Audit Objective
Did the Town of Lockport (Town) Highway Superintendent (Superintendent) properly collect, record and deposit culvert pipe application fees (application fees) and culvert pipe installation fees (installation fees)?
Audit Period
January 1, 2023 – May 1, 2024
Understanding the Audit Area
Culvert pipes are used to help aid in the proper movement of water and materials under roadways, driveways and other structures. In the Town, property owners may submit an application to the Highway Department (Department) to request a culvert pipe installation (project) at a private residence or business. The Town’s Drainage Policy (Policy) requires all applicants to pay an application fee when submitting the application and the installation fee prior to the start of a project. Strong and effective internal controls are required to help ensure all application fees and installation fees owed to the Town are collected, recorded and deposited.
The Superintendent is responsible for all of the Department’s cash collections, including application fees and installation fees. During the period January 1, 2023 through May 1, 2024, the Department processed 33 applications with related application fees and installation fees totaling $22,800.
The Superintendent in office during the audit fieldwork was appointed on August 16, 2023. The former Superintendent was in office for the remainder of the audit period.
Audit Summary
The Superintendent did not ensure application fees and installation fees were properly collected and recorded. Because the Superintendent did not provide oversight of the collection process and records did not contain sufficient and accurate information, officials cannot verify the accuracy or ensure accountability of the collection of the application fees and installation fees. This significantly increased the risk that collections could be lost, unaccounted for or misappropriated without detection. Specifically, the Superintendent did not ensure:
- Application fees totaling $1,300 for 26 projects were collected in a timely manner as required by the Town’s Policy and did not collect one installation fee totaling $400 and seven1 application fees totaling $350.
- Adequate collection records were maintained to demonstrate that all application fees and installation fees due to the Town were collected, recorded and deposited. Collection records did not contain sufficient details such as the date that fees were collected and recorded, and who collected the fees.
- Duplicate press-numbered receipts were issued or that collection dates were documented for any of the application fees and installation fees collected for the 33 applications reviewed. Without duplicate press-numbered receipts or another suitable record evidencing receipt, he and the Office of the New York State Comptroller (OSC) auditors could not confirm that all application fees and installation fees due to the Town were collected, recorded and deposited.
The Superintendent also had application fees and installation fees collected and recorded without him or another Town official providing oversight or reviewing this work for accuracy. The Town Board (Board) and the Superintendent did not ensure compliance with the Policy, and there were no procedures in place to review and reconcile collections to ensure all application fees and installation fees owed to the Town were collected. Allowing one individual to control key processes and procedures without compensating controls increases the risk that errors or misappropriations could occur and remain undetected.
The report includes 13 recommendations that, if implemented, will improve the Town’s oversight and monitoring over the collection of application fees and installation fees. Town officials agreed with our recommendations and indicated they will take corrective action.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and OSC’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. 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 (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 office.
1 Includes one application fee waived without authorization.