Audit Objective
Did the Village of Asharoken (Village) Board of Trustees (Board) ensure that non-payroll disbursements were properly audited and the Village Treasurer’s (Treasurer) financial duties were monitored?
Audit Period
June 1, 2023 – December 6, 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. When a local government has a strong claims auditing process, the control consciousness of its staff is enhanced because officers and employees are aware that a careful review of claims will occur before public funds are disbursed. Because it is the Board’s responsibility to ensure tax dollars are spent properly, efficiently and in the best interest of taxpayers, the Board should conduct a thorough and deliberate audit of all claims before authorizing a claim to be paid, ensure strong internal controls are established and working as intended and monitor the Treasurer’s financial duties.
During the audit period, the Village processed a total of 685 non-payroll disbursements totaling approximately $2.36 million and performed 78 bank transfers totaling approximately $7.1 million.
Audit Summary
The Board did not always conduct a thorough and deliberate audit of each individual claim for non-payroll disbursements we reviewed because the claims presented for audit did not always include the necessary supporting documentation. As a result, there is an increased risk that the Village may pay more than necessary or that improper claims could be paid without being detected, irregularities could go undetected and unauthorized claims could be paid. The Board’s failure to monitor and review bank reconciliations and bank transfers prepared by the Treasurer and user account activity reports increased the risk of unauthorized or inappropriate transactions going undetected. Furthermore, the Board did not ensure that users did not share access to the financial software. With shared access, accountability is diminished, and any questionable system activity may not be traceable to a specific user.
The Board did not ensure that all non-payroll disbursements were properly audited. We reviewed 232 disbursements totaling $877,625 and although these disbursements were all for valid and appropriate Village purposes, we determined that 51 disbursements totaling $69,707 were not properly audited. These 51 disbursements included 52 discrepancies1 such as invoices and vouchers not attached to claim packets, vouchers missing signatures, late fees, and disbursements missing from listings of claims that had no evidence of being audited by the Board. Additionally, four disbursements to the financial software vendor totaling $2,136 were withdrawn directly from the Village’s bank account by the vendor, of which three of the disbursements totaling $1,539 were not audited by the Board.
In addition, we reviewed all 19 listings of claims, totaling $2.34 million of disbursements, and determined that 18 listings did not include check numbers and check dates. The Board also adopted resolutions to approve disbursements, and all 19 resolutions included the dollar amount. However, 14 of the resolutions did not specify the range of check numbers.
Although the Board provided some compensating controls for the Treasurer’s financial duties, the Board did not adequately monitor the Treasurer’s financial duties by:
- Reviewing bank reconciliations performed by the Treasurer, as required by Village policy,
- Reviewing bank transfers, and
- Ensuring that each financial software user had their own access.
After we brought these matters to the attention of the Mayor, Clerk and Treasurer in August 2024, officials implemented changes to their claims audit process, monitoring disbursements and financial software user account access. However, we subsequently identified ongoing issues such as invoices missing from claims packets, late fees being incurred and paid, and bank reconciliations not being reviewed.
The report includes eight recommendations that, if implemented, will improve the Board’s auditing of claims and oversight of the disbursements process. Village 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 Village’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 (GML). 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 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 Village Clerk’s office.
1 One disbursement totaling $2,000 was repeated in more than one discrepancy category.