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1988-12-31 .. .. rttCE'VEL DEe 29 1989 III '=:LAINE H. SNOWDEI" Town Clerk .. TOWN OF WAPPINGER, NEW YORK .. FINANCIAL STATEMENTS AND OTHER SUPPLEMENTAL INFORMATION .. AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1988 ... .. .. ... .. III .. .. j:\ .. .. .. .. .. III .. TOWN OF WAPPINGER, NE~ YORK TABLE OF CONTENTS DECEMBER 31, 1988 III 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 ilto 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 Issued by GAO ~ General Purpose Financial Statements ilia Combined Balance Sheets - All Fund Types and Account Groups - Combined Statement of Revenues, Expenditures and Changes in Fund Equity - All Governmental Fund Types and Expendable Trust Funds .. Combined Statement of Revenues, Expenditures and . Changes in Fund Equity - Budget and Actual - 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 Financial Statements Other Supplementary Information ilia PAGE 1 2-4 5 6-7 8-9 10-11 12 13 14-25 Schedule of Federal Financial Assistance Independent Auditor's Report on Schedule of Federal Assistance 26 27-28 .. .. 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 Test 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 Ii. 29-31 32 33-34 35-40 41-43 .. Sedore, O'Sullivan &JLetterio .. III Certified Public Accountants, Pc. .. INDEPENDENT AUDITOR'S REPORT II. III To The Supervisor and Members of the Town Board Town of Wappinger, New York ... We have audited the accompanying general purpose financial statements of Town of Wappinger, New York as of December 31, 1988, and for the year then ended. These general purpose financial statements are the responsibility of Town of Wappinger, N. Y. 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 ~ell as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. .. .. .. Ilia In our opinion, the general purpose financial statement referred to above present fairly, in all material respects, the financial position of Town of Wappinger, N. Y. as of December 31, 1988, and the results of its operation 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. .. i... SEDORE, O'SULLIVAN & LETTERIO, CPA'S P.C. 5~(OV~ 1~alf.~~-L- Wappingers Falls, N. Y. December 22, 1989 II. ... .. P62 East Main St., P. 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -1- ft291 Main St. Beacon, NY 12508 914-831-0542 l. ... Sedore, O'Sullivan ffiLetterio .. .. Certified Public Accountants, Pc. .. INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ... .. 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 for the year ended December 31, 1988 and have issued our report thereon date December 22, 1989. ... We conducted our audi t in accordance wi th 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, 1988, 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. ... ... 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 accoun ting principles. Because of inherent limi tations in any internal control structure, errors or irregulari ties 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. ... .. .. .. ... .. P62 East Main St., P. 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -2- ft291 Main St. Beacon, NY 12508 914-831-0542 .. .. III - For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: .. Accountinq Controls Cvcles of the entities' activity. Treasury or financing. Revenue/receipts. Purchases/disbursements. External financial reporting. .. till 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 obt ained 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 materia} 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 \\i thin a timely period by employees in the normal course of performing their assigned funct ions. 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. .. .. .. -3- .. .. ... This report is intended for the information of the Audit Committee, Management, Supervisor and Town Board. This restriction is not intended to limi t the distribution of this report, which is a matter of public record. - -- SEDORE, O'SU~~VA~& LETT~.~J~ CPA'S, ~.C;( S.~( 0 ~ {JJrH; CfIJ:' ~ I-c. Wappingers Falls, New York December 22, 1989 .. ... .. ... .. .. ... .. .. ... .. .. -- ... -4- I 4i1 - Sedore, O'Sullivan &/Letterio ... - 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 - ... 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 for the year ended December 31, 1988, and have issued our report thereon dated December 22, 1989. .. 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. .. .... Compliance with laws, regulations, contracts and grants applicable to Town of Wappinger, New York is the responsibility of 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 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 and Management. This restriction is not intended to limit the distribution of this report, which is a matter of public record. .... SEDORE, O'(ULLIVAN & L~~:fRIO, CP~~~s)fP.C, <;~~ of;d/~j ~ CElt" -? ;. c · . -/ / Wapplngers Falls, New York December 22, 1989 ~62 East Main St., P 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -5- ft291 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, 1988 - .. - .... ASSETS Cash - Kates A.6 and A.ll Other Receivables (Net) - Notes A.12 and B State and Federal Receivables - Note C Due From Other Funds - Note D Property, Plant and Equipment - Note A.3, E and F Net of Accumulated Deprecation Amounts Available In Debt Service Amounts to be Provided in Future Budgets - - - TOT.l'\L ASSETS - LLl\BILITIES Accounts Payable Retainage Accrued Expenses and Compensated Absences - Note A.7 Due to Employees Retirement Fund - Note A.8 Due to Other Funds - Note D Due to Other Governments - Note H Agency Liabilities Serial Bonds Payable - Notes A.I0 and G Capital Leases Payable - Note K .. .. .. TOTAL LIABILITIES ... FUND EOUITY Investment in General Fixed Assets Retained Earnings Reserved - Note A.l1 Unreserved Fund Balance Reserved - Note A.ll Unreserved .. .. .. TOTAL FUND EQUITY TOTAL LIABILITIES AND FUND EQUITY .. GOVERNMENTAL FUND TYPES GENERAL SPECIAL REVENUE CAPITAL PROJECTS DEBT SERVICE S1,740,075 $ 110,509 $ 60,442 S 25,865 42,990 93,685 53,490 198,090 $2,074,840 $ 163,999 S 60,442 S 25,865 S 184,542 S 3,703 S s 25,081 50,519 83,133 49,227 235,061 86,836 74, 3 08 1, 839,779 1,839,779 42,445 34,718 77,163 60,442 (48,443) (48,443) 60,442 S2,074,840 S 163,999 S 60,442 $ 25.865 The accompanying notes are an integral part of these statements. -6- .. .. - - PROPRIETARY FIDUCIARY FUND TYPES FUND TYPES ACCOUNT GROUPS TOTAL ..", GENERAL TRUST GENERAL LONG-TERM (HEMORANDU~1 E~TERPRISE AND AGENCY FIXED ASSETS DEBT ONLY) - S 867,092 S 328,151 S $ S 3,132,134 312,306 355,296 .. 147,175 198,090 .. 6,336,632 6,336,632 8,188,417 8,188,417 60,442 60,442 .. 2,202,022 2,202,022 S 9,367,815 S 328,151 $ 6,336,632 $2,262,464 $20,620,208 - S 10,809 S S S $ 199,054 25,081 ... ~0,457 25,800 76,257 50,519 .. 65,730 198,090 .. 194,436 194,436 5,100,050 2,214,950 7,315,000 21, 714 21. 714 - 5,227.046 194,436 2,262,464 8,080,151 .. 6,336,632 6,336,632 - 174,244 133,715 410,846 .. 3,966,525 5,792,579 4,140,769 133,715 6,336,632 12,540,057 ""'" $ 9,367,815 S 328,151 S 6,336,632 $2,262,464 $20,620,208 ... -7- .. .. ... TO"N OF WAPPINGER, NE" YORK COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND EOUITY ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS FOR THE YEAR ENDED DECEMBER 31, 1988 GOVERNMENTAL FUND TYPES SPECIAL DEBT GENERAL REVENUE SERVICE .. ... ... 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 Sale of Property and Compensation for Loss Miscellaneous Local Sources State .l\id 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 .... iIw TOTAL EXPENDITURES .. EXCESS OR REVENUES OVER (UNDER) EXPENDITURES .. OTHER FINANCING SOURCES (USES) Proceeds From Obligations Operating Transfers In Operating Transfers Out ... TOTAL OTHER FINANCING SOURCES (USES) .. EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES .. $2,245,555 1, 452 53,016 115,362 146,238 47,437 70,043 11,547 5,063 1,134,273 3,829,986 964,818 115,022 1,271,214 128,240 241, 197 522,138 297,485 453,879 3,993,993 (164,007) 99,206 99,206 (64,801) FUND BALANCE, END OF YEAR FUND BALANCE, BEGINNING OF YEAR 1,904,580 $1,839,779 .. $ 30,475 $ The accompanying notes are an integral part of these statements -8- . 5,234 2,603 103,374 139,083 2,603 21,323 22,723 80,651 124,697 14,386 2,603 8,709 8,709 14,386 11,312 62,777 49,130 $ 60,442 S 77,163 CAPITAL PROJECTS $ 4,590 4,590 4,590 (66,683) (66,G83) (62,093) 13,650 $ (48,443) .. - .. FIDUCIARY FUND TYPE TOTAL .. EXPENDABLE (MEMORANDUM TRUST ONLY) ~ $ 2,276,030 .. .., 1, 452 53,016 115,362 - 6,925 165,590 47,437 70,043 ... 11,547 17,500 22,563 1, 134,273 .. 103,374 24,425 4,000,687 .. 964,818 115,022 1, 292,537 .. 150,963 241, 197 .. 602,789 297,485 453,879 ... 4,118,690 - 24,425 (118,003) .. 107,915 (41, 232) (107,915) .. (41,232) .. (16,807) (118,003) 150!522 2,180,659 ... $ 133,715 $ 2,062,656 - -9- . .. TOWN OF WAPPINGER, NEW YORK COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 1988 .. .. GENER.l\L FUND .. BUDGET .. REVENUES Real Property Taxes Real Property Tax Items Non-Property Tax Items Departmental Ihcom~ Uses of Money and Property Licenses and Permits Fines and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources State Aid Federal Aid S 2,245,552 34,000 45,000 73,900 43,900 67,100 60,600 7,719 1,400 944,635 ... - .. TOTAL REVENUES 3,523,806 ... EXPENDITURES General Government Public Safety Transportation Economic Assistance and Opportunity Culture and Recreation Home and Co~nunity Service Employee Benefits Debt Service 1,125,957 141, 990 1,440,201 166,761 254,567 373,904 374,004 500,084 4,377,468 ... .. ... TOTAL EXPENDITURES ... EXCESS REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Proceeds From Obligations Operating Transfers In Operating Transfers Out 154,628 (853,662) .. .. EXCESS REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, END OF YEAR (699,034) S . ACTUAL S 2,245,555 1, 452 53,016 115,362 146,238 47,437 70,043 11,547 5,063 1,134,273 3,829,986 964,818 115,022 1, 271,214 128,240 241,197 522,138 297,485 453,879 3,993,993 (164,007) 99,206 (64,801) 1,904,580 S 1,839,779 The accompanying notes are an integral part of these statements. .. .. -10- . VARIANCE - FAVORABLE (UN FA VORABLE) S 3 (32,548) 8,016 41,462 102,338 (19,663) 9,443 3,828 3,663 189,638 306,180 161,139 26,968 168,987 38,521 13,370 (148,234) 76,519 46,205 383,475 689,655 (55,422) S 634,233 .. - - BUDGET SPECIAL REVENUE FUNDS VARIANCE- FAVORABLE ACTUAL (UNFAVORABLE) - $30,475 $ 30,475 $ .. - 31,975 21,323 10,652 22,723 (22,723) 80,651 (80,651) - 31,975 124,697 (92,722) .. 100 14,386 14,286 - - .. S 100 14,386 S 14,286 62,777 .. S 77,163 - .. -11- IlIIII - ... 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, 1988 - TOTAL OPERATING REVENUES PROPRIETARY FUND TYPE ENTERPRISE S 1, 005,609 7,818 1, 013,427 16,237 975,050 318,419 1,309,706 (296,279) 611,325 142,132 57,069 (296,756) 513,770 217,491 3,923,278 S 4,140,769 .... ... OPERATING REVENUES Current Use Charges Other - OPERATING EXPENSES Administrations Contracted Services Depreciation Expenses - - TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON-OPERATING REVENUES (EXPENSES) Real Property Taxes State Aid Interest .. .. Interest Expense TOTAL NON-OPERATING REVENUES .... NET INCOME RETAINED EARNI~GS - BEGINNING OF YEAR .. RETAINED EARNINGS - END OF YEAR - .... The accompanying notes are an integral part of these statements. .... .... - - -12- .. ... TOWN OF WAPPINGER, NEW YORK COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION ALL PROPRIETARY FUND TYPES FOR THE YEAR ENDED DECEMBER 31, 1988 .. .. .. .. SODRCES OF WORKING CAPITAL FROM OPERA.TIONS Net Income Charges to Operations Not Using Working Capital - Depreciation .. WORKING CAPITAL PROVIDED FROM OPERATIONS AND TOTAL RESOURCES .. APPLICATION OF WORKING CAPITAL Acquisition of Fixed Assets Current Maturities Long-Term Debt Increase In Working Capital .. TOTAL RESODRCES APPLIED PROPRIETARY FUND TYPES ENTERPRISE s 217,491 318,419 s 535,910 s 62,841 314,450 158,619 535,910 $ .. CHANGES IN COMPONENTS OF WORKING CAPITAL tit INCREASE (DECREASE) IN CURRENT ASSETS Cash Accounts Receivable till INCREASE (DECREASE) IN CURRENT LIABILITIES Accounts Payable Accrued Expenses Due To Other Funds .. - INCREASE (DECREASE) IN WORKING CAPITAL s 118,783 45,666 164,449 $ (53,716) (4,454) 64,000 5,830 158,619 .. The accompanying notes are an integral part of these statements. ... .. .... .. -13- ... .. .. .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 1988 .. NOTE A - Summarv of Accounting Policies The 'I'o\\'l1 of v,'appinger, New York ("The Town") was incorporated on 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. .. .. The Town provides the following services: highway maintenance, water, sewer, planning, zoning, building and safety inspection, lighting and 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 governmental accounting and financial reporting principles. ... - 1. The Reporting Entitv . 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 Accountinq 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 ~hich 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 six generic fund types and three broad fund categories 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. .. -14- .. .. Summary of Accounting Policies (Cont'd) .. .. 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 costs (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, accountability 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. ... .. .. -15- .. ... Summary of Accounting policies (Cont'd) .. .. .. 3. Propertv, Plant and Equipment and Lonq-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 onlv 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 financing sources) and decreases (expenditures and financing uses) in net current assets. Accordingly, are said to present a summary of sources and uses of "available spendable resources" during a period. other other they .. .. .. .. .. 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. - .. .. -16- .. .. Summary of Accounting policies (Cont'd) .. .. .. 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 maintenance" 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 earnings 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. Gross receipts and sales taxes are considered "measurable" when in the hands of intermediary collecting governments and are recognized as revenue at the time. 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 incluge: (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. .. .. -17- .. .. Summary of Accounting policies (Cont'd) .... .. .. 5. Budqets 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 ~hich 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. .. .. 8. Pension Plans The Town employees are covered by the New York State Employees' Retirement System. The system is noncontributory for all employees, except for employees who joined the New York State Employees' Retirement System after July 26, 1976. These employees contribute 3% of their salary. ... .. -18- .. .. Summary of Accounting policies (Cont'd) .. .. The Town accrues the outstanding contribution payable as of December 31, 1988 within the applicable fund. .. 9. Propertv 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 31st. 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. !III .. .. 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. ... .. .. !III ... - .. !III .. .. .. -19- .. .. Summary of Accounting Policies (Cont'd) .. .. 11. Reserves 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: .. .. BAlAT\TCE AT DECEMBER 31 1988 .. A. Debt Service (1) Reserved for principle and interest on bond indebtedness s 60,442 .. B. Enterprise Fund (1) Retained earnings, reserved for principle and interest on bond indebtedness S 174,244 .... .. C. Fiduciary Fund (1) Reserved for Parklands Deposit Trust S 133,715 .. 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. Dates 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 - OTHER RECEIV.i\BLES .. Other Receivables at December 31, 1988 consists of the following: GENERAL ENTERPRISE FUND FUND . WI'AL .. Franchise Fees $ 28,983 $ $ 28,983 Zoning Fees 178 178 Planning Board Fees 3,959 3,959 .. Building Penni ts 5,241 5,241 Water and Sewer Receivables 312,306 312,306 Miscellaneous 4,629 4,629 ... Total other Receivables (Net) $ 42,990 $ 312,306 $355,296 .. ... NOTE C - STATE AND FEDERAL RECEIVABLES State and Federal Receivables as of December 31, 1988 consist of the following: 'III Fines and Forfeitures State Aid H.D.D. Corrnlunity DevelOllftent Grants 'Total State and Federal , Receivables GENERAL FUND $ 19,997 73,688 SPEcrAL REVEMJE mTAL .. $ 53,490 $ 19,997 73,688 53,490 .. $ 93,685 $ 53,490 $147,175 .. NOTE D - INTERFUND RECEIVABLES AND PAYABLES The following is a summary of amounts due from and due to other funds as of December 31, 1988: ... ... General Fund SDecial Revenue capital Projects Enterprise Funds DUE 'ID $198,090 DUE f'R(}1 Total $198,090 $ 83,133 49,227 65,730 $198,090 .. ... .. ... -21- - III .. .. NOTE E - PROPRIETARY FUNDS PROPERTY, PLANT AND EQUIPMENT The fOllowing is a summary of the property, plant and equipment of the Enterprise Funds at December 31, 1988: .. .. Utility Plants and Equiprrent }\ccurnulated Depreciation "''ATER DISTRICI'S S 4,313,982 (1, 462,333) $ 2,851,649 SDl'ER DISTRICI'S S 9,250,931 (3,914,163) S 5,336,768 'IUI'AL $13,564,913 (5,376,496) S 8,188,417 Property, Plant and Equipnent Net - .... ~OTE F - GENERAL FIXED ASSETS ACCOUNT GROUP The following is a summary of changes in the General Fixed Assets .l\ccoun t Group: tit Land Buildings Improvarent Other Than Buildings Machinery and Equiprrent Total BALANCE DECEMBER 31, 1987 $ 741. 022 1,635,173 ADDITIOOS $ DELEITOOS $ BAlANCE DEnMBER 31, 1988 $ 741,022 1,673,105 tit 37,932 2,612,912 2,612,912 - 1,171,233 S 6,160,340 138,360 $ 176,292 s 1, 309,593 $ 6,336,632 - .. - - .. .. .. .. .. -22- .. .. NOTE G - SERIAL BONDS PAYABLE AND GENERAL LONG-TERM DEBT ACCOUNT GROUP .. The Serial Bonds Payable and General Long-Term Debt as of December 31, 1988 follows: MUJNT .. OOTS'I'ANDING ORIGINAL AT ISSUE INTEREST AtfilNT DECEMBER 31, PROPRIETARY I.ONG-TER~l ~JRroSE DATE RATE OF ISSUE 1988 F1JND DEB!' GROOP - Water $ 66,000 $ 28,600 $ 28,600 $ Sewer 104,000 44,000 44,000 .. Drainage 1, 125,000 477,400 477,400 09-01-71 5.0 1, 295,000 550,000 .. hater 36,800 18,000 18,000 f,ewer 55,200 27,000 27,000 02-15-73 5.0 92,000 45 , 000 .. Water 400,000 234,000 234,000 .. Sewer 500,000 285,600 285,600 Drainage 375,000 215,400 215,400 03-01-74 5.8 1,275,000 735,000 .. Water 2,630,000 1, 571, 000 1,571,000 Sewer 3,005,000 1, 792,000 1, 792,000 .. Drainage 400,000 237,000 237,000 05-01-77 5.375 6,035,000 3,600,000 ... Water 330,000 183,300 183,300 Sewer 222,000 123,400 123,400 - Drainage 239,400 133 ,300 133,300 05-01-78 6.10 791,400 440,000 .. Water 148,070 129,700 129,700 Sewer 362,000 317,150 317,150 Hachinery & EquilXnent 138,571 60,000 60,000 ... Trn.n Hall 700,000 613,150 613,150 12-01-85 7.75 1,348,641 1, 120,000 .. Sewer 364,500 346,300 346,300 Town Hall, Re-evaluation 377,000 289,000 289,000 .. Machinery & EquilXflent 203,000 189,700 189,700 05-01-87 6.3 944,500 825,000 .. Totals $11,781,541 $ 7,315,000 S 5,100,050 $2,214,950 ... -23- . .. .. NOTE G - Serial Bonds Pavable and General Long-Term Debt Account Group (Cont'd) The annual requirements to amortize bonded debt as of December 31, 1988 follows: - YEAR ENDING DECEt-1BER 31 1989 1990 1991 1992 1993 Thereafter PRINCIPAL $ 563,000 563,000 558,000 427,400 463,200 4,740,400 $7,315,000 INTEREST $ 401,653 381,374 348,366 318,693 293,061 1,490,374 S3,233,521 TOTALS $ 964,653 944,374 906,366 746,093 756,261 6,230,774 $10,548,521 .. .. .. NOTE H - DUE TO OTHER GOVERNMENTS The Town entered into an agreement with the City taxes of $271,693.18 with interest of $46,212.43. of $15,895.28 commenced on January 1, 1985 with a 1, 1989. of New York to refund The quarterly payments final payment on October .. .. NOTE I - REPORT CLASSIFICATION Certain previously reported amounts have been reclassified to conform to 1988 report classifications. .. .. NOTE J - OPERATING 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, 1988 amounted to $31,824. There are no future minimum lease payments due at the expiration of all leases at the end of the year. .. NOTE K - 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. ... .. .. ... .. -24- .. - NOTE K - CAPITAL LEASE (Cont'd) .. The following is a schedule of the future minimum lease payments under this lease, and the present value of the net minimum lease payments at December 31,1988: - - FI SCAL YEl'>.R ENDING DECEMBER 31 1989 1990 1991 GENERAL LONG-TERM DEBT $11, 093 11,093 2,773 24,959 3,245 - Total Minimum Lease Payments Less: Amount Representing Interest - Present Value of Future Minimum Lease Payments $21,714 .. NOTE L - 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 M - SUBSEQUENT EVENTS The Town of Wappinger has entered into a consent decree with the Department of Environmental Conservation on behalf of the Oakwood Knolls Sewer District, formerly known as the Central Wappinger Improvement Area No.1. This consent decree sets a timetable during which time the Town Board must proceed with finding an" alternative means of processing the sewerage generated by those who are connected to the Oakwood Knolls treatment plant. The Town Board has proceeded on this course and has a memorandum of understanding with the Tri-Municipal Sewer Commission for this very purpose. However, should any of the deadlines set forth in the consent decree, the first of which is September 15, 1989, not be met, then a potential fine of S10,000.00 per day may be levied upon Oakwood Knolls Sewer District and it would gradually increase for each and every day of violation fOllowing that date. On June 5, 1989 the Town Board adopted a resolution creating the Wappingers Park Water District. .. .. .. .. .. NOTE N - LEGAL COMPLIANCE The Town expenditures exceeded appropriations in various areas during the vear. The Town failed to bid contracts for goods and services for the Town Hall and Sewer and Water Districts. .. .. .. -25- - - .. .. .. .. OTHER SUPPLEMENTAL INFORMATION .. .. .. .. .. - .. - .. .. ~. .. ;." .. .. .. 1M .. Sedore, O'Sullivan &1'Letterio . lIIl 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 .. lIIl We have audited the general purpose financial statements of the Town of Wappinger, New York for the year ended December 31, 1988, and have issued our report thereon dated December 22, 1989. These general purpose financial statements are the responsibility of the 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 Auditing 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 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. .. .. - lIIl 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. .. .. .. S?~'~fL;7;~CP~p~'ec- . Wappingers Falls, New York December 22, 1989 ... .. A62 East Main St., P 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -26- 4291 Main St. Beacon, NY 12508 914-831-0542 .. - TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FEDERAL ASSISTANCE FOR THE YEAR ENDED DECEMBER 31, 1988 - - CFDA PROGRAM NAME NUMBER GRANTOR - Town Hall Housing U. S. Department of Housing Rehabilitation 14.218 and Urban Development Hilltop Aquifer U. S . Department of Housing - Development 14.218 and Urban Development t'1as ter Plan Zoning U. S. Department of Housing Ordinance 14.218 and Urban Development - Senior Citizens' U. S . Department of Housing Program 21.300 and Urban Development - - - - - lIIIIil - - lIIIIil See accompanying Accountant's Report IIliI - -27- - ... . . - REVENUES EXPENDITURES DECEMBER 31, DECEMBER 31, 1988 1988 .. S 44,723 S 44,723 .. 20,438 20,438 - 15,490 15,490 - 22,723 22,723 S 103,374 S 103,374 - - - - - - - - .. - .. -28- III . . - . - - - - - .. .. .. .. .. III .. .. tilt ... Sedore, O'Sullivan &1'Letterio Certified Public Accountants, Pc. 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 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, 1988, and have issued our report thereon dated December 22, 1989. As part of our audi t, 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 Auditinq Standards, issued by the Comptroller General of the Uni ted States, the Single Audi t Act of 1984, and the provisions of OMB Circular A-128, "Audi ts 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: Accountinq 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. P62 East Main St., P. 0. Box 918 Wappingers Falls, NY 12590 914-297-1111 -29- ft291 Main St. Beacon. NY 12508 914-831-0542 . . 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 benefi ts 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 anv 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, 1988, the Town of Wappinger, Ne~ York had no major federal financial assistance programs and expended 96% of the following nonmajor federal financial assistance programs: Community Development Block Grant Enti tlement Program and Federal Revenue Sharing. Wi th respect to internal control systems used in administering these nonmajor federal financial assistance programs, our study and evaluations included considering: the Lypes 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 \vappinger, New York, our study and evaluation was limited to a preliminary review of the systems to obtain anunderstanding 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 III .. .. -30- .. . - administering the nonmajor federal financial assistance programs of Town of Wappinger, New Ybrk did not extend beyond this preliminary review phase. - Our study and evaluation was more limited than would be necessary to express an opinion on the internal control systems used in administering the federal 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 nonmajor federal financial assistance programs. - However, our study and evaluation and our audi t disclosed the following condition that we believe results in more than a relativelv low risk that errors or irregularities in amounts that would be ~aterial 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 1988 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 and nonmajor federal financial assistance programs. 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 limi t the distribution of this report, which, upon acceptance by Town of Wappinger, New York, is a matter of public record. - - - - - - - SEDORE, O'SULLIVAN & LETTERIO, CPA'S, P.C. ~lcld~,IIK (ffi;~P~C.. - Wappingers Falls, New York December 22, 1989 .. - .. - -31- - ... Sedore, O'Sullivan ffiLetterio .. .. Certified Public Accountants, Pc. ... INDEPENDENT AUDITOR'S SINGLE AUDIT REPORT ON COMPLIANCE WITH . REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS .. To The Supervisor and Members of The Town Board Town of Wappinger, New York .. In connection ~ith our audit of the 1988 general purpose financial statements of Town of Wappinger, Ne~ 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 December 31, 1988. 1\s required by OMB Circular A-128, we have performed audi ting 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 To~n 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 Audit Committee, Management, Supervisor and Town Board. This restriction is not intended to limit the distribution of this report, which is a matter of public record. .. SEDORE, 0' SU(rV~'I & LETY',~IO. cp~' Sl.p.c. >~ 0 ~ 'f /lfFt;t/J'Jr. >; I- c Wappinger' Falls, New York December 22, 1989 .. .. .. P62 East Main St., P 0. Box 918 . Wappingers Falls, NY 12590 914-297-1111 -32- 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, 1988 - - POPUlATIOO SIZE ITEM TESTED OOLlAR OOLlAR NillrnER A.~ ~urnER A.~1'J' - - 14.218 $44,723 1 $4-1.723 - PRCX;1Wl Urban County Carlmmity DevelOllnent Program Housing Hatch Fund Town Hall Housing Rehabilitation - .. - - .. .. - .. .... .. - -33- - .. - .. - ITEMS NOT IN a::MPLIANCE .. RATE (BASED 11lMBER ON OOLhl\RS) .. 1 1.00 - .. .. .. .. .. - .. .. .. .. .. .. .. FINDING\ NON cnWLIANCE The Town failed to IIDni tor the e.'\"})endi tures of the subrecipient Wappinger Youth Oltreach, Inc. -34- (}JESI'IOOED CDSTS S 44,723 .. .. - .. .. .. - .. - - - - - - - - - - - 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. FINDIKG 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. -35- - FINDING 3: .. EFFECT: - CAUSE: - - - Absence of appropriate reviews and approvals of transactions accounting entries or systems output. potential for misappropriation of funds, overpayment of bills, and over expending budget. 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. RECOMHENDATION: 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: - EFFECT: - CAUSE: - Fixed Assets detail records are not maintained. Fixed Assets may be over/under stated. potential thefts are not detected in a timely manner. 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. - .. .. .. - .. -36- . - FINDING 5: No control over signature stamps, signature plates and checks. - EFFECT: Potential misappropriation of funds not detected in a timely manner. - CAUSE: Signature stamps are kept in an unlocked drawer and have been approved for check signing. Signature plates are left unlocked in check signing machine. The checks 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. - .. FINDING 6: Absence of controls over building inspection. .. CAUSE: 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.'s. - - .. - .. .. .. -37- .. .. FINDING 7: .. EFFECT: .. .. CAUSE: .. Accounts Payable Clerk processes vouchers and writes checks. Potential for misappropriation of funds and mis- classification of expenditures. 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. - .. FINDING 8: .. CAUSE: .. EFFECT: .. Payroll processing and personnel are not segregated. Payroll clerk processes and maintains personnel records. Lack of segregation of duties. 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: - .. EFFECT: .. CAUSE: .. Employees of the Town paid as sub-contractors and no 1099's filed. Town would be liable for uncollected payroll taxes. The Town would be liable for penalties for not filing 1099's. Personnel policies practiced not in conformity with State and Federal laws. RECOMMENDATION: All compensation of Town employees be reported as payroll. .. .. .. .. -38- .. .. 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. C.A.USE: till 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. .. 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. . .. .. . . . -39- . - FINDING 12: Our sample of disbursements disclosed the following: - - 1. Twenty-eight vouchers without department head approval. 2. Ten vouchers processed not signed by claimant. .. 3. Eight vouchers with purchase orders with no dates. - 4. Five vouchers not posted to general ledger properly. 5. Purchase orders submitted with vouchers. .. 6. Invoices not cancelled. - 7. 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 BUD to Wappingers Outreach. .. EFFECT: Potential liability to BUD for monies received. .. CAUSE: No policies established for monitoring use of money by Wappingers Outreach. - RECOMMENDATION: Establish procedures for monitoring activities of Wappingers Outreach using Town pass through funds. Enter into a contract with Wappinger Youth Outreach. .. .. - -40- - ... TOWN OF WAPPINGER ... / "'VJAp<:~ . ()~~~;:~-t.'~ ~~ . ~....'... '" ~\ . '~".' '".- ".,~ . ,". l... ~ . ~ ,..~' /0" ' " '~ .p\ ,.... - :'-' \ i' i.... "'-.-' ....~\J' \ti,'~.i':! \C '."-'~h \4..~ ~~~.-- '_ <:/~~j f}.~j' t--If .... ~~<--"'~ .&. \:.~AiifI ::~~S CO"''- ----~-.....,;;; IRENE M. PAINO SUPERVISOR 20 MIDDLEBUSH ROAD ... P.O. BOX 324 WAPPINGERS FALLS. NY 12590-0324 914-297-2744 ... December 28,1989 ... - 1988 ANNUAL AUDIT/RESPONSE TO FINDINGS AND RECOMMENDATIONS General Comment: ... ... The following responses are in reply to Sedore, O'Sullivan & Letterio's Findings and Recommendations contained in their 1988 Annual Audit of the Town. Many of the changes in procedures were impletemented prior to the completion of the audit. - Response to Findings 1: ... a.> Staff have attended Municipal Fiscal Officers' Training Program and will be encouraged to continue to do so. b.> The Comptroller will prepare a manual for the Town. - Response to Findings 2: - a.> The Supervisor is paying all bills. - Response to Findings 3: a.> The Town has a new voucher form requiring the Department Head to check the accuracy of the claim submitted. - b.> The Supervisor reviews all bills of the Special Districts with the Town Engineer with respect to the validity of the charges. - c.> with respect to all goods received, a Department employee other than the Department Head shall certify to the receipt of goods by the Town Department as claimed on the payment voucher. Response to Findings 4: - ... a.> A fixed asset inventory has been established except for the Special District. A program to inventory the Special District will be instituted. - -4!- - .. .. - 2 - .. - Response to Findings 5: a.> Signature stamp is under the control of the Supervisor. All checks are locked away as well as the signature stamp. b.> The check writing machine will be physically moved into the Supervisor's office. The Town's depositories will be directed to accept only security coded signature stamps for payment. - III c.> A system of logging checks given by the Comptroller to the Supervisor for payment will be instituted. - Response to Findings 6: New Building Inspector is already in place and all funds are deposited with Town Clerk and the department will be computerized in the future. Response to Findings 7: .. .. Accounts payable clerk will process voucher and bookkeeper will print checks. - Response to Findings 8: All personnel files will be combined with those maintained by the Supervisor. The Supervisor will authorize all personnel salaries in accordance with the Town Board resolutions. .. - Response to Findings 9: .. a.> All vendors will be required to furnish Federal ID numbers before payment will be made. The Town's computerization will allow appropriate 1099's to be generated. .. b.> A review of all those performing services on a regular basis and those who are employees have been placed on payroll. .. Response to Findings ~O: a.> It is the intent of the Town to use these funds to reduce the debt that has been incurred. .. b.> Adequate planning prior to the issuance of debt securities. lilt Response to Findings 11: - An investment policy will be established and submitted to the Town Board for approval. -42- lilt