Purpose of Audit

The purpose of our audit was to review Board oversight and information technology (IT) controls for the period January 1, 2011, through September 19, 2012.

Background

The Town of Ontario is located in Wayne County and has a population of 10,135. The Town is governed by an elected Town Board, which comprises the Town Supervisor and four Board members. The Town’s 2012 expenditures totaled approximately $7.5 million.

Key Findings

• The Board has not established an effective system of internal controls over payroll, to ensure that the Town has properly classified its Fair Labor Standards Act (FLSA) exempt employees, and enforced established requirements for leave requests, accrual records, and employee time records.
• The Board did not properly authorize interfund advances or ensure that the Supervisor and accountant properly accounted for them and repaid them timely in accordance with law.
• The Board consistently adopted budgets with inaccurate estimates for revenues and expenditures, and the amount of fund balance that would be available and used to balance the budget. These inaccurate budgets led to the accumulation of significant fund balances in the general and water funds and, conversely, dangerously low fund balance in the sewer district fund.
• The Board has not established policies and procedures related to breach notification or disaster recovery.

Key Recommendations

• Consult with the United States Department of Labor to confirm that the officers or employees of the Town listed as “exempt” are not subject to the requirements of the FLSA. Ensure that all “exempt” employees have routine work schedules, charge leave time for periods of time taken off during their scheduled work day, and prepare time records supporting hours worked and leave time used.
• Approve interfund advances by resolution and ensure appropriate records are maintained detailing the funds and amounts of the transfers, and plan for repayment.
• Adopt budgets with realistic estimates of revenues and expenditures and the amount of fund balance to be used to fund operations. Implement plans to address and properly utilize the excessive fund balances in the general and water funds, and to continue to closely monitor the financial position of the sewer fund.
• Adopt an information breach notification policy and a comprehensive disaster recovery plan.