Audit Objective
Did the West Sparta Independent Volunteer Fire Department Company Number 1, Inc. (Department) Board of Directors (Board) provide adequate oversight of financial operations?
Audit Period
January 1, 2023 – April 3, 2025
Understanding the Audit Area
The Board must provide oversight to ensure that financial operations are properly managed. Adequate oversight includes ensuring that Department officials maintain comprehensive records, appropriately segregate duties or implement compensating controls to safeguard funds, and review records and reports to detect discrepancies.
The Department has 27 volunteer members and is governed by its bylaws and a four-member Board. The Board is responsible for managing the Department’s financial activities.
The Treasurer maintains custody of, deposits and disburses all Department funds. An accountant assists the Treasurer by recording all financial activities in the Department’s financial software and preparing financial reports.
From January 1, 2023 through December 31, 2024, the Department’s disbursements totaled $260,823 and revenue and redeposited startup cash1 totaled $259,178.
Audit Summary
The Board did not have the necessary information it needed to help ensure that the Department’s financial operations were adequately accounted for and reported. Also, it did not enforce the limited financial provisions outlined in the Department’s rules and standard operating guidelines (bylaws) and written purchasing policy related to disbursements. In addition, the Board did not adopt other financial policies and procedures or a required code of ethics, or provide guidance to the Treasurer for recording and reporting financial transactions. Furthermore, the Board generally did not review the Department’s bills before or after they were paid to help ensure that all 230 claims2 totaling $260,823 were properly supported and for appropriate Department purposes. Lastly, the Board did not ensure that the Treasurer maintained supporting documentation for all revenues and redeposited startup cash totaling $259,178 that were received and deposited from January 1, 2023 through December 31, 2024.
The Treasurer prepared a monthly spreadsheet of receipts and disbursements and provided the spreadsheet, along with a copy of the Department’s monthly bank statements, to an accountant (her son) who prepared the Department’s bank reconciliations and filed the Department’s annual U.S. Internal Revenue Service (IRS) 990 form.3 However, neither the Treasurer nor accountant prepared a monthly or annual report for the Board or membership to review. Also, the Treasurer did not provide the Board or membership with bank statements, canceled check images and bank reconciliations to monitor financial operations.
Finally, the Treasurer did not file the 2023 foreign fire insurance (FFI) tax proceeds annual report with the New York State Office of the State Comptroller (OSC) until after we asked about it. During our review of these funds, we determined that disbursements of FFI tax proceeds were not approved by the membership and were used for inappropriate purposes, such as purchasing approximately $4,000 in gift cards for some active members.
Because the Board and membership did not provide adequate oversight of financial operations, they have placed Department resources at risk of waste and theft.
The report includes 13 recommendations that, if implemented, will improve the Board’s oversight of financial operations. Department officials agreed with our recommendations and indicated that they initiated corrective action.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State Comptroller’s authority as set forth in Article 3 of the New York State General Municipal Law. Our methodology and standards are included in Appendix C.
The Board has the responsibility to initiate corrective action. We encourage the Board to prepare a written corrective action plan (CAP) that addresses the recommendations in this report and forward it to our office within 90 days. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. We encourage the Board to make the CAP available for public review.
1 This is cash used at the beginning of fundraisers, generally to make change, and redeposited after the event’s end.
2 These claims were paid from January 1, 2023 through December 31, 2024.
3 The IRS uses this form to obtain information about tax-exempt organizations, educate organizations about tax law requirements and promote compliance with the requirements. Organizations also use the form to share information with the public about their programs.