Purpose of Audit

The purpose of our audit was to review the processes and procedures for the Town Supervisor and Town Clerk’s financial operations for the period January 1, 2011, to January 18, 2013.

Background

The Town of Hanover is located in Chautauqua County and has a population of approximately 7,000. The Town Board , comprising five elected members, is the legislative body responsible for the general management and control of the Town’s financial and operational affairs. The Town’s 2012 budgeted appropriations for all funds totaled approximately $4.3 million.

Key Findings

• An account clerk and the Deputy Town Clerk (Deputy) performed virtually all of the Supervisor’s financial duties without his proper oversight. The Deputy also routinely performs the fiscal duties of the Clerk’s office. The Town Clerk and Supervisor have functions that serve as checks against one another that do not exist unless they are performed by separate individuals.
• The Supervisor did not submit adequate financial reports to the Board and the Board did not perform an annual audit of the Supervisor’s records and reports, as required by law. As a result, the Board was not aware that the Supervisor’s account clerk used inappropriate accounting methods that concealed the true financial condition of certain Town operating funds.
• The Clerk did not record tax and water payments when they were received and did not indicate the form of payment received in the water and sewer records.
• The Clerk did not disburse and report Clerk fees, real property taxes and other moneys received in a timely manner.

Key Recommendations

• Ensure that any individuals performing the Supervisor’s financial duties do not result in an incompatibility of office.
• Require the Supervisor to provide monthly financial reports and annually audit, or retain an independent auditor to audit, the Supervisor’s books and records. Consult legal counsel to ensure the actions taken with respect to the transfer/advance of moneys from the sewer fund.
• Ensure that all moneys collected are properly recorded and that deposit amounts correspond to receipts received and recorded. Document which individual receipts make up each deposit and record the form of payment.
• Remit all moneys to the Supervisor in compliance with statutory requirements.