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Caton Volunteer Fire Company, Inc. – Internal Controls Over Financial Activities (2013M-237)

Issued Date
November 01, 2013
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Purpose of Audit

The purpose of our audit was to determine whether Company controls are adequate to ensure that financial activity is properly recorded and reported and that Company moneys are safeguarded for the period January 1, 2012, through July 12, 2013.

Background

The Caton Volunteer Fire Company, Inc. is located in the Town of Caton, in Steuben County. The Company’s officers consist of a President, Vice-President, Secretary, Treasurer, and five Directors. The Company’s revenue and expenditures for 2012 totaled approximately $6,100 and $9,500, respectively.

Key Findings

  • The Company by-laws did not clearly establish the responsibilities of the Board and membership.
  • The Board did not adequately segregate the Treasurer’s duties. The Board also did not oversee fundraising activities, did not review all claims, and did not receive reconciled bank statements.
  • The Treasurer submitted monthly and annual financial reports to the Board; however, reports were not accurate because the Treasurer did not reconcile the bank statements or include all disbursements.
  • The President did not require the annual independent audit of the Treasurer’s records.
  • The Company does not have a code of ethics as required by statute, and the Board is not certain of the Company’s status as a not-for-profit organization.

Key Recommendations

  • Revise the by-laws to include more guidance as to the roles and responsibilities of the Board and membership, specifically those duties pertaining to financial oversight.
  • Develop policies and procedures to adequately safeguard cash receipts and disbursements, including fundraising activities, by providing oversight and segregation of duties.
  • Ensure that the Treasurer prepares and the Board reviews all bank reconciliations and verify that the Treasurer’s monthly and annual reports are complete and accurate.
  • Audit all Company claims, and contract for an independent audit of the Treasurer’s records.
  • Adopt a code of ethics and pursue clarification of its not-for-profit status with the Internal Revenue Service.