B y Derek Liebig
A report released by the state comptroller’s office cites the town of Whitehall with a lack of internal controls over the town’s financial records, and while the town agrees with the 10 recommendations made in the report, a state official pointed out Monday that Whitehall has addressed only four of them so far.
The comptroller’s office said there was no reason to believe there was any misconduct on the part of the town, but instead were the result of administrative mistakes.
Released last Wednesday, the report found a lack of budgetary oversight and a failure to provide adequate training to its’ budget officer(s) and clerk(s) that resulted in mistakes and discrepancies in the town’s accounting records to go undetected.
The report, which covers an 18-month period from Jan. 1, 2009 to June 30, 2010, found the Town responsible for not providing the budget officers and clerks with proper training, and the Supervisor(s), as chief fiscal officer and chief executive officer, for a lack of sufficient oversight.
Supervisor Richard “Geezer” Gordon said the town has since taken measures to correct the issues.
“It’s all been worked out and we have rectified the problems we had. Hopefully it’s resolved,” he said.
However, according to Kate Gurnett, assistant director of communications for the comptroller, the letter Gordon submitted adequately addresses recommendations related to the Supervisor’s records, but not necessarily other areas.
The town has sought training for clerk Elaine Jones who attended a training program in March 2011 and is scheduled to attend another in September 2011 and Gordon has taken steps to ensure all accounts and bank reconciliations are reviewed each month.
But most of the other recommendations made by the comptroller’s office that deal with the recording of account transactions in a timely manner and annual audits of town officers and employees who received or disbursed money during the year weren’t addressed in Gordon’s letter.
Gordon did say last week that the town is going to have an internal audit done every year and are looking at purchasing a fund accounting software package that should help officers keep track of account balances and tax collection payments.
Among the deficiencies detailed in the comptrollers report was the budget officer’s failure to separate transactions into five different funds. Instead, all transactions were combined into a single account, which could result in a misallocation of moneys.
In other words, cash that was intended for a specific use may be incorrectly applied elsewhere.
The report went on to say they did not find an instance of cash being improperly deposited or disbursed, but if the error was not corrected, the board’s ability to make financial decisions could be compromised.
As part of its review, the comptroller’s office also examined 21 bank reconciliations in May of 2009 and May of 2010.
According to the report, the trust and agency account was off by $4,889, the highway account was off by $517, the clearing account by $157, and the payroll account by $70 in May of 2009.
The budget officer at the time, Keith Whiting, failed to investigate these differences because he did not know how to resolve the problems.
The comptroller’s office also examined all 11 bank accounts in May 2010 and found three accounts had not been corrected (clearing, payroll and trust and agency accounts).
There was also a $90,746 discrepancy in the May 2010 payroll account due to the budget officer’s failure to record payroll disbursements since January 2010 when the town began using an outside firm to handle payroll.
Town officials were unaware of these errors because the Supervisor did not review the reconciliations, the report said.
The inability of the town to address these issues in a timely manner “increases the risk that fraud, errors, and irregularities could occur and remain undetected,” the report stated.
The report also found that the clerk held tax receipts totaling $448,265 up to 16 days before depositing them instead of doing it within 24 hours as required by law.
There were also several other occasions of payments that were not deposited in a timely fashion, tax payments that were not sent to the supervisor and county on time, and tax receipts that weren’t recorded in the accounting records.
There were also two accounting errors that resulted in a $5,003 difference between the clerk’s cash book balance and the bank balance in February 2010 and a difference of $258,799 in April of 2010.
The town was also cited for not performing annual audits of the records of the clerk, supervisor, recreation director, and town justices in 2009 and 2010 and the clerk, supervisor, and recreation director in 2008.
Gordon said he and officials simply didn’t have a full understanding of all the procedures, explaining they were unaware of some of the deadlines.
He also said they didn’t seek out training because at the time, because they didn’t have knowledge of it.
The problems indicated in the report aren’t limited to the current clerk, budget officer and supervisor.
The audit covers the tenure of two supervisors (Gordon and Vernon Scrbiner), two clerks (Elaine Jones who replaced Julie Millett) and two budget officers (Whiting and Kathy Jones).
“Everything from January 2010 to now, I’m guilty of,” said Gordon.
Gurnett said the audit was triggered by the comptroller’s office standard risk assessment process.
She said the comptroller’s office does not require municipalities to file a corrective action plan but failure to do so could trigger future audits and reflect poorly on the town.
The state made 10 recommendations, and while four have been addressed, Gordon said that a fifth, additional audits, will also be put into place. The town will have yearly audits, Gordon said.