Audit Objective
Did the Town of Palermo (Town) Board (Board) conduct or provide for an annual audit of the Town Supervisor’s (Supervisor) financial records and reports, and did the Supervisor file the Annual Financial Report (AFR) with the Office of the State Comptroller (OSC) as required?
Audit Period
January 1, 2024 – April 30, 2025
We extended our observation of annual AFR filings forward to November 28, 2025, and back to fiscal year 2020.
Understanding the Audit Area
To help promote transparency, a town board should conduct a thorough and sufficiently detailed audit of the town supervisor’s records to determine whether the accounting records are properly maintained, as well as that reports are complete and accurate. Furthermore, in light of a town board’s responsibility to oversee the general management and control of the town’s finances, the town board should also help ensure that the town supervisor annually prepares, files and makes the AFR available to the public.
With a population of 3,470, Town officials budgeted a total of $2.5 million for the general fund and highway fund appropriations in fiscal year 2024 to provide essential services to the public, such as general government support, street maintenance and improvement, snow removal and fire protection.
Audit Summary
The Board did not conduct or provide for an annual audit of the Supervisor’s financial records and reports for fiscal year 2024 in accordance with New York State (NYS) Town Law (Town Law). In addition, the Supervisor did not prepare and file the 2021 through 2024 AFRs with OSC, as required by NYS General Municipal Law (GML) Section 30. Furthermore, the Supervisor did not provide the Board with complete, accurate and reliable monthly financial reports.
Had the Board received complete, accurate and reliable monthly reports and conducted an annual audit of the Supervisor’s books, records and documents, it may have identified and potentially helped remedy these issues. Without complete, accurate and reliable financial information, the Board cannot effectively monitor the Town’s financial position and available fund balance to make informed decisions. Because the Board and Supervisor did not fulfill their statutory responsibilities, transparency of the Town’s fiscal condition was diminished as Town residents, taxpayers, OSC and other interested parties did not have access to the Town’s current fiscal activities.
Based on our review of the Supervisor’s records, we determined that the Supervisor did not:
- Make timely deposits of cash receipts, which increased the risk that Town funds could be lost, stolen or misappropriated.
- Record cash disbursements in the Town’s computerized accounting system or perform monthly bank reconciliations for fiscal year 2024, which undermined the Board’s general responsibility to oversee the Town’s financial operations and safeguard Town resources.
- Provide the Board with reports showing a total of cash receipts and disbursements each month or cash balances for each operating fund, hindering its ability to monitor the Town’s financial operations throughout the year.
This report includes 10 recommendations that, if implemented, will improve the Town’s financial reporting and help the Board and Supervisor improve the transparency of their fiscal activities. Town officials generally agreed with our findings and their response is included in Appendix B.
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 GML. Our methodology and standards are included in Appendix C.
The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report must be prepared and provided to our office within 90 days, pursuant to Section 35 of GML. 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 in the Town Clerk’s (Clerk’s) office.