Purpose of Audit

The purpose of our audit was to examine internal controls over selected financial operations for the period January 1, 2010 through October 31, 2011.

Background

The Town of Oyster Bay is located in Nassau County and serves approximately 293,000 residents. The Town is governed by the Town Board which comprises the Town Supervisor and six Board members. The cost of Town activities in 2012 were approximately $313 million.

Key Findings

• The Town is experiencing fiscal stress due to a deteriorating financial condition. The general fund’s total unreserved fund balance has declined by $25 million, from $14.7 million at the end of fiscal year 2007 to a fund deficit of $10.3 million at the end of 2012. The Town-outside-village’s (TOV) total unreserved fund balance decreased from a surplus of $2.5 million at the end of fiscal year 2007 to a fund deficit of $7.4 million at the end of 2011. The TOV fund deficit decreased to $4.5 million at the end of 2012. The Solid Waste Disposal District’s (SWDD) unreserved fund balance went from a $2.6 million surplus at the beginning of 2010 to $7.9 million deficit at the end of 2011. The SWDD fund deficit increased to $11.9 million in 2012. The Garbage Collection Districts (GCD) fund sustained a $17.3 million operating deficit in 2012, thus decreasing fund balance from a surplus of $7 million to a deficit of $10.3 million at the end of 2012. Collectively, these four funds reported net operating deficits of $24.2 million (operating deficits of $27.1 and operating surplus of $2.9) and their operations accounted for more than 70 percent of the Town’s 2012 budget expenditures.
• The Town does not have a formal change order policy that establishes procedures to be followed when change orders are necessary.
• The Board has not adopted IT policies and procedures regarding remote access, data backup, breach notification and disaster recovery.

Key Recommendations

• Develop a long-range financial plan that addresses the negative impact of its recurring operating deficits and eliminates deficit fund balances.
• Adopt a formal change-order policy to provide guidance in analyzing, processing and authorizing change orders.
• Adopt a remote access policy, comprehensive policies and procedures addressing the safeguarding of computerized data and assets, a comprehensive information breach policy and a formal disaster recovery plan.