Audit Objective
Did the Town of Horseheads (Town) Board (Board) and officials properly audit claims and process claim payments?
Audit Period
January 1, 2023 – November 30, 2024
Understanding the Audit Area
The audit of claims is often the last line of defense for preventing unauthorized, improper or fraudulent claims from being paid. A town board must audit the claims against a town before they are paid. A proper claims audit ensures all claims are subjected to an independent, thorough and deliberate review that, among other things, determines that town officials complied with statutory requirements and the town’s written policies, and that each purchase was for a proper town purpose. Effective claims audit and payment authorization processes can help ensure that tax dollars are spent properly, efficiently and in the best interest of taxpayers.
The Town’s 2024 budgeted appropriations totaled $6.7 million and, during the audit period, the Town paid 2,432 claims totaling approximately $8.7 million.
Audit Summary
The Board and Town officials did not properly audit claims and process claim payments. The Board did not conduct a thorough audit of claims to ensure that individual claims contained supporting documentation to demonstrate compliance with statutory requirements and Town policies. Additionally, the Town Clerk (Clerk) did not prepare and certify an abstract (a list of audited claims) that authorizes and directs the Town Supervisor (Supervisor) to pay the approved claims. Although all claims reviewed were for legitimate Town purposes, the absence of a proper claims audit and payment authorization process increases the risk that improper payments could be made and go undetected.
We reviewed 274 claims totaling $897,321 and 206 claim payments totaling $414,075 and determined the following:
- 61 claims totaling $473,309 were paid prior to the Board’s audit. As a result, the Board’s ability to ensure that purchases comply with Town policies and are legitimate is reduced. These claims included highway equipment, health insurance premiums, road maintenance, vehicle parts, audio upgrades, office-related and miscellaneous expenditures – all of which should have been audited
before payment. - The Board was not provided with documentation demonstrating compliance with competitive bidding requirements for six purchases with aggregated claims totaling $509,877, including highway equipment, diesel fuel, stone products and audio/visual equipment. Although the Highway Superintendent later provided documentation indicating certain purchases were made under a Chemung County (County) contract, this information, including pricing details, was not presented to the Board for a proper claims audit. As a result, the Board has less assurance that the Town obtained the most favorable terms and conditions in the best interest of the taxpayers.
- Town officials did not have documentation to support that they obtained the minimum number of verbal or written quotes and/or issued requests for proposals (RFPs) for 12 purchases with aggregated claims totaling $120,574 in accordance with the Town’s procurement policy (Policy). As a result, significant cost savings may be missed, and those increased costs are passed on to the taxpayers. These purchases included highway equipment installation, unleaded fuel, janitorial, cleaning and court security services, park upgrades, building repairs and tools.
- The Clerk did not properly authorize the Supervisor to pay claims, and the Supervisor did not provide proper oversight of the use of his electronic signature on checks. As a result, there is an increased risk that errors and irregularities could occur and go undetected.
The report includes six recommendations that, if implemented, will improve the Board’s and Town officials’ oversight of claims auditing and payment processes. Town officials disagreed with certain aspects of our findings but indicated they plan to initiate corrective action. Appendix C includes our comments on issues raised in the Town’s response letter.
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 Clerk’s office.