Purpose of Audit

The purpose of our audit was to examine internal controls over cash receipts and disbursements and the Board’s oversight of the Town’s financial activities for the period January 1, 2011, to August 30, 2012.

Background

The Town of Gardiner is located in Ulster County and has a population of approximately 5,700. The Town Board is the legislative body that is responsible for managing Town operations including establishing internal controls. The Town’s budgeted appropriations for 2011 and 2012 were approximately $2.5 million each year.

Key Findings

• The bookkeeper’s cash receipt and disbursement duties were not adequately segregated.
• Because the abstracts presented to the Board did not include manually processed checks, 21 percent of the claims paid by the Town totaling $846,560 were not audited prior to payment, and 18 claims totaling $293,160 that were paid lacked sufficient documentation such as written contracts or rate schedules.
• Town officials have not ensured that accounting records are accurate, complete and up-to-date.
• The former Supervisor paid $173,000 to the Library as settlement for the balance of the 2011 real property taxes, capital fund balance and the unexpended library fund balances from prior years without documentation to support this payment.
• The Town has partnered with a not-for-profit organization (NFP) to purchase land for open space. However, the Town solicited donations totaling $75,000, despite no express authority for the Town to do so, and the payment of $50,000 to the NPF toward the NPF’s purchase of open space was done without a contract.

Key Recommendations

• Segregate incompatible duties in the cash receipts and disbursements processes, or implement compensating controls.
• Approve all claims prior to payment to ensure they include sufficient documentation such as written contracts or rate schedules. Require that manually processed payments be kept to minimum.
• Require that proper and accurate accounting records are maintained.
• Review the payment made to the Library and determine whether the amount was appropriate, and take necessary actions if it determines that the amount was not correct.
• Do not conduct fund-raisers for NFP organizations and have a formal contract with private groups when services are provided and compensated.