Purpose of Audit

The purpose of our audit was to examine the Board’s oversight of selected financial operations for the period January 1, 2012 through December 31, 2013.

Background

The Town of Hempstead Sanitary District No. 7 provides garbage collection and recycling pickup services to households and businesses in parts of the Town of Hempstead. The District is separate and distinct from the Town and is governed by an elected five-member Board of Commissioners. Expenditures for 2013 were approximately $9.8 million.

Key Findings

• The Board entered into deferred compensation agreements with former sanitation supervisors for which it had no legal authority to do so, and the District, as a result, made more than $810,000 in unauthorized payments.
• The Board has not established a thorough claims audit process and improperly delegated check signing authority to all Board members.
• The Board, despite having no authority to do so, appointed two Treasurers and split the duties of Treasurer between them.
• District officials have not established sufficient controls over the procurement of professional services.

Key Recommendations

• Discontinue making deferred compensation payments and explore the potential to recoup all or part of the payments already made.
• Conduct a deliberate, thorough and timely audit of all claims prior to payment and ensure that all checks are signed by the Treasurer, as required by law.
• Appoint only one person as Treasurer.
• Consider amending the procurement policy to include the use of competition when procuring professional services and enter into written agreements with all professional service providers.