A recent state Comptroller's Office audit of the town of Jay had mostly positive results but did uncover one area in need of improvement - weak internal controls over water and sewer user charges, which could potentially increase the risk of fraud, abuse and mistakes.
The audit was conducted between Jan. 1, 2011, and March 31, 2012. During that period, public and private infrastructure was heavily damaged by spring floods and Tropical Storm Irene. Supervisor Randy Douglas said he was pleased with how well his town managed its finances despite those circumstances.
"It says a lot for us," he said. "We had to borrow $2 million from a local bank. We had to take a draw-down loan of $1 million from the (state) Environmental Facilities Corporation. ... Overall, with everything that hit us, the hours that we were working, the things we financially took a beating on, if that's all they can find - reconciling of water and sewer billing - we're in good shape.
Jay town Supervisor Randy Douglas
(Enterprise file photo)
"Overall, I'm very pleased."
Douglas explained that the comptroller's office conducted a pre-audit of the town's financial systems, and the water and sewer issues were the only things flagged for further investigation.
The audit found that the town hasn't formally adopted water and sewer rates, and that adjustments have been made to accounts without explanation. Additionally, collection dates for water and sewer payments haven't been adequately documented, and deposits haven't been made in a timely manner, according to a press release issued by the comptroller's office.
In a written response to the comptroller's report, Douglas said his board was aware of the issues raised by the audit. He said the town "had been making efforts over the last few years to correct and update the current policy on water/sewer charges and daily operations.
"We have made numerous changes but had not yet completed this department," Douglas wrote. "Unfortunately, 2011 was a tough year for the Town of Jay and so many of the projects we were working on to improve were put on hold due to four disasters in our Township, including the devastation of Tropical Storm Irene."
The audit said the town lacks comprehensive written policies and procedures "to provide adequate guidance and internal controls over water and sewer user charges and the Board provided only minimal oversight.
"This increases the risk that the Town is not collecting all the user charge revenues it is owed, along with the possibility of fraud, abuse, and professional misconduct," the report said.
In a review of 35 water and sewer rate adjustments, the comptroller's office found that 34 of them, accounting for $5,663, were not approved by the board. Municipal boards often review such rate adjustments and vote on them before they are granted.
"Additionally, for seven of the 35 adjustments totaling $313, we could not determine if they were for appropriate purposes because they were not supported by adequate documentation," the audit said.
The audit made six recommendations, and Douglas told the comptroller's office his board plans to take corrective action. The audit recommends that the town:
-Establish written policies and procedures to provide guidance and internal controls over billing, collecting, adjusting and depositing water and sewer charges.
-Establish a schedule of water and sewer rates.
-Review and approve all adjustments made to customer accounts, and make sure they are documented.
-Record the date on billing stubs when payments are received.
-Ensure that collections are deposited in a timely manner.
-Properly maintain records of water and sewer accounts, and perform monthly reconciliations to track discrepancies.
Douglas said in his response that he has met with town Sewer Committee members, the clerk to the supervisor, the town Department of Public works superintendent and the town's water and sewer bill collector to review the audit's recommendations and to "establish and approve a schedule of water and sewer rates to be charged to customers" beginning in 2013. He said the town has also developed a plan for rate adjustments.
Douglas said he doesn't like how state audits only draw attention to deficiencies in local government. He said Gary Giffords of the comptroller's Plattsburgh office complimented the town for running a good operation.
"So I said to him, 'Why can't you put that in the audit?'" Douglas said. "That's what frustrates me with the New York State Comptroller's Office.
"They will tell you positive feedback, but they won't say it in the report. ... It frustrates the (town's) staff. One positive line in the audit could go a long way."
Contact Chris Morris at 518-891-2600 ext. 25 or firstname.lastname@example.org.