State audit finds inaccurate accounting in Jay

JAY | New York State Comptroller Thomas P. DiNapoli found town officials here did not "maintain complete, accurate and timely accounting records." Released at the end of June, the state audit said the Town Council did not receive reliable records and reports to manage the Town of Jay's financial operations. Of 15 asset and liability accounts reviewed as of Dec. 31, 2021, and Oct. 31, 2022, five were overstated by $19,037 and 13 were understated by a total of $269,353. Of 10 revenue accounted reviewed from that same time frame, two were overstated by $927,546 and two were understated by a total $18,317. Of 10 expenditure accounts audited in the same time frame, two were overstated by $182,370 and two were understated by $6,091. And seven capital projects were completed but not closed out in the accounting records. The audit found bank reconciliations were not prepared monthly or properly prepared for all bank accounts. As part of their review, auditors outlined distinct duties for a town clerk and supervisor's bookkeeper, referring to the New York State Attorney General's opinion that the "office of the town clerk is incompatible with the supervisor's bookkeeper's position." "The current supervisor and board members told us although they were aware that these positions were incompatible, this occurred due to employee turnover and officials' inability to hire and fully train a new clerk to the supervisor on all financial duties as of the end of our audit period," the auditor said in the report. Current Supervisor Matt Stanley was elected in Nov. 2022 and sworn into office in January of 2023. The town council had been operating with two members, and the supervisor's job held by three people. Inaccurate accounting records were carried into each new tenure. The audit found no funds missing. But found "lack of oversight over maintenance of accounting records resulted in the town's accounting records being incomplete, inaccurate, untimely and unreliable. "Without reliable accounting records, the board's ability to manage the town's financial condition and make sound financial decisions is limited." In addition, auditors said that the board did not adopt resolutions to close any of the capital projects completed during the accounting period. "As of October 31, 2022, the accounting records contained separate capital projects funds for seven projects that were completed but not closed. Five of these projects were for capital improvements and the other two were for the purchase of heavy equipment that was financed by issuing debt." As an example, auditors found "accounting records for the 2015 plow truck, 2016 plow truck and sewer pump station rehabilitation projects contained recorded bond anticipation notes payable balances of $122,361, $286,577 and negative $1,475,000, respectively, although none of these projects had any remaining outstanding debt." The audit went on to emphasize the need for proper bank reconciliation of account statements and that they be done in a timely manner. "Had officials ensured bank reconciliations were prepared for all bank accounts, they may have identified and corrected recording errors in the accounting records. In addition, because bank reconciliations were not prepared in a timely manner, the board's ability to monitor the town's cash position and make informed financial decisions was hindered." Supervisor Stanley responded to the audit and outlined steps they have taken and will take going forward. In the six-page letter from the Town of Jay, Stanley said in May 2022 the town hired a new clerk to the supervisor to assume accounting duties, and the duties will be fully separated within the next year. The town said that by June this year, they had researched all projects with unexpended funds and "are in the process of transferring the amounts to the appropriate accounts and closing them." And the supervisor said he has begun providing the town board "with monthly operating statements, bank balances, deposits and disbursements to make sure the records are complete and accurate." Stanley told auditors that the town "will continue to remove and consolidate unnecessary funds located in our accounting records, and should have this task completed by year's end." As to journal entries, Stanley said they were being made in a timely manner as of April this year. "The journal entries are then reviewed for accuracy by a second person whether it be the supervisor and/or an independent contractor." In January 2024, the town plans to enter into a written agreement with a contractor "providing financial services to state expectations." In all, the Town of Jay has implemented 13 action steps to correct inaccuracies in its accounting methods. The full report on the Town of Jay audit is available on the State Comptroller's website: osc.state.ny.us/files/local-government/audits/2023/pdf/jay-town-2023-22.pdf.

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State audit finds inaccurate accounting in Jay

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