Southold Town needs to improve financial oversight with bidding procedures, payroll record keeping and cash deposits, according to a new state audit.
On Wednesday, state Comptroller Thomas DiNapoli’s office released an audit of the town’s finances between January 2013 through December 2013. The report found the town has failed to solicit bids and needs to improve financial policies and procedures to adequately safeguard monies collected in the Receiver of Taxes, Town Clerk and waste management departments.
“As a result of these deficiencies, there is an increased risk that town money could be lost or misappropriated or errors and irregularities could occur and remain undetected,” the audit states. “The [Town Board] does not have adequate assurance that goods and services are acquired at the best cost.”
[Scroll down to view the complete audit]
The report found the town made over $115,500 in purchases agreements that weren’t properly executed through a bidding process. For example, the town paid nearly $89,000 for police vehicle repairs to two vendors without soliciting other offers, according to the audit.
In the report, auditors noted that while Police Chief Martin Flatley said he maintained those services were exempt from the competitive bidding process and over $26,800 was used to purchase for emergency vehicle items, including lighting and radios, the town should solicit other offers in order to ensure the best cost.
The audit also shows the town authorized $23,000 in payments to an attorney without entering into a written contract.
As for payroll and timekeeping, the audit found the town needs to do a better job making sure current polices are followed.
“Employees were paid without adequate documentation for the hours worked and there was little uniformity in the timekeeping procedures, which could lead to errors or timekeeping abuse,” the audit states. “The [Town Board’s] failure to require all departments to use the system has resulted in employees being paid without adequate documentation for the hours worked.”
The Tax Receiver’s office failed to maintain a running checkbook balance in its accounting records and check disbursements, according to the audit. Adjustments and bank transfers also weren’t accounted for, the report states.
In addition, auditors said employees use the same generic username to document electronic payments electronic, which makes it difficult to hold individuals accountable.
“There is an increased risk that town money could be lost or misappropriated without detection and errors or irregularities could occur and remain undetected,” the audit states.
In the Town Clerk’s office, the audit noted that the timeliness of deposits, daily cash reports and accountability within the department’s financial system were problematic.
“We were unable to verify if more than $1 million received by the Clerk’s office during our audit period was deposited intact and found that the Clerk’s bank balance exceeded the cash receipt records by more than $7,000 as of Dec. 31, 2013,” the report found.
Accounting errors with the waste management department’s transfer station were also included in the audit.
Monies were left unsecured in a mail slot overnight and deposits to accounts receivable weren’t completed in a timely fashion, the report states.
“While accounts receivable adjustments appeared reasonable, there was no indication of prior supervisory approval for the 47 adjustments we reviewed,” auditors wrote. “As a result, there is an increased risk that errors could occur and go undetected.”
Supervisor Scott Russell said in a response attached to the audit that the town will address each concern listed in the audit.
“The Town Board will review existing policies and procedures,” he wrote.
“We welcome these audits,” Mr. Russell later said, on Thursday. ” It gives us an opportunity to run government more efficiently.”
The Town Board is currently drafting a corrective action plan and hopes to have a draft completed within five to six weeks, he said. The town is required to submit the plan to the state within 90 days.