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HomeMy WebLinkAbout2000 Audit by Stateco 13 R 9 H. Carl McCall Comptroller State of New York Office of the State Comptroller Town of Groton Report of.Exam'inat'ion 2000M-1 65 Division of Municipal Affairs H. CARL McCALL STATE COMITROLLER�T JCC STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER TO THE SUPERVISORS AND MEMBERS OF THE TOWN BOARD OF THE TOWN OF GROTON, TOMPKINS COUNTY, NEW YORK: A.E. SMITH STATE OFFICE BUILDING ALBANY, NEW YORK 12236 Among my top priorities as the State Comptroller is to maintain a strong partnership between my office and the local governments of New York State. One of the main objectives of this partnership is to assist local governments in improving their financial condition and strengthening their financial management systems. The audit reports issued by my office are an important component in accomplishing this objective. These reports are expected to be a resource to you. They are designed to identify current and emerging fiscal problems and provide recommendations for improvement. Prudent fiscal management, sound fiscal policy and a commitment to working together will enable us to serve the taxpayers more effectively by making better use of our limited resources. Toward this end, I look forward to working with your municipality and all other • local governments throughout the State. To make our audit report more useful and understandable, it now includes: ♦ Table of contents; ♦ Executive summary to highlight recommendations; and ♦ Headings that separate Findings and Recommendations. If my office can be of assistance to you or if you have any questions concerning this audit report, please feel free to contact the local area office for your county listed at the back of this report. Sincerely, �f� '* C4 -5:a H. Carl McCall Town of Groton Page 1 TABLE OF CONTENTS Section Page Executive Summary ...................................................... 3 Summary of Recommendations ............................................. 3 Authority and Scope Letter ................................................ 4 Findings and Recommendations Internal Control and Compliance Compliance with Procurement Policy ................................. 6 Lack of Departmental Approval of Claims ............................. 7 Appendix..............................................................8 Town of Groton EXECUTIVE SUMMARY Our examination disclosed findings which should be reviewed by the Town Board for appropriate action. Good management practices require that town officials take prompt action concerning our recommendations. We believe prompt action by town officials will protect the town's resources from possible loss or improper use, and ensure its compliance with appropriate statutory requirements. For the ready reference of the reader, the recommendations are summarized in the following section. However, this is not meant to serve as a substitute for reviewing the Findings and Recommendations section of the report, which begins on page 6. The Town Board should prepare a plan of action that addresses our recommendations and forward the plan to our office within ninety days. For guidance in preparing the plan of action, you may refer to applicable sections contained in the publication issued by the Office of the State Comptroller entitled Financial Management Guide for Local Governments. We are available to assist you in providing guidance in preparing the plan. The local area office for your county is listed in the back of this report. SUMMARY OF RECOMMENDATIONS • Internal Control and Compliance • An effective system of internal control is necessary so that the Town Board can have reasonable assurance that resources are safeguarded and that transactions are executed in accordance with management's authorization, are in accordance with statutory requirements and are properly recorded. Failure to establish proper controls could expose the town's resources to loss or improper use. The following recommendations help ensure that the town's resources are not at risk and that transactions are properly authorized and are in compliance with statutory requirements. Compliance with Procurement Policy (For Full Discussion See Commentary, Pa qe 6) Town officers and employees involved in the purchasing process should adhere to and the Town Board should monitor compliance with the provisions of the town's adopted procurement policy and procedures. Lack of Departmental Approval of Claims (For Full Discussion see Commentary, Paqe 7) The Town Board should review the town's claims processing procedures and establish requirements to help ensure that claims are approved by the appropriate town officer and that such approval is evidenced on the claim. Town of Groton Pa :3 H. CARL McCALL STATE CONffyrROLLER )lot STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER Report: 2000M-165 Filed: September 1, 2000 AUTHORITY AND SCOPE LETTER TO THE SUPERVISORS AND MEMBERS OF THE TOWN BOARD OF THE TOWN OF GROTON, TOMPKINS COUNTY, NEW YORK: A.E. SMITH STATE OFFICE BUILDING ALBANY, NEW YORK 12236 Pursuant to the State Constitution, Article V, § 1 and further authority vested in the State Comptroller by Article 3 of the General Municipal Law, we have examined the financial affairs of the Town of Groton. Our responsibilities are to review the financial condition and fiscal operations of the town in order to identify areas needing improvement and to inform local officials and the public of our findings and recommendations. Consistent with these responsibilities, the objectives of this examination were to identify conditions indicating possible fiscal stress and to test for noncompliance with certain finance related statutory and regulatory provisions as well as guidance of the Office of the State Comptroller. It was not our objective to, and we do not, express an Audit Opinion on the financial statements of the town or provide assurance as to either its internal control structure or the extent of its compliance with statutory and regulatory requirements as well as guidance of the Office of the State Comptroller. The management of the town is responsible for its financial affairs and for safeguarding its resources. This responsibility includes establishing and maintaining an internal control structure to provide reasonable, but not absolute, assurance that resources are safeguarded against loss from unauthorized use or disposition; that transactions are executed in accordance with management's authorization and are properly recorded; that appropriate financial reports are prepared; that applicable laws, rules and regulations are observed; and that appropriate corrective action is taken in response to audit findings. Nevertheless, errors, irregularities, or instances of noncompliance may occur and not be detected because of inherent limitations in any internal control structure. Town of Groton Page 4 FINDINGS AND RECOMMENDATIONS • Internal Control and Compliance • Compliance with Procurement Policy Fin ding We noted instances of non-compliance with the town's adopted procurement policy which requires town officers and employees to obtain and document quotes received for certain purchases. The Town Board adopted a written procurement policy to provide guidance to town officers and employees involved in the purchasing function. A written procurement policy is intended to provide sufficient guidance and procedures to help ensure that competition is sought in a reasonable and cost-effective manner for purchases and public work contracts where competitive bidding is not required by law (see General Municipal § 104-b). The town's procurement policy in effect during 1999 and 2000 provided that for a purchase or public work contract falling under the statutory competitive bidding limits that either written or oral quotes be obtained depending on the estimated cost of the contract. The town's procurement policy also requires documentation of all quotes received to support compliance with the provisions of the policy. To determine compliance with the town's adopted procurement policy we scanned abstracts which listed claims audited by the Town Board for the period January 1999 through April 2000 and randomly selected claims that qualified for the solicitation requirements of the town's procurement policy. We selected ten purchase contracts having a total cost of $26,633. We attempted to verify that these contracts had been entered into in accordance with the town's adopted procurement policy. Of the items selected, documentation was provided to us by town officials to indicate that the required written or oral quotes had been obtained for four of the ten items selected. Town officials informed us that verbal quotes were obtained prior to entering into the other six contracts, totaling $10,500, however, documentation in support of those quotes was not made available for our examination. Town officers and employees involved in the purchasing process should comply with the provisions of the written procurement policy adopted by the Town Board to help ensure that competition is sought for obtaining goods and services where competitive bidding is not required by law. Quotes solicited and obtained should be adequately documented and retained on file to support compliance with the board's policy. The failure of town officers and employees to follow the procurement guidelines adopted by the Town Board increases the possibility that goods and services may not be acquired economically, which could result in excess costs to the town. Recommendation Town officers and employees involved in the purchasing process should adhere to and the Town Board should monitor compliance with the provisions of the town's adopted procurement policy and procedures. Town of Groton Lack of Departmental Approval of Claims Finding Certain claims paid chargeable to various town funds lacked evidence of approval by the town officer whose action gave rise or origin to the claims. To test for compliance with procedural controls over the approval of claims, we examined claims paid in April 2000 and December 1999 that were chargeable to the townwide and part -town general funds, townwide and part -town highway funds, community development and special district funds. We also examined claims paid in February 2000 and April 1999 that were chargeable to the townwide and part town general funds. These claims were audited by the Town Board and allowed for payment. Of the 246 claims tested, 74 lacked a signature on the claim or any other indication thereon of approval by the town officer whose action gave rise or origin to the claims. The majority of the claims lacking departmental approval, D2 of 74, consisted of utility claims (telephone, electric and gas, water). In each of the years 1999 and 2000, there were 26 unapproved utility claims which totaled $9,936 and $7,062, respectively. The cumulative dollar amount of paid utility claims in 1999 totaled $29,244 and for the period January 1, 2000 to April 11, 2000, totaled $14,480. With certain exceptions, which appear not to be applicable in these instances, no claim should be audited and approved for payment by the Town Board unless the claim has first been approved by the town officer whose action gave rise or origin to the claim (Town Law, § 118(1)). Evidence of the approval by the town officer whose action gave rise to the claim, preferably by signature on the claim or related invoice itself, is needed to attest that the goods or services, as itemized on the claim, were received by the town and that the charges claimed are correct. We believe that departmental review and approval of bills submitted for utility services is important for verifying the reasonableness and propriety of telephone charges as well as rates and usage for electric, gas and water service. The failure of the Town Board to properly audit claims for such approval may result in payments for goods and services which have not been received or billed at incorrect amounts. Recommendation The Town Board should review the town's claims processing procedures and establish requirements to help ensure that claims are approved by the appropriate town officer and that such approval is evidenced on the claim. Town of Groton Page 7 APPENDIX OFFICE OF THE STATE COMPTROLLER DIVISION OF MUNICIPAL AFFAIRS Patricia Lamb McCarthy, Deputy Comptroller Rosemarie V. Rosen, Assistant Deputy Comptroller Steven J. Hancox, Assistant Deputy Comptroller LOCAL AREA OFFICE LISTING BUFFALO AREA OFFICE David H. Slusarz, Chief Examiner Office of the State Comptroller 1050 Ellicott Square Building 295 Main Street Buffalo, New York 14203 (716) 847-3647 Fax (716) 847-3643 Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Wyoming E -Mail: Muni-Buffaloe..osc.state. nv.us SYRACUSE AREA OFFICE Norman E. Bagley, Chief Examiner Office of the State Comptroller State Office Building, Room 409 333 E. Washington Street Syracuse, New York 13202 (315) 428-4192 Fax (315) 426-2119 Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, St. Lawrence E -Mail: Muni-Svracusenosc.state. ny.us GLENS FALLS AREA OFFICE Richard H. Dinolfo, Chief Examiner Office of the State Comptroller One Broad Street Plaza Glens Falls, New York 12801 (518) 793-0057 Fax (518) 793-5797 Clinton, Essex, Franklin, Fulton, Hamilton, Montgomery, Rensselaer, Warren, Washington E -Mail: Muni-GlensFalls(a.osc.state. ny.us HAUPPAUGE AREA OFFICE John R. Pollack, Chief Examiner Office of the State Comptroller NYS Office Bldg. Room 3A10 Veterans Memorial Highway Hauppauge, New York 11788-5533 (631) 952-6534 Fax (631) 952-6530 Nassau, Rockland, Suffolk, Westchester E -Mail: Muni-Hauppauaeeosc.state.ny.us ROCHESTER AREA OFFICE William W. Campbell, Chief Examiner Office of the State Comptroller The Powers Building 16 West Main Street - Suite 522 Rochester, New York 14614 (716) 454-2460 Fax (716) 454-3545 Cayuga, Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne, Yates E -Mail: Muni-Rochestere.osc.state. nv.us BINGHAMTON AREA OFFICE Patrick Carbone, Chief Examiner Office of the State Comptroller State Office Bldg. Room 1701 44 Hawley Street Binghamton, New York 13901-4417 (607) 721-8306 Fax (607) 721-8313 Broome, Chenango, Cortland, Delaware, Otsego, Sullivan, Tioga, Tompkins E -Mail: Muni-Binahamton aeosc.state.nv.us ALBANY AREA OFFICE Thomas J. Kelly, Jr., Chief Examiner Office of the State Comptroller 22 Computer Drive West Albany, New York 12205 (518) 438-0093 Fax (518) 438-0367 Albany, Columbia, Dutchess, Greene, Orange, Putnam, Saratoga, Schenectady, Schoharie, Ulster E -Mail: Muni-Albanv anosc.state.ny.us Town of Groton Pa e 8 I T r ♦T 3• `r `:lr : r• �{' v a `^�. . .-�','- .,�"'.�• r ' ! _ ,•iV,- -z •. } •ts ,: : i' .l r1^ -yi a r t. r Z + t`' ? �K 'S �• i j " > .` �( > ! ,l. :iK :, FT ISL t 'z ! ` ; + •I r y ,Jr ..-,. _ 4 .,t. r Via•.i•I, - Vii,• _ ``' v" �1r - ` . !} ^tr `i• 1 I. ^• r, �`�gi 41. ��;-Tr` ✓!:. J 'f •r. .' J•. ..1E. ,7,11 r ,.,at,. % j. •-!�'s ,.tir 'A„ ... • �..`r •t.. y. ate: 7� r'- "•�{j�' fty ".�1.` .y ^Z '` r';di« .! r. =a' : rt -' �'• ti5�.4 � .s,,��6�•♦ .j •' , +.I. ..F r .. r �:. tiI ,� .1,•Lr..• 1 �J• t�j �.:R '•1 {t `. '♦ I!* ' °r 11I A,, :�"n -t. r.r t, i d• "%!t •la., }.,.1.1'4, ,t�' y- .r'R� � .14 • -�' /•; •r;. ,. 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A - �. -Y, 1 1 F ',�•, 7• • ,.:./. 1. 'S .t. . . . ! .' .�r • . Y .w Y : + t 1A mal' ' +i I I .M t �a .-•S't �K I R� •'a.,,°i - - R � , •• -It, if w , .11, �'e... y� .T `Y`.� f- !ii ..i .}`. f .4•.t 'a f •r r� ''' + . r I.R. x �� t •T I V�' +w• '.i• t.. ', i ,) I+ . --„�--I- } . + .�`, }:I , _ -It ..; \rv.l - ” A 1i7 :�• tb •j� 1 •.o ; x.. . :"7,.-,j6-,v'ti . y . ✓ r : a Sti , ' 7i�' w .+ 1 :' , !fit :.T` } , i t J a4 v' ..tf 14i. ,•! . - �, _ t . t 'r " $ , , A; ''' c�, r� i 3 i.t <!�'+r'' 9' �5;. • ^; f ,�."., ,..Al` A- W, +r, ` V: �a ,. , "'r'' r f� \ tl L 11 • � Jr• r,!. :. r^ii hr ,�+' r a r , i. Rj. ♦`..�„,} ti!. . ,••r t.t+ j_- r L • < ..,�,.. t .. ,a ., ,.,'IR. i:. a ' x • +, i { y 4 .1, > /•t' �,R,,.: ! • 1 .1y .. . a I YL �, ': ''.� :r n - 'r +- ;>;. �> >i t•, r y - : :.r,;., l .�:' f, �• r<I •.,�,7J,�e c - i. H. CARL MCCALL STATE COMPTROLLER Glenn E. Morey Supervisor Town of Groton 101 Conger Blvd. Groton, NY 13073 Dear Mr. Morey: STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER September 1, 2000 A.E. SMITH STATE OFFICE BUILDING ALBANY, NEW YORK 12236 2000M-165 Town of Groton Enclosed is a Report of Examination for the 'Town of Groton prepared by the Office of the State Comptroller. A copy of the report has been mailed to the person responsible for filing such report and making it available for public inspection. The examination was made, and report prepared, in accordance with the authority granted to the State Comptroller by the State Constitution, Article V. § 1 and Article 3 of the General Municipal Law. The report should be studied by all appropriate officials and a written response to the audit findings should be prepared and filed within ninety days, pursuant to Subdivision 4 of Section 35 of the General Municipal Law. The development of a corrective action plan and its implementation are important steps in improving financial management. Section 11.4 of the Financial Management Guide for Local Governments issued by the Office of the State Comptroller discusses the filing requirements and provides guidance concerning the preparation of a written response. The written response should be addressed to: Office of the State Comptroller Division of Municipal Affairs Bureau of Examinations A.E. Smith State Office Building - 10th Floor Albany, NY 12236 I trust that this report will be of assistance in improving fiscal operations as Comptroller McCall is dedicated to maintaining a strong partnership with the local government officials of New York State. If you require assistance or if you have any questions, please feel free to contact the local area office for your county listed at the back of the enclosed report. Very truly yours, 01 Ui. �L Patricia Lamb McCarthy Deputy Comptroller PLM:rh Enc. Torun Justices (607)898-5273 Arland L. Hefiron Arthur D. Dawson Code Enforcement (607)898-4428 Mark D. Gunn Supt. of Niglr%,qus (607)898-3110 Richard C. Case, Jr. Far Miniber (607')998-3086 October 19, 2000 Town of Groton 1'O Box 36. 101 Conger Boulevard , Groton NY 13073 Patricia Lamb McCarthy Deputy Comptroller Office of the State Comptroller Division of Municipal Affairs Bureau of Examinations A.E. Smith State Office Building — 10th Floor Albany, N.Y. 12236 Dear Ms. McCarthy, Supemisor (607)898-5102 Glenn E. Morev 7Mvii Clark (607)898-5035 Colleen D. Pierson Councilmen Ellard L. Sovoco of Donald F. Schefller Duane T. Randall, II Sheldon C. Clark The Office of the State Comptroller recently conducted an audit for the Town of Groton's fiscal operation for the period of January 1, 1999 through April 7, 2000. This letter constitutes the official response to the State Comptroller from the Town of Groton concerning the certain findings and recommendations which are presented in the Report of Examination, 2000M-165. Written Finding, The results of the examinations procedures disclosed two written findings, Compliance with Procurement Policy and Lack of Departmental Approval of Claims. The Town agrees with both findings. Compliance with Procurement Policy To determine compliance with the Town's adopted procurement policy the audit scanned abstracts which listed claims audited by the Town Board and randomly selected claims that qualified for the solicitation requirements of the Town's Procurement Policy. Ten purchase contracts were selected and four of the ten items indicated that the required written or oral quotes had not been obtained. Town Action - Town officers and employees involved in the procurement process will adhere with the Town's newly adopted procurement policy and procedures. The Town Board amended the Town of Groton Procurement Policy on August 8, 2000, see Procurement Policy attached. Lack of Departmental Approval of Claims Certain claims examined the were paid chargeable to various town funds lacked evidence of approval by the town officer whose action gave rise or origin to the claims. Town Action — The Town Board will not approve any claim unless the town officer whose action gave rise or origin to the claim has first approved the claim. All utility invoices will have all department heads signature or initials for approval. The Supervisor will initial or sign all vouchers for approval prior to presenting to the Town Board for their approval for payment. Thank you for the professionalism shown us during our audit If you should have any furthers questions or comments, please contact me at 607-898-5102 or at 607-255-7402. Sincerely, Glenn Morey Supervisor Town of Groton