Annual audit finds ‘no material weaknesses’ in town finances

Town's AAA rating is maintained

By JEFF MORRIS

The town board received the annual audit report from PKF O’Connor Davies, at its June 3 meeting.

The report covered the year ending Dec. 31, 2024. Alan Kassay, a partner in the accounting firm, reported along with Larry Feldman, a senior manager who “actually did all the work,” according to Kassay. 

Kassay said the town had maintained its AAA rating from Standard and Poor’s — the highest rating assigned by S&P Global Ratings. This indicates its capacity to meet the financial commitments on obligations is “extremely strong.” He said that’s certainly “a feather in your cap.”

Kassay also said that no material weaknesses were noted. He pointed out that the town budgets very conservatively every year on the revenue side, which he called a good policy to have, and which he observed the town has followed for the past 25 years.

The firm had issued “an unmodified opinion, which is known as a clean opinion — the best opinion you can receive,” said Kassay.

Regarding internal controls, the written report reinforced Kassay’s remarks, stating, “We did not identify any deficiencies in internal control that we consider to be material weaknesses.”

While overall positive, the audit did note a number of control deficiencies. During their review of the claims cycle, the auditors said, they observed that 24 out of 25 claims tested were either supported by purchase orders dated after the corresponding invoice date or a voucher was used in place of a purchase order. 

“This indicates noncompliance with the Town’s procurement policy,” said the report, “suggesting that purchases are being made without appropriate prior authorization.” Kassay noted the town’s performance in this area had actually gotten slightly worse, as in the prior year 19 out of the sample of 25 had goods received before the purchase order was issued. The auditor recommended that to ensure adequate control over the procurement process, purchase orders should be prepared and approved before the ordering of goods or services. A review of the town’s current procurement policy was recommended to identify any gaps in implementation, and to update the policy as necessary to strengthen purchasing controls. “It’s just something that you have to get your department heads, or whoever’s doing the ordering, to issue a purchase order before they’re actually ordering,” said Kassay.

The report also noted that during the audit of cash receipts, it found that one out of the five cash receipts “was not deposited in a timely manner.” It recommended that the client deposit cash receipts, especially during times of heavy cash flow, on a daily basis. During periods of less cash inflow, the auditor recommended that the receipts be deposited at the bank within 72 hours of the receipt. “This practice will firmly strengthen the Town’s internal controls over cash receipts cycle and significantly reduce the likelihood that cash could be lost or stolen before it is deposited in the bank,” said the report.

Also mentioned in the report were five outstanding checks over a year old in the operating account, amounting to $4,291. “Tracking outstanding checks is an important control procedure that ensures that all outgoing checks are accounted for,” noted the report. “We recommend the Town follow up on these outstanding checks to either re-issue them or write them off if no longer valid.”

The audit found the Justice Court had made significant progress with parking tickets outstanding for more than one year, as they totaled approximately $6,310 after having been almost $56,000 the previous year. “So, you’re making progress and you’re cleaning up some of these deficiencies,” said Kassay. “Again, these are only control deficiencies; they are not significant deficiencies or material weaknesses.” The official recommendation in the report was to have the Justice Court review the outstanding parking tickets to ensure their collectability, and “if found that the parking tickets are not likely to be collected, the Justice Court should consider writing off the respective balances.”

Another area the auditor found worthy of note was in the category of special purpose funds, where the existence of two inactive trusts was noted. The report said the Buxton Cemeteries and NYC Road Fund Trusts, with balances of $4,441 and $21,368, respectively, had no activity for the year. Kassay noted these amounts were identical to the previous year, and said they were not material. “We recommend that the Town reviews the purpose of these trusts and determine if these trusts need to remain open or if expenditures should be made from the trusts,” stated the report.

There had been inactivity for the past five years in the Performance Bond Deposits account, but Kassay said progress was being made, as the current balance is down to $258,000 after having been $384,426 a year earlier. 

In a follow-up statement, town comptroller Brian Kenneally said regarding the purchase order deficiencies, that he is reviewing the town’s procurement policy. “I think it’s written very well the way it is, but we’re going to make a few tweaks,” he said. “Most of the stuff that either didn’t have a purchase order, or was dated prior, were things like utilities.” He said they may rewrite the language in that section to account for those types of situations. As for the performance bonds and old escrow money, Kenneally said they have been taking “really active steps” for the last few months to resolve some of the old outstanding escrows that exist. He also noted that when there are unspent special purpose funds that are earmarked for specific things, there may be no valid reason to expend those funds in a given year. The references to those items in the report, Kenneally said, were more of an informational comment than a “slap on the wrist.”