Purpose of Audit

The purpose of our audit was to review internal controls over time and attendance and leave accrual records, Justice Court operations, and the chief fiscal officer’s financial activities, including the Village’s online banking, for the period June 1, 2011, to September 26, 2012.

Background

The Village of Chatham is located in Columbia County. The Village is governed by an elected Board of Trustees comprising a Mayor and four Trustees.

Key Findings

• Village officials need to improve internal controls over the Village’s time and attendance procedures and leave accruals. We identified 79 errors in nine employees’ accrual records. There were no timesheets or other records of the days or hours worked, such as calendars and logs, for four salaried employees, and timesheets for two part-time employees were not signed by their supervisors.
• Internal controls over the Court’s operations were not appropriately designed or operating effectively to allow for proper accounting and reporting of financial activities. Bank reconciliations were not documented for Justice Harrison’s account, and monthly bank reconciliations of Justice Portin’s account showed a recurring, unresolved surplus balance of $446 during the audit period.
• Internal controls over the Treasurer’s activities and the Board’s oversight of the Treasurer’s financial operations also need to be improved. The Treasurer did not properly reconcile all Village bank accounts or update the accounting records in a timely manner. Further, the Board did not ensure that adequate policies, procedures and agreements were established for online banking and did not provide sufficient oversight of electronic funds transactions.

Key Recommendations

• Develop and implement written procedures to address the maintenance of leave time records. Ensure that all Village employees complete, submit and certify timesheets to support hours worked.
• Prepare proper bank reconciliations and accountability analyses on a monthly basis.
• Review bank statement activity and bank reconciliations to ensure reconciliations are prepared timely and accurately, and that any discrepancies are promptly investigated and resolved. Establish a comprehensive written online banking policy and require a monthly report of all online banking transactions that have occurred during the period.