[read complete report]

Purpose of Audit

The purpose of our audit was to examine the Company’s internal controls over its financial operations for the period January 1, 2013 through December 16, 2014.

Background

Citizens Hose Company (Company) provides fire protection and emergency rescue services for the Village of Shortsville (Village) and Towns of Manchester, Hopewell and Farmington in Ontario County. The Company is a not-for-profit organization that operates an ambulance service and provides volunteer firefighters for the Shortsville Fire Department. For 2013, the Company reported net income of $17,600, which was mainly from ambulance services revenue, a one-time donation of more than $33,000 and fundraising activities.

Key Findings

• The Company did not have adequate controls in place to ensure that Company funds were safeguarded.
• The Company’s bylaws were insufficient because they did not provide detailed guidance for the Treasurer or audit committee when collecting and depositing funds, recording cash receipts and disbursements and paying Company bills.
• The Treasurer misappropriated more than $20,000 of Company funds.
• The Company Secretary inappropriately used a Company credit card for personal purchases of at least $1,100 without detection by officials.

Key Recommendations

• Review and revise the Company’s bylaws and adopt a code of ethics and written policies and procedures to provide detailed guidance for Company officials and staff on all financial operations, including cash disbursements, cash receipts, purchasing, credit card usage and claims auditing.
• Periodically review bank statements, bank reconciliations, canceled check images, invoices, receipts and the Treasurer’s reports and accounting records.
• Periodically review credit card purchases to ensure appropriate usage and compliance with the credit card policy.
• Annually audit the records and reports of all Company members who are involved in the collection, recording, reporting and custody of Company funds.