Officials in the city of Amsterdam are unable to properly assess and monitor the city’s financial condition due to inadequate, inaccurate and incomplete accounting records, according to an audit released today by State Comptroller Thomas P. DiNapoli.
Auditors found Amsterdam’s unreserved fund balance fell from $3.4 million in 2007 to $620,000 in 2011, a decrease of 81 percent. The city’s short-term borrowing to cover expenses also increased by more than 250 percent in the last three years.
“City officials are preparing budgets and making financial decisions without accurate information about the city’s finance,” DiNapoli said. “What auditors were able to measure shows a steady decline in the city’s financial condition. If the city’s fiscal outlook is going to improve, it must begin with better planning and an honest conversation about the numbers.”
DiNapoli’s auditors found Amsterdam officials lacked basic accounting records for the city’s cash, assets, outstanding debt and available fund balance. In addition, Amsterdam officials have not filed the city’s 2011-12 or 2012-13 annual financial reports with the Comptroller’s office, which they must do by state law.
Specific areas of concern in regards to inaccurate recordkeeping include:
- Auditors could not verify the accuracy of the city’s reported revenues and that all reported revenues were deposited properly;
- The city’s billed receivables were overstated by $4.4 million in 2012 and $11.1 million in 2013;
- The city’s disbursements exceeded deposits in 2011-12 by $7.6 million and in 2012-13 by $4.2 million; and
- The city understated expenses by $4.2 million in 2011-12 and by $4.5 million in 2012-13.
Auditors found that, from the 2010-11 fiscal year through the 2012-13 fiscal year, the city’s outstanding Bond Anticipation Notes increased by more than 250 percent, from $4.7 million at the beginning in 2010-11 to $16.6 million as of March 31, 2013. The significant increase in short-term debt issuance, particularly to pay for costs that are normally paid through routine budget appropriations, indicates cash flow problems.
DiNapoli recommended the city take immediate steps to improve accounting practices and budget planning, and develop a long-term financial plan.
The Comptroller’s recommendations also call on city officials to:
- Ensure the city’s accounting records for the operating funds and capital projects funds are complete, accurate and maintained in a timely manner;
- Perform complete and accurate monthly bank reconciliations and ensure that any differences disclosed by the reconciliation process are promptly identified and resolved; and
- Prepare and provide adequate monthly financial reports to the city council. The council should use these monthly reports as a means to monitor the city’s financial operations, and to ensure that funds are available and expenditures are kept within the limits of budgetary and project authorizations.
The response from city officials is included in the final audit. For a copy of the report, visit: http://www.osc.state.ny.us/localgov/audits/cities/2014/amsterdam.pdf.
For access to state and local government spending and nearly 50,000 state contracts, visit http://www.openbooknewyork.com/. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.