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Audit Objective

Determine whether the Town of Butternuts (Town) Board transparently planned and monitored the highway garage and salt shed capital project (Project).

Key Findings

The Board was not fully transparent in planning and could have improved its monitoring of the Project. As a result, total costs to complete the highway garage exceeded the maximum estimated costs by $372,318. The Board did not:

• Prepare a budget or disclose all known Project costs and financing sources.
• Fully define the Project scope. For example, a planned highway department office suite was omitted from bid documents, but later added as a $60,000 change order, which should have been competitively bid in accordance with New York State General Municipal Law (GML).
• Obtain an RFP and written/fax proposal for two other change orders totaling $43,115, which violated the Town’s procurement policy.
• Ensure contractors were properly monitored. As a result, a contractor used less expensive roof material on the highway garage.
• Ensure the required annual financial reports filed with the State Comptroller’s Office were accurate and timely.

Key Recommendations

• Approve a capital project budget and require periodic financial reports that show revenues and expenditures compared to the budget.
• Follow the procurement policy, applicable statutes and contract terms.

Town officials disagreed with certain aspects of our findings and recommendations but indicated they planned to initiate corrective action. Appendix C includes our comments on issues raised in the Town’s response letter.