New Lebanon Supervisor Responds To Audit Report

by Thaddeus Flint
New Lebanon Town Supervisor Margaret Robertson has responded to a State Comptroller’s audit of the Town’s records, stating that “significant inaccuracies” existed in the released report.
As reported in the May 20 Eastwick Press, an audit of New Lebanon was done covering financial activities from the period of January 1, 2008 to July 1, 2009. The Comptroller’s Office was primarily looking to determine if internal controls over wire transfers, purchasing and information technology were appropriately designed to adequately safeguard Town assets.
Their audit report listed the following problem areas:
“Internal controls over wire transfers were not appropriately designed and operating effectively to safeguard Town assets.” The Town needs to be vigilant in making sure they know exactly who orders online transfers of funds and what the purpose of those transfers was for.
“Internal controls over purchasing were not adequate.” The report cited that $84,570 was spent on highway materials which the Comptroller’s Office felt was not properly solicited or put out to bid. A further $36,356 for rental of equipment was spent “without using requests for proposals or soliciting written quotes, as required.”
“Internal controls over IT (Information Technology) are not appropriately designed.” The Town needs to make sure a better system is put into place to safeguard and backup sensitive data. In the event of some disaster, with the system that was in place at that time, there could be loss of financial records and court records which could seriously affect Town operations.
In a May 25 letter to Kenneth Madej, Chief Examiner at the New York State Comptroller’s Office, Robertson pointed out that the Town did not receive “preliminary audit findings” of the released report. As a result, the Town’s first response to the audit was not able to review and focus on the “significant inaccuracies.”
In regard to the wire transfers, Robertson pointed out that these are actually Electronic Funds Transfers (EFTs) and are used to transfer money from one account to another. The Town is fully aware at all times who is doing these transfers as only the “Town Supervisor and no one else performs these transfers.” Robertson stated that only she has online access to the Town’s bank accounts so they know exactly who is ordering them. All payments are then confirmed with a certified abstract. Copies of bank statements are provided monthly to the Town’s accountant. This information is then incorporated into the Supervisor’s report and presented to the public at monthly meetings of the Town Board. “We feel the Town has effective internal controls regulating transfers and sufficient oversight to effectively safeguard the Town monies,” wrote Robertson. She further explained two transfers which the report listed as totaling $11,346. The OSC report stated, “Town officials could not provide the reason for the transfers.” According to Robertson this is not true. “Two separate interviews documented by the auditor recorded these two transactions…” wrote Robertson. To refresh the Comptroller’s memory she explained that one payment was for $588 and went to pay postage so the tax collector could send out tax bills in 2009. The remaining $10,758 went towards payroll.
As for purchasing, Robertson explained that not every purchase need be put out to bid if the materials have already been put out to bid by the State or the County and are bought under those contracts. “All General Municipal Law (GML) procurement requirements were and are met,” wrote Robertson.
In response to the Comptroller’s accusations that the Town does not have adequate protections safeguarding their electronic records, Robertson pointed out that the Town does in fact have adequate protection of records because everything still exists on paper as well. While it is true that the Town is implementing systems for electronic record keeping, at the moment these are considered “solely for the ease of use and convenience.” Even with hard paper copies and electronic copies, the Town has still made a point of implementing a daily off-site automatic backup of electronic records. “Determining that paper records are the official records and electronic records are for ease of use and convenience at this stage has enabled us to mitigate the risk while maximizing the benefit of electronic records without unnecessarily burdening our taxpayers,” said Robertson.
To further show that the Town is not only transparent in its record keeping but accurate as well, Robertson intends to request that the Town Board procure the services of an independent accounting firm to perform an audit of the Town financial records for the same period reviewed by the State Comptroller’s office. In the meantime, the Comptroller’s Office has removed the audit report of New Lebanon from their website. According to Town Clerk, Colleen Teal on June 6, “We have not had a response from OSC as of yet.”