeen closed and 14 could have been submitted to the NewYorkStateDepartmentofMotorVehicles(DMV)ScofflawProgram8 for non-payment.Bynotenforcingfinecollections,theTowncouldbeforfeiting revenues.

Eachmonth,theJusticesshouldverifytheaccuracyoftheirfinancialrecordsandreconciletheirbankaccounts.Inaddition,onamonthlybasis,theamountofcashonhandandondepositinthebankshouldbe compared to detailed lists of amounts due to the JCF and other outstanding liabilities such as pending bail. This comparison is referred to as an accountability analysis.An accountability analysis servesto document the status of moneys held by the Court and provides a means of demonstrating that the Court is properly addressing its custodial responsibilities.

Monthly Accountabilities

8 TheDMVScofflawProgramallowslocaljusticecourtstonotifytheDMVwhenanindividualhasanunresolved(failuretopaythefineorfailuretoappearonthe court date) traffic ticket for a60-dayperiod.When thisoccurs, theDMVnotifies the individualandgives them30additionaldays toaddress the issue.Iftheindividualhasnottakenaction,thentheDMVsuspendstheindividual’slicense until they address the outstanding ticket.


The Justices were not performing monthly accountabilities to verify the status of money held by the Court and were not completing monthly bank account reconciliations. We performed accountabilities for the three Justices who served during our audit period9asofAugust31,2014andfoundJusticeManchesterhad$320moreinherfine/feesbank account than what she was accountable for and Justice Snyder had$265moreinhisfine/feesaccountthanwhathewasaccountablefor. We reviewed the Justices’ records and reports to determine the causesofthevariancesandidentified35discrepanciestotaling$3,811resultingfromvariousclericalandaccountingerrors.Forexample,weidentifiedthefollowingerrors:

• There were two collections by Justice Manchester totaling $210 and one collection by Justice Montgomery totaling$150whichwereneitherdepositednorrecordedandwerenotremitted to the Supervisor.

• There were two collections by Justice Manchester totaling $318andtwocollectionsbyJusticeSnydertotaling$150thatwere deposited but not remitted to the Supervisor or reported to the JCF.

• Therewasonecollectionfor$170byJusticeManchesterthatwasdepositedbutnotremittedtotheSupervisor.However,itwas reported to the JCF.

Bynotperformingbankreconciliationsandmonthlyaccountabilities,the Justices are not ensuring their moneys on hand equal their liabilities,andtheyarenotidentifying,investigatingandcorrectingany discrepancies on a timely basis.

ForeachcasebroughtbeforetheCourt, theJusticesmustmaintaina separate case file. The status of each case (e.g., awaiting thedefendant’sfirstappearance,finesassessedanddue,etc.)asreflectedintheindividualcasefilesshouldagreewiththecasestatusreflectedintheCourt’ssoftwaresystem.Furthermore,Justicesareresponsiblefor enforcing traffic tickets to ensure that laws are enforced andrevenues are collected as efficiently and effectively as possible.Tomeet this responsibility, the Justicesmay useDMV’s ScofflawProgramtoenforcethepaymentoffinesforindividualswhoeitherhave not appeared in Court to resolve their tickets or have not paid theirfines.

9 JusticeMontgomeryservedJanuary1,2010throughDecember31,2013,JusticeManchester’s termisJanuary1,2012throughDecember31,2015andJusticeSnyder’stermisJanuary1,2014throughDecember31,2017.

Pending Case Files


TheJusticeCourt’spendingcasereportasofJuly29,2014indicatedtherewere 1,873 pending cases; 1,208 cases originatedmore than11 years ago. We reviewed 98 randomly selected pending cases and found that 48 cases should have been closed based on the information inthecasefiles.Forexample,thefineforonecasewaspaid,remittedtotheSupervisorandreportedtotheJCF.However,thecasewasnotclosedoutinthesystem.Inaddition,therewere14caseswithatotalunpaidbalanceof$1,963 that couldhavebeen referred toDMV’sScofflawProgram due to the defendants’ failure to pay their finesorlackofappearanceinCourttoresolvetheirtickets.However,theJustices did not do so.

Because the Justices do not routinely and effectively monitor the unresolvedtrafficticketswiththeDMV,allCourtfinesandfeesmaynot be collected in a timely manner. This could result in lost revenues to the Town. NewYork Codes, Rules and Regulations require Court personnelto deposit all collections into the Justices’ bank accounts as soon as possible,butnolaterthan72hoursafterreceipt,exclusiveofSundaysand holidays. Deposits also must be intact.10

The Justice Court Clerk did not always make deposits in a timely manner.We reviewed108collections totaling$15,68411 and found that27collectionstotaling$4,156weredepositedbetweentwoand31dayslate.Forexample$155wascollectedonNovember26,2013but not deposited until January 9, 2014, 31 days after the time ofcollection.Anothercollectionfor$168wasreceivedonMarch14,2014butnotdepositeduntilMarch26,2014,10daysafterthetimeof collection. The Justice stated that deposits were made as soon as the Justice Court Clerk could make it to the bank and there were instances when she could not get to the bank in a reasonable amount of time. We reviewed the deposits for intactness and found only one minorexceptionthatwediscussedwithTownofficials.

WhenCourtreceiptsarenotdepositedinatimelymanner,theriskisincreased that moneys collected could be lost or stolen. The Justices and the Supervisor told us that the Justices submitted their records to theBoard for an annual audit.However,Townofficials didnotgenerate a report of such an audit and there was no indication in the Board minutes that the Board actually conducted an audit of their records. Conducting a proper audit of the Justices’ records would havehelpedtheBoardtodetectthesedeficiencies.

Timeliness of Deposits

10Inthesameform(cashorcheck)ascollected11SeeAppendixB,AuditMethodologyandStandards,fordetailsonoursample

selection.


TheJusticesshould:

6. Reconcile all of their bank accounts on a monthly basis.

7. Ensurethatmonth-endaccountabilitiesarebeingperformedon all of their records.

8. Review and analyze pending cases and take the necessary actions as required.

9. Ensurethatdepositsaremadenolaterthan72hoursfromthedate of receipt.

TheBoardshould:

10.ConductanannualauditoftheJustices’financialrecordsandrecord the results of this audit in the minutes.

Recommendations


APPENDIX A

RESPONSE FROM LOCAL OFFICIALS

Thelocalofficials’responsetothisauditcanbefoundonthefollowingpage.


APPENDIX B

AUDIT METHODOLOGY AND STANDARDS

WeexaminedtheTown’sinternalcontrolsoverpurchasing,thetransferstationrevenuesprocessedbytheTownClerk’sofficeandtheJusticeCourt’soperationsfortheperiodJanuary1,2013throughAugust31,2014.Weexpandedourscopeback toOctober2012 to review theTownofficials’useofcreditcardsandtoJanuary2010toreviewtheinventoryandsaleoftransferstationpermitsandtickets.Inaddition,weexpandedourscopebacktoJune2003toreviewtheJusticeCourt’srecords.

To accomplish our audit objective and to obtain valid audit evidence, our audit procedures forpurchasingincludedthefollowing:

• WeinterviewedTownofficialsandemployeestoobtainanunderstandingofinternalcontrolsover the procurement process.

• WeselectedpurchasesbyfirstsortingtheTown’svendorhistoryandexcludingallpurchasesunder$1,000andutilitypaymentsandpayroll,towhichtheTown’spurchasingpolicydoesnot apply. We sorted the entire population by dollar amount to test adherence to the purchasing policyandGMLrequirements.Weselectedallpurchasesthatexceeded$1,000.

• Wetestedallnon-highwaypurchasesbetween$1,000and$4,999todeterminewhetherTownofficials obtained and documented quotes from three vendors as required by the Board’spurchasing policy.

• We tested all highwaypurchasesbetween$1,000and$19,999 todeterminewhetherTownofficialsobtainedwrittenquotesfromthreevendorsinaccordancewiththepurchasingpolicy.

• Wetestedallnon-highwayrelatedpurchasesandpublicworkscontractsover$5,000andallhighwayrelatedpurchasesandpublicworkscontractsover$19,999todeterminewhethertheyweresubjecttocompetitivebiddingrequirements,pertheTown’spolicy,andwerebid.Ifthepurchasewasnotbid,wedeterminedwhetheritwaspurchasedunderavalidStateorcountycontract or an emergency situation. We also determined whether the solicitation of competitive bids was properly published.

• WeinterviewedTownofficialsandemployeestoobtainanunderstandingofcontrolsoverthecredit card purchases.

• We reviewed all purchases on the Supervisor’s and former Clerk’s credit card statements fromOctober1,2012throughAugust31,2014todetermineanyunauthorizedpurchasesandpurchasesthatwerenotforproperbusinesspurposes.Wealsodocumentedlatefeesandfinancecharges.


Ourauditproceduresfortransferstationrevenuesincludedthefollowing:

• WeinterviewedallTownofficialsandemployeestoobtainanunderstandingofthecontrolsover the transfer station revenue.

• We performed a physical count of transfer station permits on September 2, 2014, whichrepresented theending inventorycountasofAugust31,2014.Wecalculated total salesofthesepermits,subtractedthesalesfromthebeginninginventoryandcomparedtheresultwiththe ending inventory to determine if there were unaccounted permits.

• WeperformedabankreconciliationforthemonthofJuly2014andtraceddepositticketsanddeposit slips to bank statements and accounting records.

• WeperformedaninventorycountofthetransferstationticketsonSeptember2,2014,whichwastheendinginventoryasofAugust31,2014.WethenmadeatimelinewitharunningtotalofallticketspresenteffectiveNovember15,2010,whichwasthedayafterthefirstpurchaseof transferstation tickets fromthevendor,assuming that therewasnobeginning inventoryoftransferstationtickets.WethencalculatedtheunaccountedticketsasofAugust31,2014bysubtractingtheendinginventoryasofAugust31,2014fromtherunningtotalofpresenttickets.

OurauditproceduresfortheJusticeCourtincludedthefollowing:

• We interviewed the current Justices and Justice Court Clerk to obtain an understanding of thecontrolsovertheprocessformaintainingcaserecords,includingcasefilesandrecordsoffinancialactivity.

• ForallJusticesthatservedduringourauditperiod,wereviewedcashreceiptscollectedforfinesandfees.WedeterminedwhethertheyagreedwiththedepositsmadetotheJustices’bankaccountsandtothemonth-endaccountabilityreportstotheJCF.Wealsoverifiedthecheckamounts of funds collected that were provided to the Town Supervisor.

• We compared all cash receipts from the physical cash receipt booklet to the computerized accounting records to the duplicate deposit slips and bank statements to determine whether depositsweremadeintactandinatimelymanner.Wetestedthefirstsixmonthsof2014forJusticeSnyderandJusticeManchesterandthelastsixmonthsof2013forJusticeMontgomery,wholeftthebenchonDecember31,2013.

• Wecompared thependingcase reportgenerated from the records to the actual casefile todetermineiffilesshouldhavebeenclosedorreferredtoDMV’sScofflawProgram.

We conducted this performance audit in accordance with generally accepted government auditing standards(GAGAS).Thosestandardsrequirethatweplanandperformtheaudittoobtainsufficient,appropriateevidencetoprovideareasonablebasisforourfindingsandconclusionsbasedonourauditobjective.Webelieve that the evidence obtained provides a reasonable basis for our findings andconclusions based on our audit objective.


APPENDIX C

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT

OfficeoftheStateComptrollerPublicInformationOffice110StateStreet,15thFloorAlbany,NewYork12236(518)474-4015http://www.osc.state.ny.us/localgov/

Toobtaincopiesofthisreport,writeorvisitourwebpage:


APPENDIX DOFFICE OF THE STATE COMPTROLLER

DIVISION OF LOCAL GOVERNMENTAND SCHOOL ACCOUNTABILITYAndrewA.SanFilippo,ExecutiveDeputyComptroller

GabrielF.Deyo,DeputyComptrollerTraceyHitchenBoyd,AssistantComptroller

LOCAL REGIONAL OFFICE LISTING

BINGHAMTON REGIONAL OFFICEH.ToddEames,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Suite170244 Hawley StreetBinghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313Email:[email protected]

Serving:Broome,Chenango,Cortland,Delaware,Otsego,Schoharie,Sullivan,Tioga,TompkinsCounties

BUFFALO REGIONAL OFFICEJeffreyD.Mazula,ChiefExaminerOfficeoftheStateComptroller295MainStreet,Suite1032Buffalo,NewYork14203-2510(716)847-3647Fax(716)847-3643Email:[email protected]

Serving:Allegany,Cattaraugus,Chautauqua,Erie,Genesee,Niagara,Orleans,WyomingCounties

GLENS FALLS REGIONAL OFFICEJeffreyP.Leonard,ChiefExaminerOfficeoftheStateComptrollerOne Broad Street PlazaGlensFalls,NewYork12801-4396(518)793-0057Fax(518)793-5797Email:[email protected]

Serving:Albany,Clinton,Essex,Franklin,Fulton,Hamilton,Montgomery,Rensselaer,Saratoga,Schenectady,Warren,WashingtonCounties

HAUPPAUGE REGIONAL OFFICEIraMcCracken,ChiefExaminerOfficeoftheStateComptrollerNYSOfficeBuilding,Room3A10250VeteransMemorialHighwayHauppauge,NewYork11788-5533(631)952-6534Fax(631)952-6530Email:[email protected]

Serving:NassauandSuffolkCounties

NEWBURGH REGIONAL OFFICETennehBlamah,ChiefExaminerOfficeoftheStateComptroller33AirportCenterDrive,Suite103NewWindsor,NewYork12553-4725(845)567-0858Fax(845)567-0080Email:[email protected]

Serving:Columbia,Dutchess,Greene,Orange,Putnam,Rockland,Ulster,WestchesterCounties

ROCHESTER REGIONAL OFFICEEdwardV.Grant,Jr.,ChiefExaminerOfficeoftheStateComptrollerThe Powers Building16WestMainStreet,Suite522Rochester,NewYork14614-1608(585)454-2460Fax(585)454-3545Email:[email protected]

Serving:Cayuga,Chemung,Livingston,Monroe,Ontario,Schuyler,Seneca,Steuben,Wayne,YatesCounties

SYRACUSE REGIONAL OFFICERebeccaWilcox,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Room409333 E. Washington StreetSyracuse,NewYork13202-1428(315)428-4192Fax(315)426-2119Email:[email protected]

Serving:Herkimer,Jefferson,Lewis,Madison,Oneida,Onondaga,Oswego,St.LawrenceCounties

STATEWIDE AUDITSAnnC.Singer,ChiefExaminerStateOfficeBuilding,Suite170244 Hawley Street Binghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313

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