Purpose of Audit

The purpose of our audit was to examine internal controls over the Department’s financial operations for the period January 1, 2012 through December 10, 2013.

Background

The Le Roy Fire Department, Inc. provides fire protection services to the Village and Town of Le Roy in Genesee County. The Board of Directors generally consists of five members, with one person from each fire company and two at-large members. The Department’s revenue for the past three fiscal years 2011 through 2013 averaged about $3,400, and the average expenditures for the three years were $2,400.

Key Findings

• The Business Officers did not establish adequate internal controls over cash receipts and disbursements to ensure that Department moneys were safeguarded. The Treasurer managed the Department’s funds with little or no oversight by any of the other Business Officers. We found that the Treasurer made $18,100 in questionable disbursements that were not supported by invoices or authorized by the Department’s membership.
• The Treasurer processed cash disbursements with limited oversight by other Business Officers. Bank withdrawals and expenditures over $500 were not authorized by the membership and cash disbursement records were not accurate. Also, we found that 14 transfers totaling $14,305 were made from the Association’s bank accounts to the Department’s checking account. In addition, four transfers totaling $8,600 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 Business Officers did not compare transactions on the bank statements with amounts recorded by the Treasurer, or cash balances with the accounting records or annual report.

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 as required in the bylaws.
• Periodically request and review bank statements and canceled check images, comparing them with invoices and the Treasurer’s accounting records.