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1989-12-31 / r/ uJ'</ U Ie f''/<-- REC~IVED fEB261991 ELAINE. SNOWDEN TOWN CLEFtK TO-WNOFWAPPINGER, NEW YORK FINANCIAL STATEMENTS AND OTHER SUPPLEMENTAL :INFORMATION AS OF ANCFOR THE YEAR ENDED DECEMBER 31,1989 L ~. L. TOWN OF WAPPINGER, NEW YORK TABLE OF CONTENTS DECEMBER 31, 1989 L L L L L L Independent Auditor's Report Independent Auditor's Report on Internal Control Structure Related Matters Noted in a Financial Statement Audit Conducted in Accordance With Government Auditing Standards Independent Auditor's Report on Compliance With Laws and Regulations Based on an Audit of General Purpose Financial Statements Performed in Accordance With Government Auditing Standards by the GAO General Purpose Financial Statements Combined Balance Sheets - All Fund Types and Account Groups Combined Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental Fund Types and Expendable Trust Funds Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - (Budgetary & Basis) General and Special Revenue Funds Combined Statement of Revenues, Expenses and Changes in Retained Earnings, All Proprietary Fund Types Combined Statement of Changes in Financial Position All Proprietary Fund Types Notes to the Financial Statements Other Supplemental Information Independent Auditor's Report on Schedule of Federal Financial Assistance Schedule of Federal Financial Assistance Independent Auditor's Report on Internal Controls (Accounting and Administrative) - Based on a Study and Evaluation Made as a Part of an Audit of the General Purpose or Basic Financial Statements and the Additional Tests Required by the Single Audit Act Independent Auditor's Single Audit Report on Compliance With Requirements Applicable to Nonmajor Federal Financial Assistance Program Transactions Schedule of Findings and Questioned Costs Findings and Recommendations Response to Findings \ .. l L l L 1 .. l L l L L Paae 1 2-4 5 6-7 8-9 1 0-11 12 13 14-26 27 28-29 30-32 33 34-35 36-40 41-42 ~ J J J J J j J j J.. ;,' ,I . J :. . J J J ~ ~ J L L L Sedore, O'Sullivan &Zetterio } L. Certified Public Accountants, Pc. i L INDEPENDENT AUDITOR'S REPORT L L To the Supervisor and Members of the Town Board Town of Wappinger, New York I .. We have audited the accompanying general purpose financial statements of Town of Wappinger, New York as of December 31, 1989, and for the year then ended. These general purpose financial statements are the responsibility of Town of Wappinger, New York management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of Town of Wappinger, New York as of December 31, 1989, and the results of its operations and changes in financial position of its proprietary and similar trust fund types for the year then ended in conformity with generally accepted accounting principles. l L L l 1.. , l A, ~:J~~ .../~ i'J1'.JS I!~. l L l Wappingers Falls, N. Y. July 16, 1990, except Note K, dated January 30, 1991 L L A62 East Main St.. P. 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -1- ft291 Main St. Beacon, NY 12508 914-831-0542 J J J J .,J II J J j ~ j J J J J J J J .. . J L l L L L Sedore, O'Sullivan &J'Letterio Certified Public Accountants, Pc. I .. INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS L To the Supervisor and Members of the Town Board Town of Wappinger, New York L We have audited the financial statements of Town of Wappinger, New York as of and for the year ended December 31, 1989 and have issued our report thereon dated July 16, 1990. ... L L L L We conducted our audit in accordance with generally accepted auditing standards and Government Auditinq Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. In planning and performing our audit of the financial statements of Town of Wappinger, New York for the year ended December 31, 1989, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure. L The management of Town of Wappinger, New York is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of poliCies and procedures may deteriorate. L L l i L. P62 East Main St.. P. 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -2- 4291 Main St. Beacon, NY 12508 914-831-0542 L -3- J J . .- J J J ~ j J J J J J J J J J J J For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: Accounting Controls Cycles of the entities' activity. Treasury or financing. Revenue/receipts. Purchases/disbursements. External financial reporting. Financial statement captions Cash and cash equivalents. Receivables. Property and equipment. Payables and accrued liabilities. Debt. Fund balance. Accounting applications Billings. Receivables. Purchasing and receiving. Cash disbursements. Payroll. Property and equipment. General ledger. For all of the control categories listed above, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk. Our consideration of the internal controls structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as defined above. However, we noted a certain matter involving the internal control structure and its operation that we have reported to the management of Town of Wappinger, New York in the findings and recommendations. L L L L L L L This report is intended for the information of the Supervisor, Town Board, Audit Committee, and Management. This restriction is not intended to limit the distribution of this report, which is a matter of public record. A tJ'.4~~ ""/~ ('J/J.II., I?~. Wappingers Falls, New York July 16, 1990, except Note K, dated January 30, 1991 L l l l L l L l L L L l -4- J J J J J J J J J J J J J J J J J J J L L Sedore, O'Sullivan ffi'Letterio ~ L L L L Certified Public Accountants. Pc. INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ISSUED BY THE GAO i i.. To the Supervisor and Members of the Town Board Town of Wappinger, New York We have audited the financial statements of Town of Wappinger, New York as of and for the year ended December 31, 1989, and have issued our report thereon dated July 16, 1990. L l L L L L L L L We conducted our audit in accordance with generally accepted auditing standards and Government Auditino Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts and grants applicable to Town of Wappinger, New York is the responsibility of the Town of Wappinger's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Town of Wappinger's compliance with certain provisions of laws, regulations, contracts and grants. However, it should be noted that our objective was not to provide an opinion on overall compliance with such provisions. The results of our test indicate that, with respect to the items tested, Town of Wappinger complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that Town of Wappinger had not complied, in all material respects, with those provisions. . This report is intended for the information of the Supervisor, Town Board, Audit Committee and Management. This restriction is not intended to limit the distribution of this report, which is a matter of public record. dltI~ tP:t~....., ",/~ ~'A~ /!e.. Wappingers Falls, New York July 16, 1990, except Note K, dated January 30, 1991 l L ~ ~62 East Main St.. P. 0. Box 918 Wappingers Falls. NY 12590 914-297-1111 -5- 4291 Main St. Beacon. NY 12508 914-831-0542 TOWN OF WAPPINGER, NEW YORK COMBINED BALANCE SHEETS ALL FUND TYPES AND ACCOUNT GROUPS FOR THE YEAR ENDED DECEMBER 31, 1989 Liabilities Accounts Payable $ 180,958 $ Retainage Accrued Expenses and Compensated Absences . Note A 7 Due to Other Funds - Note B Due to Other Goverment Advances From Other Funds - Note C Agency Liabilities Serial Bonds Payable - Note A 1 0 and F Capital Leases Payable . Note I Total liabilities 180,958 Fund Equity Investment in General Fixed Assets Retained Earnings Designated Undesignated Fund Balance Reserved for Advances Designated - Note A.11 Undesignated Total Fund Equity Total Liabilities and Fund Equity Assets Cash - Note A6 and A11 Other Receivable (Net) State and Federal Receivables Due From Other Funds- Note B Advances to Other Funds - Note C Property, Plant and Equipment- Note A3, 0 and E Net of Accumulated Depreciation Amounts to be Provided in Future Budgets Total Assets Governmental Fund Types General Special Revenue Debt Service $ 1,778,635 $ 116,247 $ 59,575 88,177 51,318 44,715 123,234 $ 2,094,336 $ 167,565 1 ,793 $ 44,715 31,588 78,096 123,234 74,361 1,715,783 1,913,378 46,575 42,894 89,469 $ 2,094,336 $ 167,565 The accompanying notes are an integral part of these statements. -6- Capital Projects J J J J J J J .t J J J J J J J J J J J $ 5,476 $ 5,476 $ 25,081 27,646 52,727 (47,251) (47,251 ) $ 5,476 l L L L Proprietary Fiducary Fund Types Fund Types Account Goups Total General Trust General Long-Term (Memorandum) L Enterprise And Aaency Fixed Assets Debt Only) $ 844,111 $ 363,416 $ $ $ 3,107,885 L 324,414 383,989 139,495 44,715 f 123,234 .. 6,557,420 6,557,420 t 7,864,615 7,864,615 .. 2,161,712 2,161,712 $ 9,033,140 $ 363,416 $ 6,557,420 $ 2,161,712 $ 20,383,065 L $ 154,370 $ $ $ $ 337,121 L 25,081 44,208 179,661 223,869 L 44,715 50,000 50,000 64,000 123,234 186,538 186,538 l 4,783,200 1,968,800 6,752,000 13,251 13,251 L 5,095,778 186,538 2,161,712 7,755,809 L 6,557,420 6,557,420 252,956 252,956 l 3,684,406 3,684,406 123,234 L 176,878 297,814 1,711,426 3,937,362 176,878 6,557,420 12,627,256 l $ 9,033,140 $ 363,416 $ 6,557,420 $ 2,161,712 $ 20,383,065 L L -7- Governmental Fund Types Special Debt Revenue Service J J J J J J J ~ J J J J J J J J i J J TOWN OF WAPPINGER, NEW YORK COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS FOR THE YEAR ENDED DECEMBER 31, 1989 Revenues Real Property Taxes Real Property Tax Items Non-Property Tax Items Departmental Income Uses of Money and Property Licenses and Permits Fines and Forfeitures Sales of Property and Compensation for Loss Miscellaneous Local Sources State Aid Federal Aid Total Revenues Expenditures General Government Support Public Safety Transportation Economic Assistance and Opportunity Culture and Recreation Home and Community Service Employee Benefits Debt Service Total Expenditures General $ 2.623,762 $ 47,706 59,614 129.355 157,528 46.671 104,344 20,523 14,932 970,904 9,756 4,185.095 1 ,155,136 152,834 1,345,588 177,793 200,397 285,194 370,638 450,750 4,138.330 Excess of Revenues Over (Under) Expenditures 46,765 Other Financing Sources (Uses) Operating Transfers In 26,834 Operating Transfers Out Total Other Financing Sources (Uses) 26.834 Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses 73,599 Fund Balance, Beginning of Year 1,839,779 Fund Balance, End of Year $ 1,913.378 $ Capital Proiects 27,575 $ $ 6,242 1,020 1,192 49,403 83,220 1,020 1,192 6,358 21,512 19,164 23,880 70,914 12,306 1,020 1,192 (61,462) (61,462) 12,306 77,163 (60,442) 1,192 60,442 (48,443) $ (47,251) 89,469 $ The accompanying notes are an integral part of these statements. -8- J J J J J' .i\ J J .s J J J J J J J J , II J J TOWN OF WAPPINGER, NEW YORK COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET & ACTUAL (BUDGETARY BASIS) GENERAL & SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 1989 Governmental Fund Tvpes Variance - Favorable Budaet Actual (Unfavorable) Revenues Real Property Taxes $ 2,623,757 $ 2,623,762 $ 5 Real Property Tax Items 36,000 47,706 11 ,706 Non-Property Tax Items 45,000 59,614 14,614 Departmental Income 64,800 129,355 64,555 Uses of Money and Property 96,000 157,528 61,528 Licenses and Permits 59,595 46,671 (12,924) Fines and Forfeitures 62,000 104,344 42,344 Sales of Property and Compensation for Loss 20,523 20,523 Miscellaneous Local Sources 3,015 14,932 11,917 State Aid 795,426 970,904 175,478 Federal Aid 9,756 9,756 Total Revenues 3,785,593 4,185,095 399,502 Expenditures General Government 1,168,982 1,155,136 13,846 Public Safety 174,473 152,834 21,639 Transportation 1,609,993 1,345,588 264,405 Economic Assistance and Opportunity 165,551 177,793 (12,242) Culture and Recreation 215,274 200,397 14,877 Home and Community Service 338,894 285,194 53,700 Employee Benefits 468,026 370,638 97,388 Debt Service 441,511 450,750 (9,239) Total Expenditures 4,582,704 4,138,330 444,374 Excess of Revenues Over (Under) Expenditures (797,111) 46,765 843,876 Other Financing Sources (Uses) Proceeds From Obligations Operating Transfers In 26,834 26,834 Operating Transfers Out Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses $ (797,111) 73,599 $ 870,710 Fund Balance, Beginning of Year, Budgetary Basis 1,839,779 Fund Balance, End of Year, Budgetary Basis 1,913,378 Reconciliation to GAAP Basis Addition of Expenditures Not Budgeted Fund Balance, End of Year, $ 1,913.378 The accompanying notes are an integral part of these statements. -10- J J J J J J J J J J J J J J J J J J J L L TOWN OF WAPPINGER, NEW YORK COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS ALL PROPRIETARY FUND TYPES FOR THE YEAR ENDED DECEMBER 31, 1989 L L L Operating Revenues Current Use Charges Other Proprietary Fund Type Enterprise l .. $ 929,929 25,979 L l L L L l L L L L L L l Total Operating Revenues 955,908 Operating Expenses Administration Contracted Services Depreciation Expenses 150,228 1,218,785 319,898 Total Operating Expenses 1,688,911 Operating Income (Loss) (733,003) Non-Operating Revenues (Expenses) Real Property Taxes State Aid Interest Interfund Transfer - Debt Service Fund Interest Expense Settlement of Consent Judgment 617,489 97,634 58,201 35,945 (229,673) (50,000) 529,596 (203,407) 4,140,769 $ 3,937,362 Total Non-Operating Revenues (Expenses) Net Losses Retained Earnings - Beginning of Year Retained Earnings - End of Year The accompanying notes are an integral part of these statements. -12- J J J J J J J ~ J J J J J J J J J J J L L L L L l L L L L L L L L L L TOWN OF WAPPINGER, NEW YORK COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION ALL PROPRIETARY FUND TYPES FOR THE YEAR ENDED DECEMBER 31, 1989 Sources of Working Capital From Operations Net Loss Charges to Operations Not Using Working Capital - Depreciation Working Capital Provided From Operations Dispostion of Fixed Assets Advance to Other Funds Increase In Working Capital Proprietary Fund Type Enterprise Total Resources Provided $ (203,407) 319,898 116,491 3,904 64,000 82,455 266,850 Application of Working Capital Current Maturities Long-Term Debt 266,850 Total Resources Applied $ 266,850 Changes In Components of Working Capital Increase (Decrease) In Current Assets Cash Accounts Receivable $ (22,981) 12,1 08 (10,873) Increase (Decrease) In Current liabilities Accounts Payable Accrued Expenses Due To Other Funds 143,561 (6,249) (65,730) 71 ,582 \ .. Increase (Decrease) In Working Capital $ 82,455 l L -13- J J J J J J J J J J J J J J J J J J J L L TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 1989 l L L NOTE A - Summary of Accounting Policies The Town of Wappinger, New York ("the Town") was incorporated in May 20, 1875, under the provisions of the State of New York. The Town operates under a Town Board form of government consisting of a Supervisor and four Councilmen. The Supervisor serves as the Chief Executive Officer and as Chief Fiscal Officer of the Town. " L. l The Town provides the following services: highway maintenance, water, sewer, planning, zoning, building and safety inspection, lighting, culture and recreation. The financial statements of the Town have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing ~overnmental accounting and financial reporting principles. , L L l l L L L l L 1. The Reporting Entity The Town, for financial purposes, includes all of the funds and account groups relevant to the operations of the Town of Wappinger. The financial statements include organizations, functions and activities that are controlled by or dependent upon the Town. Control or dependence is determined on the basis of budget adoption, taxing authority, funding and appointment of the respective governing board. 2. Fund Accounting The accounts of the Town are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts which are comprised of each fund's assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated to and for individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into three broad fund categories and six generic fund types as follows: , .. Governmental Fund Types General Fund The General Fund is the general operating fund of the Town. It is used to account for all financial resources except those required to be accounted for in another fund. L l -14- -15- J J J J J J J J J J J J j J j j J J J Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than special assessments, expendable trust or major capital projects) that are legally restricted to expenditures for specified purposes. Debt Service Fund Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt, principal, interest and related costs. Capital Project Funds These funds are used to account for financial resources to be used for the acquisition and construction of major capital facilities (other than those financed by proprietary funds). Proprietary Fund Types Enterprise Funds Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and or net income is appropriate for capital maintenance, public policy, management control, accountablity or other purposes. Fiduciary Fund Types Trust and Agency Funds Trust and Agency Funds are used to account for assets held by the Town in a trustee capacity or as an agent for individuals, other governments and/or other funds. These include Expendable Trust and Agency Funds. Expendable Trusts are accounted for in essentially the same manner as governmental funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. L L L L L L L L l L L L L l L L 3. Property, Plant and Equipment and Long-Term Liabilities The accounting and reporting treatment applied to property, plant and equipment and long-term liabilities associated with a fund are determined by its measurement focus. All governmental fund types are accounted for on a spending "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources". Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Property, plant and equipment used in governmental fund type operations are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. No depreciation has been provided on such property, plant and equipment. All property, plant and equipment are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated property, plant and equipment are valued at their estimated fair value on the date donated. The Town has adopted the accounting policy of not capitalizing "infrastructure" general fixed assets (roads, bridges, curbs and gutters, streets and sidewalks, drainage system, lighting systems and similar assets that are immovable and of value only to the Town). Long-term liabilities expected to be financed from governmental fund types are accounted for in the General Long-Term Debt Account Group, not in the governmental funds. The two account groups are not "funds". They are concerned only with the measurement of financial position. They are not involved with measurement of results of operations. Special reporting treatments are also applied to governmental fund inventories and prepaid expenses to indicate that they do not represent "available spendable resources", even though they are a component of net current assets. Such amounts are generally offset by fund balance reserve accounts. a .. L l -16- -17- J J ~ J J J i J ~ J J J ~ J J J ~ J J Because of their spending measurement focus, expenditure recognition for governmental fund types is limited to exclude amounts represented by non-current liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. They are instead reported as liabilities in the General Long-Term Debt Account Group. All proprietary funds are accounted for on a cost of services or "capital maintencance" measurement focus. This means that all assets and liabilities (whether current or non-current) associated with their activity are included on their balance sheets. Their report fund equity (net total assets) is segregated into contributed capital and retained earings components. Depreciation is provided in the enterprise funds in amounts sufficient to relate the cost of the depreciable assets, to operations over their estimated service lives on the straight-line basis. 4. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. All governmental and expendable trust funds are accounted for using the modified accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. All major revenues are susceptible to accrual. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include: (1) accumulated unpaid vacation, sick pay, and other employee amounts which are not accrued and (2) principal and interest on general long-term debt which is recognized when due. All proprietary funds are accounted for using the accrual basis of accounting. Their revenues are recognized when they are earned, and their expenses are recognized when they are incurred. Unbilled utility services receivables of the Water and Sewer Funds are recorded at year end. L L l L L L l L l l L L L L L l 5. Budgets The Town employs a formal budgetary accounting as a management tool. During the year a budget was adopted and modified by the Town Board for the General Fund, Enterprise Fund and the Lighting District of the Special Revenue Fund. Budgetary controls were not established or adopted for the Capital Projects or the other Special Revenue Funds. The Town has not established an encumbrance system to account for obligations resulting from approved commitments. Unused appropriations of the annually budgeted funds lapse at the end of the year. 6. Cash and Investments Cash includes amounts in demand deposits as well as short-term investments. State statutes govern the investment policies of the Town. Special time deposits and certificates of deposits not covered by Federal Deposit Insurance must be collateralized by the banking institutions with investments governed under state statutes. 7. Accumulated Compensated Absences Vacation, sick days and personal days are accumulated at an individual rate for employees of the Highway Department. Other Town employees accrue a maximum of five days of compensated absences. The Town accrues a liability for compensated absences which meet the following criteria: 1. The Town's obligations relating to employees' rights to receive compensation for future absences is attributable to employees' services already rendered. 2. The obligation relates to rights that vest or accumulate. 3. Payment of the compensation is probable. 4. The amount can be reasonably estimated. In accordance with the above criteria, the Town has accrued a liability for vacation and sick pay which has been earned but not taken by Town employees. For governmental funds, the liability for compensated absences is recorded in the general long-term debt account group as it is anticipated that none of the liabilities will be liquidated with expendable available financial resources. " iw L L -18- -19- ,j I ~. II , II' :,~' ,- j .,J . I I J J j .I J J J j ~ J J 8. Pension Plans The Town employees are covered by the New York Employees' Retirement System. Membership is mandatory for certain employees and optional for others. In accordance with the Retirement and Social Security Law, a participating employer cannot withhold membership in the Retirement System from any employee who desires to join. All paid policemen and firemen are mandatory members. All general employees employed in a full-time position who commenced employment after July 26, 1976 are mandatory members. A full-time position is one in which the employment is on a 12-month per year basis with a working week of not less than 30 hours and the appointment is not temporary or limited to a temporary period of less than one year. Generally, all employees appointed to either a competitive class position or a non- competitive class position before July 27, 1976 are also mandatory members. However, there are some exceptions. If you are not certain of the applicability of the mandatory membership provisions to any particular position, you should provide us with a description of the position and we will make that determination for you. Annual deficiency contributions for all employers account for less than 1/2% of the total contributions made to the Systems. 9. Property Taxes The Town submits an approved budget to the County Commissioner of Finance by December 5th of the previous year. The County then establishes the warrant for the year. The Town collects the taxes on behalf of the Town and County through August 31 st. The Town's portion of the taxes is recognized and transferred prior to the County's portion, therefore, the Town receives its entire tax, leaving the unpaids to the County Commissioner of Finance. 10. Long-Term Obligations Long-term debt is recognized as a liability of a governmental fund when due, or when resources have been accumulated in the debt service fund for payment early in the following year. For other long-term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. The remaining portion of such obligations is reported in the General Long-Term Debt Account Group. Long-term liabilities expected to be financed from proprietary fund operations are accounted for in those funds. L L L L L L l L L L L l L L l L L L L 11. Designation of Fund Equity The Town records indicate that a portion of the fund equity is legally segregated for a specific future use. The following details the description and amounts of all reserves used by the Town: Balance At December 31, 1989 A. General Fund Designated for principle and interest on bonded indebtedness $ 74,361 B. Special Revenue Fund Designated for Federal Revenue Sharing $ 46,575 C. Enterprise Fund Designated for principle and interest on bond indebtedness $ 252,956 D. Fiduciary Fund Designated for Parklands Deposit Trust $ 176,878 12. Allowance for Uncollectible Accounts Allowance for uncollectible accounts are not reflected in the Enterprise Fund. Past due accounts after one year are placed on the county tax roles for collection and reimbursed to the Town as they are put on the tax roles by the County. 13. Total Columns on Combined Statements Total columns on the Combined Statements - Overview are captioned "memorandum only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Such data is not comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. -20- NOTE B - Interfund Receivables and Payables The following is a summary of amounts due from and due to other funds as of December 31, 1989: Due To Due From General Fund Special Revenue Fund Total $ 44,715 $ 44,715 $ 44,715 $ 44,715 NOTE C - Interfund Advances The following is a summary of advances from and to other funds as of December 31, 1989: Advances From Advances To General Fund Special Revenue Fund Capital Projects Fund Enterprise Fund Total $ 123,234 $ 31,588 27,646 64,000 $ 123,234 $ 123,234 NOTE D - Proprietary Fund Property, Plant and Equipment The following is a summary of the property, plant and equipment of the Enterprise Funds at December 31, 1989: Water Sewer Districts Districts Total Utility Plants and Equipment $ 4,371,864 $ 9,186,931 $ 13,558,795 Accumulated Depreciation 1,550,344 4,143,836 5,694,180 Total $ 2,821,520 $ 5,043,095 $ 7,864,615 -21- 4 II ~ j ~ j j J I I J J J J :I .' j J j I 51 . l L l L L t ... NOTE E - General Fixed Assets Account Group The following is a summary of changes in the General Fixed Assets Account Group: Balance Balance December 31, December 31, 1988 Additions Deletions 1989 Land $ 741,022 $ $ $ 741,022 Buildings 1,673,105 1,673,105 Improvement Other Than Buildings 2,612,912 27,369 2,640,281 Machinery and Equipment 1,309,593 194,419 1,000 1,503,012 Total $ 6,336,632 $ 221 ,788 $ 1,000 $ 6,557,420 l ;l L'" I: L L L L L l L L L l -22- NOTE F - Serial Bonds Payable and General Long-Term Debt Account Group The Serial Bonds Payable and General Long-Term Debt as of December 31, 1989 follows: Original Issue Interest Amount Purpose Date Rate Of Issue Water $ 66,000 Sewer 104,000 Drainage 1,125,000 09-01-71 5.0 1.295.000 Water 36,800 Sewer 55,200 02-15-73 5.0 92,000 Water 400,000 Sewer 500,000 Drainage 375,000 03-01-74 5.8 1.275,000 Water 2,630,000 Sewer 3,005,000 Drainage 400,000 05-01- 77 5.375 6.035.000 Water 330,000 Sewer 222.000 Drainage 239.400 05-01- 78 6.10 791.400 Water 148.070 Sewer 362.000 Machinery & Equipment 138,571 Town Hall 700,000 12-01-85 7.75 1,348.641 Water 364,500 Town Hall, Re-evaluation 377,000 Machinery & Equipment 203,000 05-01-87 6.3 944.500 Totals $ 11.781.541 -23- j J ~ J ~. . . .. IJ . t J J J J j J j J J ~ j L L l L L Amount Proprietary Long-Term Outstanding at December 31. 1989 Fund Debt GrouD L $ 26,000 $ 26,000 $ 40,000 40,000 434,000 434,000 l 500,000 l 16,800 16,800 25.200 25,200 42.000 l 220,000 220,000 268,400 268,400 201.600 201,600 l 690.000 1,473,000 1,473,000 L 1,680,000 1,680,000 222.000 222,000 L 3,375,000 168,750 168,750 113,550 113,550 L 122.700 122,700 405.000 L 123,600 123,600 302,200 302,200 30,000 30,000 L 584.200 584,200 1.040.000 L 325,700 325,700 195,000 195,000 179.300 179,300 , 700,000 L $ 6.752.000 $ 4,783,200 $ 1,968.800 L L -24- NOTE F - Serial Bonds Payable and General Long-Term Debt Account Group (Cont'd) The annual requirements to amortize bonded debt as of December 31, 1989 follows: Year Ending December 31 Principal Interest Totals 1990 $ 563,000 $ 381,224 $ 944,224 1991 558,000 348,035 906,035 1992 453,000 318,542 771,542 1993 468,000 291,910 759,910 1994 473,000 264,664 737,664 1995-1999 2,345,000 728,901 3,073,901 2000-2004 1,817,000 299,512 2,116,512 Thereafter 75,000 2,906 77,906 Total $ 6,752,000 $ 2,635,694 $ 9,387 ,694 NOTE G - Report Classification Certain previously reported amounts have been reclassified to conform to 1989 report classifications. NOTE H - Operati ng Leases The Town is committed under various leases for office equipment and communication equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended December 31, 1989 amounted to $32,232. There are no future minimum lease payments due at the expiration of all leases at the end of the year. NOTE I - Capital Lease The Town has entered into a lease agreement as lessee for financing the acquisition of equipment for its highway department. This lease agreement qualifies as a capital lease for accounting purposes (bargain purchase) and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of inception. The equipment is recorded in the General Fixed Asset Group of Accounts at $37,800. -25- J J J J ~ I;" .1:., ~ .t J J J J J J j J ~ ~ j,l . l l NOTE I - Capital Lease (Cont'd) L L L L The following is a schedule of the future minimum lease payments udner this lease, and the present value of the net minimum lease payments at December 31, 1989: General Long-Term Debt Fiscal Year Ending December 31 1990 1991 $ 11 ,093 2,773 13,866 615 L. Total Minimum Lease Payments Less: Amount Representing Interest Present Value of Future Minimum Lease Payments $ 13,251 L l L l l L l L L l L l NOTE J - Contingent Liabilities The Town is a defendant in various lawsuits and tax certiorari cases. The outcome of these cases and lawsuits are not presently determinable. The Town has received or is owed amounts from grantor agencies, principally the Department of Housing and Urban Development. Any allowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time. NOTE K - Subsequent Events According to the Town Attorney, the Town of Wappinger has entered into a consent decree with the Department of Environmental Conservation of the State of New York, in full satisfaction of accumulated penalties that have accrued against the Town. These penalties were implied because the Town had not met various prescribed deadlines for certain remedial and corrective actions to the sewage treatment plant serving Sewer Improvement Area No.1. In their letter dated January 11, 1991 the D.E.C. confirmed that they will accept a sum of $50,000.00, assuming the Town complies with certain revised deadlines. Also, the Town Attorney has advised that the Town Board will pay this fine and comply with the new deadlines. NOTE L - Legal Compliance The Town expenditures exceeded appropriations in various areas during the year. The Town failed to bid contracts for various goods and services. -26- J J J i'. ;;. ~ ~ J 1. II J J J J J J , J ~ J ~. . l L L L L L L. L L L L L L L l L L L l OTHER SUPPLEMENTAL INFORMATION J ~ J ~ J I," r- J I J J J J J J , J J t .- J L L L L L L L L L L L L L L L L L l Sedore, O'Sullivan ~Letterio Certified Public Accountants. Pc. INDEPENDENT AUDITOR'S REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE To the Supervisor and Members of the Town Board Town of Wappinger, New York We have audited the general purpose financial statements of Town of Wappinger, New York for the year ended December 31, 1989, and have issued our report thereon dated July 16, 1990. These general purpose financial statements are the responsibility of Town of Wappinger, New York management. Our responsibility is to express an opinion on these general purposed financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditin Standards, issued by the Comptroller General of the United tates. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit in accordance with these standards includes, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was made for the purpose of forming an opinion on the general purpose financial statements of the Town of Wappinger taken as a whole. The accompanying schedule of federal assistance is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. The information in that schedule has been subjected to the accounting procedures applied in the audit of the general purpose financial statements, and in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. ~, tJ'.LI.U'~-.-v II' /~ I'JJJA~ /!t!., Wappingers Falls, New York July 16, 1990, except Note K, dated January 30,1991 l ~62 East Main St.. P. 0. Box 918 Wappingers Falls. NY 12590 914-297-1111 ft291 Main St. Beacon. NY 12508 914-831-0542 . . -27- Proaram Name CFDA Number Grantor ~ ~ J j , II J t . . J J J J J J j J I j . . TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE FOR THE YEAR ENDED DECEMBER 31, 1989 Town Hall Housing Rehabilitaion 14.218 U.S. Department of Housing and Urban Development Hilitop Aquifer Development 14.218 U.S. Department of Housing and Urban Development Master Plan Zoning Ordinance 14.218 U.S. Department of Housing and Urban Development Senior Citizens' Program 21.300 U.S. Department of Housing and Urban Development See accompanying Accountant's Report -28- L L L L l l L L L l l L L L l l L L Revenues December 31, 1989 Expenditures December 31, 1989 $ 14,367 $ 14.367 L 6,358 23,881 19.165 6,358 23.881 19,165 -29- J ~ ~ ~ ~ I -i. . J J J J J cd . J J J II 11 . J L , L Sedore, O'Sullivan &J'Letterio , L ! L Certified Public Accountants, Pc. L INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROLS (ACCOUNTING AND ADMINISTRATIVE) - BASED ON A STUDY AND EVALUATION MADE AS A PART OF AN AUDIT OF THE GENERAL PURPOSE OR BASIC FINANCIAL STATEMENTS AND THE ADDITIONAL TESTS REQUIRED BY THE SINGLE AUDIT ACT L L L L L L L L L L L l To the Supervisor and Members of the Town Board Town of Wappinger, New York We have audited the general purpose financial statements of Town of Wappinger, New York for the year ended December 31, 1989, and have issued our report thereon dated July 16, 1990. As part of our audit, we made a study and evaluation of the internal control systems, including applicable internal administrative controls, used in administering federal financial assistance programs to the extent we considered necessary to evaluate the systems as required by generally accepted auditing standards, Government Auditino Standards, issued by the Comptroller General of the United States, the Single Audit Act of 1984, and the provisions of OMB Circular A-128, "Audits of State and Local Governments." For the purpose of this report, we have classified the significant internal accounting and administrative controls used in administering federal financial assistance programs in the following categories: Accounting Controls Cycles of the entities' activity. Treasury or financing. Revenue/receipts. Purchases/disbursements. External financial reporting. Financial statement captions Cash and cash equivalents. Receivables. Property and equipment. Payables and accrued liabilities. Debt. Fund balance. I .. PS2 East Main St., P. 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -30- A291 Main St. Beacon, NY 12508 914-831-0542 L. -31- J J J J J J J J J J J J J J J J J ~ ~ Accounting applications Billings. Receivables. Purchasing and receiving. Cash disbursements. Payroll. Property and equipment. General ledger. General Requirements Political activity. Davis-Bacon Act. Civil rights. Cash management. Federal financial reports. Specific Requirements Types of services allowed or not allowed. Eligibility. Monitoring subrecipients. The management of Town of Wappinger, New York is responsible for establishing and maintaining internal control systems used in administering federal financial assistance programs. In fulfilling that responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control systems used in administering federal financial assistance programs are to provide management with reasonable, but not absolute, assurance that, with respect to federal financial assistance programs, resource use is consistent with laws, regulations, and policies; resources are safeguarded against waste, loss, and misuse; and reliable data are obtained, maintained, and fairly disclosed in reports. Because of inherent limitations in any system of internal accounting and administrative controls used in administering federal financial assistance programs, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the systems to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Our study included all of the applicable control categories listed in the first paragraph. During the year ended December 31, 1989, Town of Wappinger, New York had no major federal financial assistance programs and expended 96% of the following nonmajor federal financial assistance programs: Community Development Block Grant Entitlement Program and Federal Revenue Sharing. With respect to internal control systems used in administering these nonmajor federal financial assistance programs, our study and evaluations included considering: the types of errors and irregularities that could occur determining the internal control procedures that should prevent or detect such errors and irregularities, determining whether the necessary procedures are prescribed and are being followed satisfactorily, and evaluating any weaknesses. With respect to the internal control systems used solely in administering the nonmajor federal financial assistance programs of Town of Wappinger, New York, our study and evaluation was limited to a preliminary review of the systems to obtain an understanding of the control environment and the flow of transactions throughout the accounting system. Our study and evaluation of the internal control systems used solely in administering the nonmajor federal financial assistance programs of Town of Wappinger, New York did not extend beyond this preliminary review phase. L l L L L L I I. Our study and evaluation was more limited than would be necessary to express an opinion on the internal control systems used in administering the financial assistance programs of Town of Wappinger, New York. Accordingly, we do not express an opinion on the internal control systems used in administering the major federal financial assistance programs of Town of Wappinger, New York. Also, our audit, made in accordance with the standards mentioned in the first paragraph, would not necessarily disclose material weaknesses in the internal control systems used solely in administering non major federal financial assistance programs. However, our study and evaluation and our audit disclosed the following condition that we believe results in more than a relatively low risk that errors or irregularities in amounts that would be material to a federal financial assistance program may occur and not be detected within a timely period. The Town failed to monitor the activities of the subrecipients. These conditions were considered in determining the nature, timing, and extent of the audit tests to be applied in (1) our audit of the 1989 general purpose financial statements and (2) our audit and review of the Town's compliance with laws and regulations, noncompliance with which we believe could have a material effect of the allowability of program expenditures for each major federal financial assistance program nonmajor federal financial assistance program. This report does not affect our reports on the general purpose financial statements and on the Town's compliance with laws and regulations dated. This report is intended solely for the use of management and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which, upon acceptance by Town of Wappinger, New York, is a matter of public record. L L L L L L L L L .J}h, tJ'.J..d~~ t1'/~ fJl'~" /!~fl Wappingers Falls, New York July 16, 1990, except Note K, dated January 30, 1991 , .. L , L. -32- J ;:1 . J "I II j ~ J ~ J J J J j J J J ,I II I td II l L L L L L L L L L L L l L L L L L L Sedore, O'Sullivan &iLetterio Certified Public Accountants, Pc. INDEPENDENT AUDITOR'S SINGLE AUDIT REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO NON MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS To the Supervisor and Members of the Town Board Town of Wappinger, New York In connection with our audit of the 1989 general purpose financial statements of Town of Wappinger, New York, and with our study and evaluation of Town of Wappinger, New York internal control systems used to administer federal financial assistance programs, as required by Office of Management and Budget Circular A-128, "Audits of State and Local Governments," we selected certain transactions applicable to certain nonmajor federal financial assistance programs for the year ended July 16, 1990. As required by OMB Circular A-128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or disallowed and the eligibilities that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on Town of Wappinger's, compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that Town of Wappinger, New York had not complied, in all material respects, with those requirements. However, the results of our procedures disclosed immaterial instances of noncompliance with those requirements, which are described in the accompanying schedule of findings and questioned costs. This report is intended for the information of the Supervisor, Town Board, Audit Committee and Management. This restriction is not intended to limit the distribution of this report, which is a matter of public record. ~, ~'kUJ~~ .,./~ t:ll'~~ /!e. Wappingers Falls, New York July 16, 1990, except Note K, dated January 30,1991 ~62 East Main St., P. 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -33- ft291 Main St. Beacon. NY 12508 914-831-0542 TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 1989 Proaram Population Size Dollar Number Amount Item Tested Dollar Amount i. . j i ~ "I . I I . J ~ J j ;,j . ~ J J j ~ I ~ Number Urban County Community Development Program Housing Match Fund Town Hall Housing Rehabilitation 14.218 $14,367 -34- $14,367 L L L L L l l l L L l L L l L L L L L Items Not In ComDliance Rate (Based Number on Dollars) 1.00 Findlng/ Non Compliance The Town failed to monitor the expendi- tures of the sub- recipient Wappinger Youth Outreach, Inc. Questioned Costs $ 14.367 -35- J ~ it . ~ j I I J II .I J J J J J J ~ ~ I j l L l L L L L l L L L l l l L L TOWN OF WAPPINGER, NEW YORK FINDINGS & RECOMMENDATIONS A. Deficiencies In Control Structure Design: Finding 1: Accounting Systems fails to provide complete and accurate output necessary for management of the Town's finances and budgetary control. Effect: Lack of current accounting information allows the misappropriation of funds, misclassification of expenditures and the over-spending of appropriations and inadequate budgeting. Cause: Lack of a formal accounting manual and policies. Inadequate training of personnel. Lack of supervision of accounting staff. Recommendation: Evaluate the adequacy of the current accounting system. The establishment of an accounting manual with detailed accounting procedures. Evaluate the competency of employees and levels of ability. Provide training in municipal accounting to staff. Finding 2: Absence of appropriate segregation of duties consistent with appropriate control objectives. Effect: Potential for misappropriation of funds. Cause: The Comptroller of the Town has both the function of approving bills and their payment. The payment approval is a power of the Supervisor and Board and cannot be delegated to the Comptroller. Recommendation: Review and analyze the position of the Comptroller to determine what powers legislatively be transferred from the Supervisor. t Ii. L ~. ... -36- -37- J J ~ j d I~~" , I i ~ dl . ~ j J J J J I ~ - Finding 3: Absence of appropriate reviews and approvals of transactions accounting entries or systems output. Effect: Potential for misappropriation of funds, overpayment of bills, and over expending budget. Cause: The Comptroller of the Town is the only person approving and checking accuracy of invoices. There is no department head approval as to the validity of the expenditures. In the case of the Sewer and Water Districts there is no review by a Town Officer or employee capable of assessing the validity of the additional charges. The Town does not maintain any controls on the receiving of goods and services. Recommendation: The Town Board established an Audit Committee to review vouchers prior to approval for payment. All department heads certify that vouchers are correct. Establish receiving controls on goods purchased by the Town. Establish controls over the purchasing in the Water and Sewer Districts. B. Inadequate Provisions For Safeguarding Assets Finding 4: Fixed Assets detail records are not maintained. Effect: Fixed Assets may be over/under stated. Potential thefts are not detected in a timely manner. Cause: A Fixed Asset inventory record system has not been established. Therefore, additions or deletions are not recorded timely. Recommendation: An inventory of the Town's assets be taken and recorded. Any change to be reported to the Accounting Department on a current basis. l L L L L Finding 5: No control over signature stamps, signature plates and checks. Effect: Potential misappropriation of funds not detected in a timely manner. Cause: L Signature stamps are kept in an unlocked drawer and have been approved for check signing. Signature plates are left unlocked in the bookkeeping office. Any person with access to the office would have access to the signed checks. Recommendation: The signature plates should be removed from machine and placed in the custody of the Supervisor. Check controls between Supervisor's office and bookkeeping office be established. Signature stamps should be made invalid for check signing. Checks should be kept under lock and key and logged as part of control between Supervisor and bookkeeping. L L l L Finding 6: Absence of controls over building inspection. Cause: L The Building Inspection Department lost records for 1/2 year. Recommendation: Better controls over records maintained. Numerical control over receipts and issuance of permits and C.O. 'so i L. Finding 7: Accounts Payable Clerk processes vouchers and writes checks. L L l L L 'L Effect: Potential for misappropriation of funds and misclassification of expenditures. Cause: The accounts payable clerk inputs vouchers and also pays check. No check of proper expenditures by person independent of the voucher process. Recommendation: Accounts Payable Clerk process vouchers. Bookkeeper process checks and verifies with voucher to accuracy. .. -38- -39- J j ~ I I I I i I', f II . j j ,t ., J J J J I J Finding 8: Payroll processing and personnel are not segregated. Cause: Payroll clerk processes and maintains personnel records. Lack of segregation of duties. Effect: Potential payment for salaries and related benefits not authorized or work not performed. Recommendation: Maintenance of personnel records separated from payroll processing. Personnel verify payroll after process. Finding 9: Employees of the Town paid as sub-contractors and no 1099's filed. Effect: Town would be liable for uncollected payroll taxes. The Town would be liable for penalties for not filing 1099's. Cause: Personnel policies practiced not in conformity with State and Federal laws. Recommendation: All compensation of Town employees be reported as payroll. Finding 10: Funds maintained in Capital Projects not having activity for years and over bonding in Capital Projects. Effect: Improper classification and valuation of account balances. Improper budgeting for debt liquidation. Unnecessary debt incurred. Cause: Improper planning in issuance of debt and lack of established review proceedings of accounts on a periodic basis. Recommendation: Review accounts on a periodic basis to determine their reasonableness and validity. Proper planning as to debt needed to finance payees. L L L l L l L l L L L L L L l L L Finding 11: The Town does not have a written investment policy. Effect: The maturity of investments may not be matched against cash needs and the greatest rate of return on investments may not be obtained. Cause: The Town and Town Board have not established an investment policy. Recommendation: An investment policy be established and submitted to the Town Board. Finding 12: Our sample of disbursements disclosed the following: 1. Twelve vouchers without department head approval. 2. Nine vouchers processed not signed by claimant. 3. Nine vouchers with purchase orders with no dates. 4. Two disbursements did not agree with invoices. 5. Fifteen vouchers without purchase order approval. 6. Purchase orders submitted with vouchers. 7. Invoices not cancelled. 8. No approval for payments other than comptroller's office. Cause: Lack of control procedures for purchasing and payment of invoices. Recommendation: Policies be established for approving vouchers only after all supporting documentation is obtained. Implement a purchase order system and maintain it. All supporting documentation be cancelled after payment and returned for all transactions. Finding 13: The Town has not established policies for monitoring pass through funds from HUD to Wappingers Outreach. Effect: Potential liability to HUD for monies received. Cause: No policies established for monitoring use of money by Wappingers Outreach. t L Recommendation: Establish procedures for monitoring activities of Wappingers Outreach using Town pass through funds. Enter into a contract with Wappinger Youth Outreach. l -40- J j ~ J J J j J . I J J J J J J J j I j L l l L L L L L L L L l l L L L L l L. l TOWN OF WAPPINGER CONSTANCE O. SMITH SUPERVISOR SUPERVISOR'S OFFICE 20 MIDDLEBUSH ROAD P.O. BOX 324 WAPPINGERS FALLS, NY 12590-0324 TELEPHONE: (914) 297-2744 FAX: (914) 297-4558 1989 ANNUAL AUDIT/RESPONSE TO FINDINGS AND RECOMMENDATIONS General Comment: As the newly elected Supervisor for the Town of Wappinger I have inherited findings of 1989 as well as 1988 recommendation which were not implemented. The current administration has evaluated the policy and procedures that were in place before our time. The following are responses to audit findings based on the evaluation of the policies and procedures and the changes that the Supervisor has implemented or is in the process of implementing. Finding 1: A. This administration has directed accounting personnel to attend municipal accounting training sessions as part of their continued employment. B. This administration has acquired a new automated accounting system. The accounting staff is in the process of training at this time. The Comptroller and Accounting Department has been directed to design policies and procedures around implementation of the new system. The Supervisor has hired a new Comptroller and outlined the responsibilities of the position. Finding 2: A memo has been sent to all department heads requesting a list of all employees and their respective duties and job specifications. A new personnel manual has been completed and distributed, a manual of budget procedures is being prepared, and accounting procedures and policies are being established for each department. This should be completed by OCtober 1, 1990. Finding 3: Approval procedures have been established by Comptroller and Supervisor. All vouchers and purchase orders not in compliance with the procedures including the proper certification by department heads are being rejected. The water and sewer district contracts have been renegotiated at a fixed service cost per district, therefore . eliminating the need for monthly approval for individual expendi~ures. J J J J j J J J J J J J J J J J J I ~ L L L l L L L L L L L l L L l L ~ . L L Audit Response page 2 Findina 4: A townwide inventory of fixed assets has been taken and procedures are being established for maintaining the records. The inventory records will be maintained in the Town Clerk's office. Finding 5: All signature stamps and plates are in the control of the Supervisor at all times. A check logging system is in place for all checks being issued and signed. All check tis are logged, including manual checks for signing by the Supervisor. Finding 6: Building permits and certificates of occupancy will be inventoried and prenumbered. Monthly reports are being issued to the Supervisor's and Comptroller's offices. Finding 7: Procedures and policies are being studied and implemented to segregate the accounting department functions based on the recommen- dations of the auditors and around the implementation of new automated accounting system. Finding 8: payroll records will be maintained by Supervisor's secretary under direct supervision of the Supervisor and Town Board. Establish- ment of policy and procedures have been implemented and distributed. Finding 9: Comptroller has established procedures for recording and reporting non-employment compensation. All current 1099 reporting requirements have been met. J J J J ,j .- J J J J J J J J J J ~ ~ I t L L L L L L L L L L L L L L L L L Audit Response page 3 Findina 10: pOlicy and Procedures are being established for planning and funding capital projects and their respective bonding. Excess bonding from past projects is currently budgeted to liquidate debt. Findina 11: The investment policy is submitted and established by the Town Board at it's annual re-organizationa1 meeting. Findin9 12: Supervisor is reviewing established procedures for the approval of purchase orders and vouchers. policies and Procedures are being revised and tightened around the implementation of the new automated accounting system. Findin9 13: Procedures have been established to monitor all funds passed through to outside agencies. Contracts have been executed for current and future funding. Financial statements have been requested and received, thus complying with the Single Audit Act. i ~ L J J J J J J J J J J J J J J J J t t j