Audit Objective
Did the Town of Denmark (Town) Board (Board) properly audit and approve claims before payment?
Audit Period
January 1, 2024 – January 21, 2026
Understanding the Audit Area
The audit of claims is often the last line of defense in preventing unauthorized, improper or fraudulent claims from being paid. When a town has a strong claims auditing process, the control consciousness of its staff is enhanced because officials and employees are aware that a careful review of claims will occur before public funds are disbursed. Because it is a town board’s responsibility to ensure that tax dollars are spent properly, efficiently and in the best interests of the taxpayers, the town board should conduct a thorough and deliberate audit of claims before directing the town supervisor to pay them.
During the period January 1, 2024, through September 30, 2025, the Town paid 896 claims totaling approximately $4 million from its main operating funds.
Audit Summary
The Board did not properly audit and approve all claims before payment. While the Board approved an abstract (list of claims) for payment each month, it did not conduct a thorough audit of individual claims to determine whether they contained adequate supporting documentation, represented actual and necessary expenditures and were for valid Town purposes. Because the Board did not conduct a thorough audit of claims before approving them for payment, the Town had an increased risk that it could make improper payments, which could remain undetected.
We reviewed 167 claims totaling approximately $1.2 million and identified discrepancies with 105 claims totaling $673,969, which included the following:1
- Department head approval was not documented for 102 claims totaling $608,034. Without these documented approvals, Town officials could not ensure that the Town received the goods and services and that the expenditures were properly authorized.
- Four claims for health insurance premiums totaling $17,141 in our sample were not approved for payment by the Board. Because claims for health insurance premiums were not included on abstracts, the Town Supervisor (Supervisor) paid monthly health insurance invoices totaling $259,109 from January 2024 through September 2025 without Board approval. Therefore, the Board could not ensure the accuracy of these payments and verify that only eligible individuals received coverage.
- Five claims did not have adequate support, such as original receipts or itemized invoices, for expenditures totaling $11,773. During our audit, the Supervisor was able to provide original receipts or other adequate supporting documentation from vendors and a claimant to support four claims totaling $11,743. However, when the Board approves claims without sufficient support, it increases the likelihood that the Town could pay for inappropriate expenditures that are not for Town purposes.
In addition, the Town improperly paid two claims totaling approximately $43,500 for paving materials and renting equipment that was used to pave a parking lot owned by a volunteer fire company (fire company), which is a separate not-for-profit entity. Although the fire company later reimbursed the Town for the cost of the materials and rental services, the fire company did not reimburse the Town for the Town’s highway employee labor costs of approximately $1,500 for paving the parking lot. Because Article VIII, Section 1 of the New York State (NYS) Constitution generally prohibits towns from making gifts or loans to or in aid of a private entity, the Town should not have used town funds and employees to perform paving work for a private entity, such as the fire company.
In October 2025, the Board began taking steps to improve the Town’s claims auditing process. Before approving claims for payment at the October monthly meeting, Board members reviewed the individual claims and signed and dated each claim voucher to document their review and approval.
The report includes four recommendations that, if implemented, will help the Board to continue to improve the Town’s claims auditing process. Town officials generally agreed with our recommendations and have initiated or indicated they plan to initiate corrective action.
This audit was conducted pursuant to Article V, Section 1 of the State Constitution and the Office of the New York State Comptroller’s (OSC’s) authority as set forth in Article 3 of the New York State General Municipal Law (GML). The audit’s 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 OSC within 90 days, pursuant to GML Section 35. For more information on preparing and filing the CAP, please refer to the OSC brochure, Responding to an OSC Audit Report, which was provided with the draft audit report. The Board is encouraged to make the CAP available for public review in the Town Clerk’s office.
1 Some claims contained more than one discrepancy. Refer to Appendix C for further information on our sample selection.