New York Comptroller’s office audits Town of Potter

Gwen Chamberlain

The Office of the New York State Comptroller recently released the results of an audit of the Town of Potter.

The results include:

• HIGHWAY FUND BALANCE: Auditors noted that in 2007, the Highway Department operated at a deficit of over $46,000, largely due to the need to replace equipment that had broken down. The deficit was eliminated over the next two years by restricting spending and increasing property taxes.

By the end of 2009, the highway fund represented 12 percent of the total budget. The town continued to restrict spending while continuing to increase revenues, according to the audit. The auditors estimate that the highway fund will have a surplus of $70,000, which will increase the estimated surplus fund balance to over $158,000 or 80 percent of the town’s total spending.

The town board members explained that the balance will help establish a capital reserve fund for future equipment needs.

• BOND REFUNDING: The auditors said the board’s failure to properly budget for debt service on bonds issued in 2005 and 2008 resulted in lengthening the repayment period for the debt. The auditors said proper approval was not sought when rebonding 2005 debt in 2008.

• PAYROLL PROCESSING: The auditors said the town lacks a payroll policy that includes a town audit of the private contractor handling payroll.

The contractor withdrew approximately $272,200 annually from the town’s checking account for payroll, related employee withholdings, employment taxes and payroll processing fees. “Allowing the contractor to withdraw its fee without a review of this claim against the town is inappropriate,” wrote the auditor.

While the auditors found no discrepancies between the payroll records and reports, the private contractor could not provide documents proving that it had remitted the payroll taxes. “By giving control to the private contractor, the town could potentially be liable for salaries and payroll taxes that the private contractor did not pay,” wrote the auditors.

The auditors recommended that the board:

• Adopt written policies and procedures to govern the town’s financial operations;

• Develop realistic budgets for highway operations and work with the town’s attorney to properly establish a reserve fund.

• Ensure that it is in compliance with local finance law’s requirements.

• Review the contract for payroll services and make amendments so the contractor does not exercise the custodial and disbursing functions vested by statute in the Supervisor.

Responding to the Comptroller’s office, Potter Supervisor Leonard Lisenbee said the audit process caused an imposition on the town. “The appearance of the Comptroller staff at the Town over an eight month period was sporadic and random. Requests for documentation on many of these appearances were redundant. This redundancy created more of an imposition of time on the Town Clerk than should have been required of a small town with part time staffing.”

His letter, dated May 16, notes that the auditor’s incorrectly stated that Potter receives sales tax revenue.

He also said the town board will review financial policies and procedures and make amendments as needed, include in-depth advance consultation with the Highway Superintendent when developing the annual budget, consult with legal counsel in advance of borrowing funds and review its arrangement with the payroll contractor.