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2008-12-31 (2) .. . .. - rt E. C E. \\1 \::. \.; MAR , 6 20\0 ",,^,I\l ~. FP' - .. .. TOWN OF WAPPINGER, NEW YORK FINDINGS AND RECOMMENDATIONS DECEMBER 31. 2008 .. - .. .. - .. .. .. .. - - - .. .. .. iIII TOWN OF WAPPINGER, NEW YORK TABLE OF CONTENTS DECEMBER 31.2008 iIII .. DESCRIPTION PAGE(S) .. Independent Auditors' Report ........... ....... ............ .... .... ............ .............. ............. ..... ........................1 Schedule of Findings and Recommendations . and Town of Wappinger Responses .. ................... ............. ........................................... ........ 2-6 . . . . !III .. .. . .. .. .. . .. HUDSON VALLEY (PAs Navigating Your Success Partners James L. Sedore, Jr, CPA Mark S O'Sullivan. CPA James F Lellerio, Jr, CPA Linda M. Hannigan, CPA Karen T Hansen, CPA Jeffrey L. Brown, CPA Charles R. Rae, Jr, CPA ~~ SEDORE .. III .. To the Supervisor and Members ofthe Town Board Town of Wappinger, New York 20 Middlebush Road Wappingers Falls, New York 12590 .. In planning and performing our audit ofthe financial statements of the Town of Wappinger, New York for the year ended December 31, 2008, we considered Town's internal control in order to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on internal control. Accordingly, we do not express an opinion on the effectiveness ofthe Town's internal control. .. III However, we noted matters involving internal control and its operation that we consider to be a significant deficiency under standards established by the American Institute of Certified Public Accountants. Significant deficiencies involve matters coming to our attention relating to the design or operation of internal control that, in our judgment, could adversely affect the Town's ability to initiate, record, process, summarize and report financial data with the assertions of management in the financial statements. The significant deficiencies are summarized in Section 1. .. .. .. During our audit we became aware of matters that are opportunities for strengthening internal controls and operating efficiency. Section II summarizes our findings and recommendations regarding those matters. .. - We will review the status of these comments during our next engagement. We have previously discussed many of these comments and suggestions with Town personnel, and we will be pleased to discuss them in further detail, at your convenience, and to perform any additional study of these matters, or to assist you in implementing the recommendations. .. We would like to thank Christopher Colsey, Supervisor, Fredrick Awino, Town Accountant and Town staff, for their assistance. .. This report is intended solely for information and use of the Board, management, and staff, and is not intended to be and should not be used by anyone other than the specified parties. .. .. ~y ~,{!~dJ Poughkeepsie, New York December 21,2009 - Poughkeepsie Office 2678 South Road I Suite 101 I Poughkeepsie, New York 12601 Tel: (845) 485-5510 Fax: (845) 485-5547 I Email: info@sedoreco.com I Web: www.sedoreco.coJ POUGHKEEPSIE. PORT JERVIS · FISHKILL .. III III TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND RECOMMENDATIONS FOR THE YEAR ENDED DECEMBER 31. 2008 .. SIGNIFICANT DEFICIENCIES: .. PRIOR YEAR FINDINGS - CONTINUING: 11II Findin2 1 - Escrow Recordkeevin2 Findin2: The Town has applied considerable effort in the reconciliation of applicant escrow subsidiary ledgers to the Town's general ledger balances, however material differences which change from year to year have been noted. Such changes indicate an unreliable reconciliation methodology. Our examination of the escrow reconciliation revealed the following: .. .. - . As of December 31, 2007 the escrow subsidiary ledgers, $677,691, exceeded the $634,912 general ledger by $42,779. . As of December 31, 2008 that difference amounted to $175,579, with the 2007 reconciliation being revised to reflect a difference of $135,821. . Comments related to escrows have been made since 1993; .. .. Cause: There has existed a lack of communication between the Planning Department and the Comptrollers Office regarding fees charged to individual escrows. Individual schedules were not always updated and invoices were coded incorrectly. Reconciliations between the Planning Department and the Comptroller's Office were not performed regularly so that these errors were not caught on a timely basis. .. .. Effect: The Town is responsible for payment of fees that should be taken from escrow accounts. If not reconciled timely, the Town may not be able to recover these fees from the rightful applicant. Recommendation: No amounts should be returned to an applicant until a thorough review of all transactions has been made, including confirming receipt of escrow funds received and analysis of all disbursements made on that applicant's behalf. This will serve as a check that funds are not being returned in appropriately. A significant portion of the outstanding escrow liability pertains to inactive applications. The Town should re-review these balances, including making inquiries of engineers and attorneys regarding their fees related to these applicants, to confirm that all appropriate disbursements have been charged to the appropriate applicants. The analysis of Escrows schedules should continue be completed on a monthly basis, comparing department receipt records and charges posted to individual escrow schedules to general ledger transactions. Names of escrows should be consistent, such as code and name of property, to avoid confusion between department and general ledger transactions. .. .. .. .. .. .. 2 .. III .. . TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND RECOMMENDATIONS, CONT'D FOR THE YEAR ENDED DECEMBER 31.2008 Findine: 1- Escrow Recordkeepine: (Cont'd.) .. Response: Escrow Record Keeping - The Town is making every effort to streamline the escrow records. In the past this process was hindered by a lack of complete documentation and information. During 2009 the Town instituted a complete re-examination of the escrow balances and related documentation including identifying and classifying escrows by age and activity. We want to reiterate that from 2009, the reconciliation process has improved and we are confident with regard to the status of the escrow balances. iIIlI .. .. .. Findine: 2 - Escrow Funds N ee:ative Balances .. Findine:: Payments have been made in excess of escrow amounts collected resulting in excess payments to individual project owners/developers. As of December 31, 2008 126 escrow accounts indicated debit/negative balances totaling $160,334, of a total of 328 accounts amounting to $678,718. .. .. Cause: The Town collects escrow funds to ensure that costs incurred by the Town, while projects or subdivisions are being considered by the Planning Board, are borne by the applicants. The Town maintains records for each project/applicant so that balances can be monitored; however, in numerous cases the disbursements exceeded the escrow collected. .. Effect: Unanticipated liabilities could be incurred by the Town for which no revenues/funds have been provided. .. .. Recommendation: We note that the Town Board authorized legislation during 2002 and 2006 which provided for policies and procedures to ensure that the Town does not subsidize applicant review costs. However, we note that debit balances have not significantly changed from 2006 through 2008, ($184,812, $171,058 and $151,770 respectively). Also, as noted above a significant portion of these balances pertain to inactive or old applications, $133,124. Along with the reconciliations noted above, we recommend that the Town make the confirmation and collection of these balances a priority, reviewing the pertinent documentation and determining a course of action for collection of each account. .. .. .. Response: Currently, before any disbursement is made, each escrow account is checked independently to ensure that what is being processed is actually owed by the Town. The Town always confirms each disbursement with .. 3 .. II ill TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND RECOMMENDATIONS, CONT'D FOR THE YEAR ENDED DECEMBER 31.2008 .. .. Findin22 - Escrow Funds Ne2ative Balances (Cont'd.) documentation which is verified at appropriate levels by the Building department and the Comptroller's office. .. The Town has sent numerous letters to holders of escrow with negative balances urging them to reimburse the Town for expenditures made on their behalf. The Town Attorney will be notified to provide legal direction on the collection of outstanding negative balances. .. .. OTHER FINDINGS: CURRENT YEAR FINDINGS: .. Findin2 3 - Bank Reconciliations .. Finding: The Town has made considerable improvement in the timeliness of completing its bank reconciliations, including researching differences and making appropriate corrections. However we continue to note an unknown balance in the general disbursing account, amounting to $12,559. This represents a change of$19,271 from the unknown balance at the end of 2007. .. Cause: Differences during the year have occurred which have yet to be researched and adjusted. .. .. On-going changing unknown differences indicate that all appropriate entries are not being made and can mask in-appropriate entries. Effect: .. .. Recommendation: These unknown differences should be researched and resolved. Further, management should receive a copy of the monthly bank reconciliations so that differences can be apparent to all. .. Response: The bulk of the difference relate to payroll checks cut in 04,05,06, and 07 years which continued to be shown as reconciling items whereas they should have been cleared. In the course of 2009 these differences were researched and the reconciliations in the General Disbursement Account brought up to date. The Town will implement the rest of the recommendations in 2010. .. - - 4 - l1li III TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND RECOMMENDATIONS, CONT'D FOR THE YEAR ENDED DECEMBER 31. 2008 . PRIOR YEAR FINDINGS - CONTINUING: .. Findin2: 4 - Buildin2: Deuartment Procedures .. Findin2:: During the audit we tested revenue recording and collection in the Building Department. Our test work continues to reveal the following: .. . The clerks cannot enter receipts simultaneously; . Receipts were not remitted to the Town Clerk daily. Cash is stored in unlocked file cabinets. .. Cause: The system does not allow for more than one person to be using it at a time. Daily cash receipts are not remitted to the Town Clerk on a daily basis. III .. Effect: Cash reports could differ from actual receipts collected. Receipt numbers could be duplicated or voided. Receipts not remitted daily could be missappropriated. .. .. Recommendation: The Town should restructure where the cash is being received for the Building Department. The Building clerk could produce a fee statement which is paid at the Town Clerk's office and a receipt given. The Building Department should then use the SCA software "Cash Receipts Report" to create a monthly report and reconcile to the Town Clerk's collections as shown on his monthly report to the Supervisor. .. Resuonse: We agree with the finding and recommendation. .. .. .. .. .. .. 5 .. .. ill TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND RECOMMENDATIONS, CONT'D .. FOR THE YEAR ENDED DECEMBER 31.2008 .. Findin2 5 - Parkland Fund Transactions III Findin2: We continue to note that use of parkland funds were not recorded as expenditures during the year, amounting to $13,130. Cause: Use of park lands funds were charged directly to the parkland fund and not shown as expenditures in the General Fund with a corresponding recording of Other Culture and Recreation Revenue. III .. Effect: General Fund revenues and expenditures were understated for the year. .. Recommendation: We note this recommendation and will implement recommendation from 2009. .. III Status of Prior Year Findin2s: Findin2s #1. 4. 5.6 and 7 Were Satisfied OR No Lon2er Applicable iIIII . .. .. .. .. ... IiIIIlt 6 III