2000-08-02
'-'Sedore & CompanY'
Certified Public Accountants, Pc.
Poughkeepsie
(845) 485-55/0
Jome.r L. Sedore. .11:, CP.A.
Mork S. 0 :')u/(ivolI. CP.A.
Jomes F LetferilJ, .11:. CP./f
Tere.w A. B{I1J(hi. CP.A.
Lilldo 111. HOllniKolI. CP.A.
Korell T H{{lIsetl. CP.A.
Po. Box 918 . 62 East Main Street. !I1Jppingers Falls, NY 12590
(845) 297-11l1 . Fax (845) 297-1432
www.sedoreandcompany.com
Beo({)n
(845) 831-0542
Ne'd!JblflW1
(845) 565-1373
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
AND ON INTERNAL CONTROL OVER
FINANCIAL REPORTING BASED ON AN AUDIT OF GENERAL
PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Supervisor and
Members of the Town Board
Town of Wappinger, New York
Wappingers Falls, New York 12590
We hiive audited the general purpose [mancial statements of tll~ Town of Wappinger, New York,
as of and for the year ended December 31, 1999, and have issued our repOlt thereon dated August
2, 2000. We conducted our audit in accordance with generally accepted auditing standards and
the standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the Town of Wappinger, New York's
general purpose financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with
which could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our
audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance that are required to be reported under Government Auditing Standards.
We also noted certain immaterial instances of noncompliance that we have reported to the
management of the Town of Wappinger, New York, in the Schedule of Findings and
Recommendations listed in the Table of Contents.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Town of Wappinger, New York's
internal control over financial reporting in order to determine our auditing procedures for the
purpose of expressing our opinion on the general purpose financial statements and not to provide
assurance on the internal control over financial reporting. Our consideration of the internal
2
'-"
-....I
control over financial reporting would not necessarily disclose all matters in the internal control
over financial reporting that might be material weaknesses.
A material weakness is a condition in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level the risk that misstatements in amounts
that would be material in relation to the general purpose 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 over financial
reporting and its operation that we consider to be material weaknesses . We noted other matters
involving the internal control over financial reporting that we have reported to the management
of the Town of Wappinger, New York, in the Schedule of Findings and Recommendations listed
in the Table of Contents.
This report is intended solely for the information and use of the Supervisor, Town Board,
Management, others within the Town and is not intended to be, and should not be, used by anyone
other than these specified parties.
~';- ~,C,fJ.It.s
Wappingers Falls, New York
August 2, 2000
3
'-'
.....I
TOWN OF WAPPINGER, NEW YORK
SCHEDULE OF FINDINGS AND RECOMMENDATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
OTHER MATTERS:
PRIOR YEAR FINDINGS - CONTINUING:
Findin2 1 - Inspections
Findin2:
Cause:
Effect:
Recommendation:
The Town has included inspection fees in escrow accounts where the
purpose for holding these funds is unclear.
These fees have been collected as refundable fees which may not have to
be refunded.
Funds are being held indefinitely.
The Town should review its procedures for the assessment of inspection
fees so that the fee is recorded in accordance with the purpose of the fee,
being either refundable or a revenue.
Findin2 2- Escrow Funds
Findin2:
Cause:
Effect:
Recommendation:
Payments have been made in excess of escrow amounts collected resulting
in excess payments to individual project owners/developers.
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 some cases the disbursements exceeded the escrow collected.
Unanticipated liabilities could be incurred by the Town for which no
revenues/funds had been provided.
We note that the Town has had previous difficulties in accounting for and
reconciling escrow receipts and disbursements. We recommend that the
Town increase its monitoring efforts by providing for at least quarterly
reconciliations of transactions. A list of projects that are over-expended
should be circulated to interested parties, including, at a minimum, the
Supervisor and Town engineer, as well as building and accounting
department personnel. We also recommend that procedures for the return
of unexpended proceeds be changed to provide for sign-off by both the
building and accounting departments before authorization is requested of
the Town Board. General "B" Fund should reimburse the Trust &
Agency Fund for at least the amount, $5,200, by which the Town's
schedule of escrow balances exceeds the cash balance on hand.
27
'-'
-....I
TOWN OF WAPPINGER, NEW YORK
SCHEDULE OF FINDINGS AND RECOMMENDATIONS (CONT'D.)
FOR THE YEAR ENDED DECEMBER 31~ 1999
Finding 3 - Purchase Order System
Cause:
End-of-year outstanding encumbrances per the accounting system
significantly exceeded purchase orders actually open. The Town's
financial report had been adjusted to the correct amount.
Payments had been processed without releasing the related purchase
orders.
Finding:
Effect :
Payments may be made in contradiction of the approved purchase order,
budget commitments may be overstated.
Recommendation:
Procedures for the use of purchase orders should be reviewed so that
when invoices are received for goods or services they are matched with
purchase order authorizations and appropriate adjustments made. Open
purchase orders should be periodically compared to encumbrance listings
prepared by the accounting system.
Finding 4 - Fixed Assets
Finding:
The Town has not verified the existence of its fixed assets with amounts
carried on its records during the year.
Cause:
The Town has not taken a physical inventory of its fixed assets since
1993.
Effect:
The Town's fixed assets could be overstated.
Recommendation:
The Town should periodically perform a physical inventory of its fixed
assets, whether by hiring an outside consultant or requesting employees
to compare updated lists to items on hand. Periodic inventories enable the
Town to maintain accountability by those employees using Town assets,
and to prevent loss. Finally, the Town will be able to use the fixed asset
inventory to assist in its compliance with GASB #34 by the year 2003 as
required.
CURRENT YEAR FINDINGS:
Finding 1 - Cash Disbursements
Finding:
During our test of cash disbursements, certain exceptions were noted:
Cause:
. Insufficient documentation:
1. In our sample of nine vouchers/invoices for the purchase of tires none
had a description of the machine/vehicle being worked on, the
employee responsible.
2. In the same sample standardized pricing for the tires was not used.
28
-;~
'-"
.....,/
TOWN OF WAPPINGER, NEW YORK
SCHEDULE OF FINDINGS AND RECOMMENDATIONS (CONT'D.)
FOR THE YEAR ENDED DECEMBER 31, 1999
Finding 1 - Cash Disbursements (continued)
3. A voucher submitted for travel reimbursement was not accompanied
by receipts.
· Records are not centralized (for example, bid documents are kept
separately from payment documents);
· Payments are made from a copy of the invoice, not the original;
· Check register listed one check number, but actually two checks
issued with the same check number;
· Certain contracts were unavailable for our audit test-work.
Effect:
Town may pay for items and/or services not related to the Town or which
are not the Town's responsibility.
Recommendation:
The Town should review its purchasing and payment process so that the
purchase of similar items is aggregated and put out to bid, and/or that
State Contracts are used. A copy of the winning bid or state contract
should be attached to the voucher when submitted to the accounting
department for payment. Sufficient documentation should also be
attached so that it is clear to the reviewer that the expenditure is properly
a Town expense. Only original documents should be used.
Finding 2 - P~roll ExPenditures
Finding:
Certain payroll expenditures, for a total amount of $1,410, were not
reported as payroll.
Cause:
An employee was paid accumulated vacation hours upon termination by
a voucher.
Effect:
Appropriate payroll taxes were not withheld and paid as required.
Taxable wages as defined by the Internal Revenue Code were under-
reported on form W-2.
Payments to employees must be paid through payroll.
Recommendation:
29
'-'
'-'
TOWN OF WAPPINGER, NEW YORK
SCHEDULE OF FINDINGS AND RECOMMENDATIONS (CONT'D.)
FOR THE YEAR ENDED DECEMBER 31, 1999
Finding 3 - General Ledger Reconciliations
Finding:
Cause:
Effect:
Certain accounts did not reconcile to the general ledger .
The general disbursing bank reconciliation and the water/sewer rent
receivable reconciliation did not agree with amounts on the general
ledger.
Assets/liabilities and/or revenues/expenditures may be understated and/or
misposted.
Recommendation:
We recommend the Town's staff verify that reconciliations agree with
general ledger balances on a periodic basis to ensure that the general
ledger contains accurate information.
30
'-" ""'"
TOWN OF WAPPINGER
CONSTANCE O. SMITH SUPERVISOR'S OFFICE
SUPERVISOR 20 MIDDLEBUSH ROAD
P.O. BOX 324
TELEPHONE: (914) 297-2744 WAPPINGERS FALLS, NY 12590-0324
FAX: (914) 297-4558
TOWN OF WAPPINGER
FINDINGS AND RECOMMENDATIONS RESPONSES
TO AUDIT FOR THE YEAR ENDING DECEMBER 31, 1999
Prior Year Finding
FINDING 1: Inspections
The Town has included inspection fees in escrow accounts where the
purpose for holding these fmds is unclear.
RESPONSE 1: The fees in question are being reviewed and the appropriate adjustments
will be made to recognize those fees as revenue.
FINDING 2: Escrow Funds
Payments have been made in excess of escrow amounts collected resulting
in excess payments to individual project owners/developers.
RESPONSE 2: The monitoring of the escrow funds has been increased. The accounting
department has reviewed the postings to the accounts for the years 1997 to present.
Adjustments have been made in the current year for posting escrows made to the central
account totalling $2,264.80. Additional adjustments are to be made in the current year to
correct over-expanded accounts.
The Building Department has to verifY unexpended balances with
accounting department before authorization is requested of Town Board. This policy has
been in place.
31
'-'
"""'"
Audit Response
page 2
FINDING 3: Purchase Order System
End-of-year outstanding encumbrances per the accounting system
significantly exceeded purchase orders actually open. The Town's financial report had
been adjusted to the correct amount.
RESPONSE 3: The outstanding encumbrances were reviewed and in balance with general
ledger control accounts at year end. The accounting system went through an update in
December of 1999 and there were some problems with encumbrance roll-over on the
update. However, the difference/problem found were corrected.
FINDING 4: Fixed Assets
The Town has not verified the existence of its fixed assets with amounts
carried on its records during the year.
RESPONSE 4: The Town is in the process of receiving proposals from the firm which
did our previous appraisal due to the issuance of GASB 34 so that we may be in
compliance with the issuance of new GASB 34 ruling.
32
'-"
.....",
Audit Response
Page 3
Current Year Finding
FINDING I-Cash Disbursements: During our test of cash disbursements, certain
exceptions were noted: Insufficient documentation, In the sample standardized pricing for
the tires was not used~ A voucher submitted for travel reimbursement was not
accompanined by receipts.
RESPONSE 1: The Town purchased the tires from state bid. It is out normal practice to
note the state bid number on the PO, however, to have a better trail as to where the tires
are being used, we will, in the ,future on each PO, indicate which vehicle the tires will be
used on.
FINDING 2- Payroll Expenditures: Certain payroll expenditures, for a total amount of
$1,410, were not reported as payroll
RESPONSE 2: This was a most unusual situation in which the Town had hired a former
employee as a consultant and he was erroneously paid his earned benefit time from the
consultants line instead of payroll. This also was a time when we were without a
comptroller and were short handed. We will see to it, that, in the future, this does not
happen again.
FINDING 3 _ General Ledger Reconciliations: Certain accounts did not reconcile to
the general ledger.
RESPONSE 3: All accounts are and were in balance. The bookkeeper reconciles and
balances all accounts every month with out bank statements.
33