Purpose of Audit

The purpose of our audit was to examine internal controls over the Association’s receipt and disbursement of the Foreign Fire Insurance tax for the period January 1, 2012 through December 10, 2013.

Background

The Firemen's Benevolent Association of the Village of Le Roy is located in the Village of Le Roy, Genesee County. The purpose of the Association is to accumulate a fund for the relief of indigent and disabled firemen or their families. The Association is comprised of all volunteer firefighters from the three fire companies that make up the Le Roy Fire Department and is funded almost exclusively from the foreign fire insurance (FFI) tax, which totaled $12,332 in the 2013 fiscal year.

Key Findings

• The Board did not establish adequate internal controls over the receipt and disbursement of FFI tax. We identified $27,738 in questionable disbursements that were not supported by invoices or authorized by the Board.
• We identified questionable disbursements and unauthorized transfers that were made from the Association’s bank accounts to the Le Roy Fire Department’s checking account. In addition, transfers were made from the Department to the Association. According to officials from the Department and the Association, there should be no reason for cash transfers to occur between these two organizations.
• The Board did not compare financial transactions listed on bank statements and canceled check images with the amounts recorded by the Treasurer or compare cash balances on bank statements with the cash balances reported by the Treasurer on the annual financial report.
• Although we found completed reports for the entire audit period in the Association’s records, the Treasurer has not submitted an annual report to OSC since at least the 2009 fiscal year.

Key Recommendations

• Investigate the questionable financial transactions identified in this report and take appropriate action to recover any misappropriated moneys, as necessary.
• Approve disbursements and transfers prior to payment.
• Receive the monthly bank statements and canceled check images from the bank and compare them with the Treasurer’s records and paid invoices.
• Prepare and file an annual report for the FFI tax with OSC in a timely manner.