Audit Objective
Did the Otisco Fire District (District) Board of Fire Commissioners (Board) and Treasurer ensure collections were recorded and deposited in a timely manner, disbursements were properly authorized and supported and accurate financial reports were provided to the Board?
Audit Period
January 1, 2023 – February 4, 2025
Understanding the Program
The Board is responsible for the general management and control of financial activities. The Treasurer serves as the District’s chief fiscal officer and is responsible for receiving and disbursing District funds, maintaining accurate financial records and providing periodic financial reports to the Board.
In order to ensure financial activities are properly managed, the Board and Treasurer should ensure collections are accurately recorded and deposited in a timely manner, disbursements are properly supported and authorized prior to payment, and financial records and reports contain complete and accurate information.
The District had 15 individual collections, totaling $867,105, received or deposited between January 1, 2023, and October 31, 2024. The District paid 367 individual claims totaling $827,347 during the period January 2023 through July 2024. The District had three bank accounts with a combined balance of approximately $500,000.
Audit Summary
We conducted an audit of the District’s financial management procedures and issued a report in February 20171 that identified certain conditions and opportunities for the Board’s review and consideration. We returned to the District in July 2024 to conduct an audit follow-up review. Our follow-up review was limited to interviews with Board members and the Treasurer and inspection of certain documents related to the issues identified in our report. Based on our limited procedures, the District made no progress in implementing corrective action. Of the three audit recommendations, two recommendations were not implemented, and one recommendation was not applicable for the period that we reviewed.2 During the course of our audit follow-up, we identified additional deficiencies in the District’s accounting records and procedures that resulted in a determination for a more comprehensive review. As such, we engaged the District in this separate audit.
Our audit determined that the Board did not ensure that the Treasurer was properly accounting for District collections and depositing funds in a timely manner, and the Board and Treasurer did not ensure disbursements were properly supported and authorized and that periodic financial information reported to the Board was sufficient or accurate. We determined that:
- 12 collections totaling $425,202 were not deposited in a timely manner (averaging 154 days late) including two deposits totaling $22,143 that were made more than a year and a half late.
- Eight collections totaling $24,453 were not recorded accurately.
- 11 claims totaling $130,435 were not approved by the Board prior to payment.
- 26 claims totaling $19,479 lacked adequate supporting documentation.
- The Treasurer’s financial reports to the Board were not accurate and supported by the accounting records. For example, the Treasurer reported $53,424 less cash than was in the District’s bank accounts.
- Bank reconciliations included questionable reconciling items and were not provided to or reviewed by the Board.
- The Treasurer did not provide financial records to the Board for the annual audit, and the Board did not request the Treasurer’s financial records annually for audit.
The lack of oversight and inaccurate accounting records and reports increases the risk that funds could be lost or misappropriated without detection. In addition, when the financial records and reports are not accurate, the Board does not have reliable information to oversee the District’s financial activities and make informed decisions.Had the Board conducted an annual audit of the Treasurer’s financial records, it might have been able to identify and address the deficiencies sooner.
The report includes 13 recommendations that, if implemented, will improve the District’s financial operations. District officials generally agreed with our recommendations and indicated they planned to initiate corrective action.
The Board has the responsibility to initiate corrective action. Pursuant to Section 181-b of New York State Town Law, a written corrective action plan (CAP) that addresses the findings and recommendations in this report must be prepared and forwarded to our office within 90 days. To the extent practicable, implementation of the CAP must begin by the end of the next fiscal year. 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 Otisco Fire District - Financial Operations (2016M-415) https://www.osc.ny.gov/local-government/audits/fire-district/2017/02/17/otisco-fire-district-financial-operations-2016m-415
2 Otisco Fire District - Audit Follow-Up (2016M-415-F) https://www.osc.ny.gov/local-government/audits/fire-district/2024/11/08/ otisco-fire-district-audit-follow-2016m-415-f