Purpose of Audit

The purpose of our audit was to review the Village’s water and sewer rent activity for the period April 18, 2012 through October 3, 2013.

Background

The Village of Middleport is located in Niagara County and has approximately 1,840 residents. The Village is governed by an elected Board of Trustees (Board) comprised of four Trustees and a Mayor. Budgeted appropriations for the general, water and sewer funds in the 2013-14 fiscal year total $1.7 million.

Key Findings

• Overall we found that the Clerk-Treasurer properly billed, collected and deposited water and sewer rents. However, she did not maintain timely, complete and accurate records. For example, we reviewed eight credit adjustments totaling $516 from individual customer accounts and found that none of these adjustments were properly authorized by the Board and only two had been sufficiently documented as to the rationale for the adjustments.
• The Clerk-Treasurer uses a combination of manual records, spreadsheets with control and subsidiary accounts and a billing software application to record water and sewer financial activity. This “accounting system” did not ensure that transactions were recorded in a timely manner.
• The Clerk-Treasurer’s spreadsheets were not up-to-date. As of September 13, 2013 she had not recorded any cash receipts for the 2013-14 fiscal year, which began June 1, and the most recent recorded cash disbursements were through July 2013.
• The Clerk-Treasurer did not properly prepare bank reconciliations for water and sewer fund accounts.
• Any individual in the Clerk-Treasurer’s office could handle all aspects of a financial transaction.

Key Recommendations

• Properly authorize billing adjustments and require written documentation of the reason(s) for the adjustments.
• Implement and maintain a comprehensive accounting system that provides for the integrity of financial information.
• Properly record water and sewer rents in a timely manner.
• Properly prepare bank reconciliations and periodically submit the bank reconciliations to the Board for its review.
• Improve oversight of the Clerk-Treasurer’s office and ensure that incompatible duties within the Clerk-Treasurer’s office are adequately segregated.