Town of Allegany · D IVISION OF OCAL OVERNMENT AND S CHOOL A CCOUNTABILITY 55 Compared to the 2014...

Division of LocaL Government & schooL accountabiLity

o f f i c e o f t h e n e w y o r k s t a t e c o m p t r o L L e r

report of ExaminationPeriod Covered:

January 1, 2009 — January 2, 2015

2015M-103

Town of Allegany

Financial Management

thomas p. Dinapoli

Page

AUTHORITY LETTER 1

INTRODUCTION 2 Background 2 Objective 2 Scope and Methodology 2 CommentsofLocalOfficialsandCorrectiveAction 2

FINANCIAL MANAGEMENT 4 Recommendations 5

APPENDIX A ResponseFromLocalOfficials 7 APPENDIX B AuditMethodologyandStandards 9APPENDIX C HowtoObtainAdditionalCopiesoftheReport 10APPENDIX D LocalRegionalOfficeListing 11

Table of Contents

11Division of LocaL Government anD schooL accountabiLity

State of New YorkOffice of the State Comptroller

Division of Local Governmentand School Accountability August2015

DearTownOfficials:

A toppriorityof theOfficeof theStateComptroller is tohelp localgovernmentofficialsmanagegovernment resources efficiently and effectively and, by so doing, provide accountability for taxdollarsspenttosupportgovernmentoperations.TheComptrolleroverseesthefiscalaffairsoflocalgovernmentsstatewide,aswellascompliancewithrelevantstatutesandobservanceofgoodbusinesspractices.Thisfiscaloversightisaccomplished,inpart,throughouraudits,whichidentifyopportunitiesforimprovingoperationsandTownBoardgovernance.Auditsalsocanidentifystrategiestoreducecosts and to strengthen controls intended to safeguard local government assets.

FollowingisareportofourauditoftheTownofAllegany,entitledFinancialManagement.ThisauditwasconductedpursuanttoArticleV,Section1oftheStateConstitutionandtheStateComptroller’sauthorityassetforthinArticle3oftheNewYorkStateGeneralMunicipalLaw.

This audit’s results and recommendations are resources for local government officials to use ineffectivelymanagingoperationsand inmeeting theexpectationsof their constituents. Ifyouhavequestionsaboutthisreport,pleasefeelfreetocontactthelocalregionalofficeforyourcounty,aslistedat the end of this report.

Respectfullysubmitted,

Office of the State ComptrollerDivision of Local Governmentand School Accountability

State of New YorkOffice of the State Comptroller

2 Office Of the New YOrk State cOmptrOller2

Background

Introduction

Objective

Scope andMethodology

Comments ofLocal Officials andCorrective Action

TheTownofAllegany(Town)islocatedinCattaraugusCountyandincludestheVillageofAllegany.TheTowncovers72squaremilesandservesabout8,000residents.TheTownprovidesavarietyofservicestoitsresidents,includinghighwaymaintenanceandimprovements,a justicecourt,waterandsewer,fireprotection,codeenforcement,recreation activities and general government support. The Town’stotal 2015 adopted budget appropriations are approximately $4million,fundedprimarilywithrealpropertyandsalestaxes,userfeesand State aid.

TheTownisgovernedbyanelectedTownBoard(Board),whichiscomposedofaSupervisor(Supervisor)andfourBoardmembers.TheBoard is responsible for the general management and control of the Town’sfinancialaffairs.TheSupervisoristhechiefexecutiveofficerand theTownComptroller (Comptroller)maintains the accountingrecordsandprovidesthefinancialreportstotheBoard.

The objective of our audit was to evaluate the Board’s financialmanagement practices. Our audit addressed the following related question:

• Did the Board adopt realistic budgets and properly monitor actualresultswithintheTown’soperatingfunds?

We examined the Board’s financial management practices for theperiodJanuary1,2009throughJanuary2,2015.

We conducted our audit in accordance with generally accepted governmentauditingstandards(GAGAS).Moreinformationonsuchstandards and the methodology used in performing this audit are includedinAppendixBofthisreport.

The results of our audit and recommendations have been discussed withTownofficialsandtheircomments,whichappearinAppendixA,havebeenconsideredinpreparingthisreport.Townofficialsgenerallyagreedwith our findings and recommendations and indicated theyplan to initiate corrective action.

The Board has the responsibility to initiate corrective action. Awrittencorrectiveactionplan(CAP)thataddressesthefindingsandrecommendations in this report should be prepared and forwarded to ourofficewithin90days,pursuanttoSection35ofGeneralMunicipalLaw.FormoreinformationonpreparingandfilingyourCAP,please


refertoourbrochure,Responding to an OSC Audit Report,whichyoureceived with the draft audit report. We encourage the Board to make thisplanavailableforpublicreviewintheTownClerk’soffice.


Financial Management

The Board is responsible for monitoring financial operations tomaintaintheTown’sfiscalhealth.Suchmonitoringincludesadoptingrealistic budgets and routinely monitoring actual activity against budgeted amounts ensuring appropriations are not over expended,revenues are received as anticipated and fund balance is available. It is also important for theBoard to plan for the future by settingadequatelong-termprioritiesandgoals.Toaddressthisresponsibility,Town officials should develop comprehensive multiyear financialand capital plans to estimate the future costs of ongoing services and future capital needs.

Overall, the Board properly managed the Town’s finances as itgenerally adopted realistic budgets. While the Town’s operatingfunds have not recently experienced any significant year-end fundbalance deficits, the Board could improve its monitoring of theTown’s financial condition, in particular the town-outside-village(TOV)generalandhighwayfunds.1

TOVGeneralFund–During2014, theTown’sTOVgeneral fundincurred an operating surplus of approximately $42,000, primarilydue to the receipt of unplanned building permit revenue. This unanticipated revenue has positively affected the fund, increasingbothfundbalanceandunrestrictedcash.Thefundhadexperiencedunplannedoperatingdeficitsinthreeofthelastsixcompletedfiscalyears.As a result, the additional revenue has improved the fund’sfinancialcondition.

Comparedtothe2014budget, theBoard’s2015budgetanticipatesthat both revenues and expenditures will continue to increase byanadditional$10,000.Thisappearsreasonablebasedontheactualrevenueandexpendituresreportedforthisfundin2014.

TOVHighwayFund–Beginning in2011, theTOVhighway fundrelied on interfund borrowing (between $75,000 and $175,000annually)fromthetown-widegeneralfund.However,theBoardhastaken steps to address this by adopting a more realistically balanced budget in 2014 and realizing additional revenue, primarily due totheincreaseintheamountofsalestaxtheCountydistributestotheTown.Asaresult,thefundrepaidtheinterfundborrowingin2014eliminating the amount owed to the town-wide general fund.

1 TheTOVhighwayfundexperiencedafundbalancedeficittotaling$7,939asofDecember31,2011.


Comparedtothe2014budget, theBoard’s2015budgetanticipatesrevenues will decrease by approximately $20,000 in the TOVhighway fund.TheBoard planned to appropriate $25,000 of fundbalance to cover the decrease. Additionally, while the Board hasrealistically estimated revenues, it has not realistically estimatedexpenditures consistently.As a result, underestimated expenditurescontributedtothefund’spastfinancialconditionissues.However,theBoardincreasedappropriationsto$830,000in2014,whichalignedmorecloselywiththeactualexpendituresof$825,000,resultinginapositivebudgetvarianceofapproximately$5,000.TheBoard’s2015budgetisconsistentwith2014.Asaresult,itappearsthattheBoardhasaddressedpriorbudgetingissues.However,wealsocautiontheBoardandTownofficialsonthelong-termuseoffundbalanceasafinancingsource.

Although the Board has taken positive steps to manage Town’sfinances, we identified the following improvement opportunities,whichcouldhelptofurtherimprovetheTown’sfinancialoperations.

Monthly Financial Reports – Budget status reports serve as an effective tool for the Board to perform its oversight and monitoring functions.However, theBoarddidnot review thebudget-to-actualstatus reports the Comptroller provided. The Comptroller printed one copy of a quarterly budget-to-actual status report and made it available intheTownClerk’sofficeforBoardmemberstoreview.However,we found no evidence in the Board meeting minutes that these reports werereviewedbyBoardmembers.Further,Boardmembersassertedthat the Supervisor and Comptroller reviewed these reports instead oftheBoard.AmonthlyreviewofthebudgetstatusreportsforeachfundwillassisttheBoardinmonitoringandaddressingtheTown’sactualfinancialactivityinatimelymanner.

MultiyearFinancialPlan–AmultiyearfinancialplanallowsTownofficialstomakemoreinformedfinancialdecisionsbasedonfutureneeds.TheBoardhasnotdevelopedamultiyearfinancialplan.Bydeveloping and adopting such a plan, theBoard could continue tostrengthen the overall fiscal stability of both its TOV funds andoverallTownfinances.

TheBoardshould:

1. Aspartof itsofficialmeetings, routinely reviewbudget-to-actual status reports to ensure the timely monitoring of the Town’sfinancialcondition.

2. Developandadoptamultiyearfinancialplan.

Recommendations


TheComptrollershould:

3. Providemonthlybudget-to-actualstatusreportstoeachBoardmember.


APPENDIX A

RESPONSE FROM LOCAL OFFICIALS

Thelocalofficials’responsetothisauditcanbefoundonthefollowingpage.


APPENDIX B

AUDIT METHODOLOGY AND STANDARDS

TheobjectiveofourauditwastoassesstheBoard’sfinancialmanagementpractices.Toaccomplishourauditobjectiveandobtainvalidauditevidence,ourproceduresincludedthefollowing:

• WeinterviewedappropriateTownofficialstogainanunderstandingoftheTown’sfinancialmanagement,thebudgetingprocessandmultiyearplanning.

• We reviewed Board minutes and resolutions regarding financial decisions and budgetmodifications.

• WereviewedtheTown’sadoptedbudgetsfor2009through2015todeterminetheamountoffund balance appropriated.

• WereviewedtheTown’sbudget-to-actualvariancesfor2009through2014.Wealsoreviewedthe2015budgettodetermineifthebudgetsrealisticallyestimatedrevenuesandexpenditures,andifvariancesweresignificant.

• Wereviewedinterfundadvancesandtransfersfor2009through2014.

WeconductedthisperformanceauditinaccordancewithGAGAS.Thosestandardsrequirethatweplanandperform theaudit toobtainsufficient,appropriateevidence toprovidea reasonablebasisforourfindingsandconclusionsbasedonourauditobjective.Webelievethattheevidenceobtainedprovidesareasonablebasisforourfindingsandconclusionsbasedonourauditobjective.


APPENDIX C

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT

OfficeoftheStateComptrollerPublicInformationOffice110StateStreet,15thFloorAlbany,NewYork12236(518)474-4015http://www.osc.state.ny.us/localgov/

Toobtaincopiesofthisreport,writeorvisitourwebpage:


APPENDIX DOFFICE OF THE STATE COMPTROLLER

DIVISION OF LOCAL GOVERNMENTAND SCHOOL ACCOUNTABILITYAndrewA.SanFilippo,ExecutiveDeputyComptroller

GabrielF.Deyo,DeputyComptrollerNathaalieN.Carey,AssistantComptroller

LOCAL REGIONAL OFFICE LISTING

BINGHAMTON REGIONAL OFFICEH.ToddEames,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Suite170244 Hawley StreetBinghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313Email:[email protected]

Serving:Broome,Chenango,Cortland,Delaware,Otsego,Schoharie,Sullivan,Tioga,TompkinsCounties

BUFFALO REGIONAL OFFICEJeffreyD.Mazula,ChiefExaminerOfficeoftheStateComptroller295MainStreet,Suite1032Buffalo,NewYork14203-2510(716)847-3647Fax(716)847-3643Email:[email protected]

Serving:Allegany,Cattaraugus,Chautauqua,Erie,Genesee,Niagara,Orleans,WyomingCounties

GLENS FALLS REGIONAL OFFICEJeffreyP.Leonard,ChiefExaminerOfficeoftheStateComptrollerOneBroadStreetPlazaGlensFalls,NewYork12801-4396(518)793-0057Fax(518)793-5797Email:[email protected]

Serving:Albany,Clinton,Essex,Franklin,Fulton,Hamilton,Montgomery,Rensselaer,Saratoga,Schenectady,Warren,WashingtonCounties

HAUPPAUGE REGIONAL OFFICEIraMcCracken,ChiefExaminerOfficeoftheStateComptrollerNYSOfficeBuilding,Room3A10250VeteransMemorialHighwayHauppauge,NewYork11788-5533(631)952-6534Fax(631)952-6530Email:[email protected]

Serving:NassauandSuffolkCounties

NEWBURGH REGIONAL OFFICETennehBlamah,ChiefExaminerOfficeoftheStateComptroller33AirportCenterDrive,Suite103NewWindsor,NewYork12553-4725(845)567-0858Fax(845)567-0080Email:[email protected]

Serving:Columbia,Dutchess,Greene,Orange,Putnam,Rockland,Ulster,WestchesterCounties

ROCHESTER REGIONAL OFFICEEdwardV.Grant,Jr.,ChiefExaminerOfficeoftheStateComptrollerThePowersBuilding16WestMainStreet,Suite522Rochester,NewYork14614-1608(585)454-2460Fax(585)454-3545Email:[email protected]

Serving:Cayuga,Chemung,Livingston,Monroe,Ontario,Schuyler,Seneca,Steuben,Wayne,YatesCounties

SYRACUSE REGIONAL OFFICERebeccaWilcox,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Room409333E.WashingtonStreetSyracuse,NewYork13202-1428(315)428-4192Fax(315)426-2119Email:[email protected]

Serving:Herkimer,Jefferson,Lewis,Madison,Oneida,Onondaga,Oswego,St.LawrenceCounties

STATEWIDE AUDITSAnnC.Singer,ChiefExaminerStateOfficeBuilding,Suite170244 Hawley Street Binghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313

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