Audit Objective
Determine whether City of Mount Vernon (City) officials provided proper oversight of non-payroll disbursements and the former City Comptroller (former Comptroller) properly accounted for these disbursements.
Key Findings
The City Council, the former Comptroller and other City officials did not provide proper oversight of non-payroll disbursements. The former Comptroller did not properly or transparently account for all non-payroll disbursements. Her failure to provide financial information or perform her duties resulted in the untimely payment of claims and litigation. As a result, the City’s reputation with its vendors was damaged and the City paid for additional, potentially unnecessary, disbursements related to litigation.
The former Comptroller and certain department heads did not ensure:
- 88 claims totaling $1.8 million were paid in a timely manner.
- 60 claims totaling $460,594 for essential services and infrastructure were paid.
The former Comptroller and the City Council did not ensure:
- Adequate policies and procedures were developed or adopted to ensure claims were always properly authorized, for valid purposes and paid in a timely manner.
- Officials and employees had clear guidance on how the disbursement process should work.
The former Comptroller:
- Implemented a manual voucher system that restricted the ability of officials and employees to monitor operations and prevented officials from accounting for committed funds. Also, her system prevented officials from determining whether vendors had been paid.
- Made 25 unauthorized electronic disbursements and three withdrawals totaling $16.4 million, of which $15.1 million circumvented the Mayor’s required countersignature of checks.
- Used contingency appropriations to pay $1.3 million in expenditures without the Council’s knowledge and approval.
- Did not seek reimbursement for approximately $7,579 out of $30,754 in disbursements made to the former Comptroller’s outside counsel in violation of a court’s order.
The former Comptroller’s lack of transparency also resulted in City officials operating under the expectation that appropriations were available when the former Comptroller had already expended them.
Key Recommendations
The Comptroller should:
- Refrain from making electronic disbursements to vendors unless their use is approved by the Council, and the City enters into banking agreements and adopts a system of internal controls for all electronic disbursements.
- Discontinue the incorrect practice of charging expenditures to the contingency account and instead account for expenditures in the correct appropriation accounts after Council and Board approval.