Audit Objective
Did the Town of Lewis (Town) Town Supervisor (Supervisor) maintain complete and accurate accounting records and reports?
Audit Period
January 1, 2023 – November 30, 2024
Understanding the Program
The Supervisor, as chief fiscal officer, is responsible for receiving, disbursing and retaining custody of Town money, maintaining accounting records and providing financial reports to the Town Board (Board). The Supervisor assigned his duties of maintaining accounting records and preparing financial reports to an appointed Clerk to the Supervisor (Clerk).
The Town’s accounting records included three operating funds during the audit period: general fund, highway fund and water district. The Town’s budgeted appropriations for 2024 totaled $589,883 for the general fund, $480,125 for the highway fund and $55,049 for the water district.
Audit Summary
The Supervisor did not maintain complete and accurate accounting records and reports. As a result, the Board lacked reliable records and reports to effectively manage the Town’s financial operations.
The Supervisor did not provide oversight of the Clerk’s duties related to maintaining the accounting records, which resulted in errors and deficiencies in the Town’s accounting records. The errors and deficiencies included, but were not limited to, the following:
- The Clerk did not record $94,400 in Community Development Block Grant (CDBG) funds received and disbursed in the accounting records.
- We reviewed all 15 asset and liability accounts recorded in the accounting records for the general fund, highway fund and water district as of December 31, 2023 and November 30, 2024, and determined that 12 accounts were overstated by a combined total of $894,197 and eight accounts were understated by a combined total of $187,553.
- Expenditures totaling $50,038 for New York State and Local Employees’ Retirement System (NYSLRS) contributions and workers’ compensation insurance were not properly allocated to each of the operating funds, but instead were all recorded in the general fund.
- We reviewed 15 journal entries recorded during our audit period and determined that four (27 percent) were not properly recorded.
Without reliable accounting records, the Board’s ability to manage the Town’s financial condition and make sound financial decisions is limited. In addition, the improper allocation of certain employee benefit expenditures related to the water district has caused taxpayer inequities of $3,753 to occur. The water district has a different tax base than the general fund; Therefore, the general fund has subsidized the water district’s operations. As a result, only taxpayers within the water district benefited from the general fund subsidies.
Bank reconciliations were not prepared for all accounts or properly prepared and reviewed. For 18 of the 45 bank reconciliations (40 percent) we prepared, the adjusted balances did not agree with the general ledger cash or investment balances at month-end. Had the Board ensured bank reconciliations were prepared for all accounts and properly reviewed them, they may have identified and corrected recording errors in the accounting records.
The Supervisor also did not provide the Board with complete and accurate monthly reports during the audit period. For all four of the monthly Supervisor reports we reviewed, the recorded receipts and disbursements and some of the recorded cash and/or investment account balances were not accurate. Without complete and accurate monthly financial reports, the Board cannot exercise adequate oversight of financial operations and be aware of the Town’s true financial condition.
The 2023 Annual Financial Report (AFR) was not accurate. For example, the general and highway funds’ reported unrestricted fund balances of $355,698 and $18,078 were overstated by $242,040 and $12,903, respectively. The inaccurate AFR prevented the Board, residents and other interested parties access to reliable financial information to measure the effectiveness of operations and the Town’s overall fiscal health.
The Board also did not audit, or contract with an independent public accountant to audit, the Supervisor’s records for 2023. Had the Board performed the annual audit, the deficiencies identified during the audit may have been detected and corrected sooner.
The report includes 10 recommendations that, if implemented, will improve the Town’s recording and reporting of financial transactions. Town officials generally agreed with our recommendations and have initiated, or indicated they planned to initiate 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 D.
The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to our office within 90 days, pursuant to Section 35 of the New York State General Municipal Law. 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 office.