Purpose of Audit

The purpose of our audit was to evaluate internal controls over the Company’s financial operations for the period January 1, 2012, through March 12, 2013.

Background

The Olcott Fire Company, Inc. is an all volunteer organization which provides fire protection to the Town of Newfane in Niagara County. The Company is governed by a 13-member Executive Board, which includes a Board President. In the 2012 fiscal year, the Company’s revenue totaled $351,898, of which $261,158 was from the Town. The Company’s expenses totaled $351,781 for the 2012 fiscal year.

Key Findings

• The Board did not provide adequate oversight of the Company’s financial operations, properly supervise the Treasurer’s activities, approve bills prior to payment, or ensure that an audit of the Company’s finances was performed by an IPA, as required by law. As a result, Company resources were spent unnecessarily. We identified payments made totaling approximately $8,500 for services and equipment that were never used.
• We also estimate that the Company will save approximately $10,000 annually if the number of cellular telephones is reduced from 18 to five.
• The Treasurer inappropriately reimbursed himself $1,162 for fees associated with his personal credit card and for unsubstantiated restaurant purchases.

Key Recommendations

• Establish an accounting system and maintain complete, accurate, and timely accounting records. Prepare monthly bank reconciliations and financial reports and present them to the Board for review. Approve bills prior to payment. Obtain an independent audit of the Treasurer’s financial records as required by statute.
• Evaluate the use of automatic payments and review bank statements to ensure that all automatic payments are for appropriate Company expenditures.
• Consult legal counsel to determine if the Company should seek repayment from the former Treasurer for the inappropriate reimbursements that he made to himself.