Audit Objective 

Determine whether the Town of Lancaster (Town) Supervisor (Supervisor) adequately performed his financial duties.

Key Findings 

The former Supervisor did not perform his financial duties and did not monitor the work performed by the firm he improperly contracted with to act as Director of Finance, resulting in incomplete and inaccurate financial records and significant control weaknesses: 

• Monthly financial reports were not generated and provided to the Town Board (Board) and bank reconciliations were not completed promptly.
• 86 budget lines were overspent by nearly $9.2 million and 21 budget transfers totaling $483,122 were completed without Board approval.
• 76 percent of non-recurring journal entries were made 70 days after the transaction took place.
• 60 percent of journal entries were recorded and approved by the firm without the Supervisor’s review or oversight.

The Supervisor also compromised the security of the Town’s resources by granting unrestricted access to the financial system and online banking to a third party and by not ensuring proper segregation of duties or other mitigating controls were in place. For perspective, the firm was allowed to disburse $2.5 million of the Town’s cash without any Town official’s approval. The Supervisor and other Board members were unaware of these deficiencies and continued to pay the firm even though the contract terms were not fulfilled because they did not monitor the Town’s financial activity and the Supervisor did not monitor the firm.

Key Recommendations 

The audit report includes 16 recommendations to Town officials.

Town officials agreed with our recommendations and indicated that they have already begun implementing corrective action.