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East Kingston Fire Company Audit
East Kingston Fire Company Audit
East Kingston
Volunteer Fire Company
Financial Activities
Report of Examination
Period Covered:
January 1, 2013 March 31, 2015
2017M-191
Thomas P. DiNapoli
Table of Contents
Page
AUTHORITY LETTER 1
INTRODUCTION 2
Background 2
Objective 2
Scope and Methodology 2
Comments of Company Officials and Corrective Action 2
FINANCIAL ACTIVITIES 4
Board Oversight 5
Records and Reports 5
Audit of Claims 6
Fundraising 7
Budgeting 7
Recommendations 8
APPENDIX A Response From Company Officials 9
APPENDIX B OSC Comments on the Companys Response 12
APPENDIX C Audit Methodology and Standards 13
APPENDIX D How to Obtain Additional Copies of the Report 14
APPENDIX E Local Regional Office Listing 15
State of New York
Office of the State Comptroller
One important function of the Office of the State Comptroller is to help fire company officials manage
company resources efficiently and effectively and, by so doing, provide accountability for money
spent to support company operations. The Comptroller oversees the fiscal affairs of fire companies
statewide, as well as compliance with relevant statutes and observance of good business practices,
through the conduct of audits. Our audits may also identify opportunities for improving operations and
fire company governance. Audits also can identify strategies to reduce costs and to strengthen controls
intended to safeguard fire company assets.
Following is a report of our audit of the East Kingston Volunteer Fire Company, entitled Financial
Activities. This audit was conducted pursuant to Article V, Section 1 of the State Constitution and the
State Comptrollers authority as set forth in Article 3 of the New York State General Municipal Law.
This audits results and recommendations are resources for fire company officials to use in effectively
managing operations and in meeting the expectations of the public. If you have questions about this
report, please feel free to contact the local regional office for your county, as listed at the end of this
report.
Respectfully submitted,
Background The East Kingston Volunteer Fire Company (Company) provides fire
protection services for the Town of Ulster (Town) located in Ulster
County. The Company also receives money from fundraising, foreign
fire insurance funds,1 donations, hall and building rental and other
activities. For 2014, Company revenues totaled about $214,000 and
expenses totaled about $163,000.
Objective The objective of our audit was to evaluate the Companys financial
activities. Our audit addressed the following related question:
Scope and Methodology We examined the Companys financial activities for the period
January 1, 2013 through March 31, 2015.
Comments of Company The results of our audit and recommendations have been discussed
Officials and Corrective with Company officials, and their comments, which appear in
Action Appendix A, have been considered in preparing this report. Except
1
Foreign fire insurance funds represent a tax on the premium paid on insurance
policies as provided for in New York State Insurance Law, which entitles fire
companies protecting an eligible area to receive an appropriate share of the tax
collected on insurance policies written by foreign insurers on policies within
their area of protection.
2
The Board adopted budget included over estimation of known expenditures such
as insurance, audit fees, and communications. Because the Town levies property
taxes to pay for the entire amount of the Companys budget, any over estimation
of expenditures results in Town residents paying more real property taxes than
necessary to fund fire protection services.
The Board did not establish policies and procedures for cash receipts,
cash disbursements, purchasing goods and services or auditing claims.
The Treasurer received money, prepared and made deposits, recorded
receipts and disbursements in the financial software program,
prepared handwritten checks and was the signatory on the Companys
bank accounts. She also prepared monthly bank reconciliations
for the Companys two checking accounts. Although the Treasurer
provided a monthly report of cash receipts and disbursements to the
general membership, Company officials did not review the bank
reconciliations, bank statements and canceled check images. Further,
the Board did not require the Treasurer to submit an annual report or
annually audit the Treasurers records as required by the Company
bylaws.
Audit of Claims The claims audit process should entail a thorough and deliberate
examination of all claims to determine whether each claim is a legal
obligation and a proper charge against the Company. A claim package
should contain enough detail and sufficient information, including
an original receipt or invoice for the goods or services purchased to
make that determination. Further, there should be evidence indicating
that an audit of the claim was performed.
The cancelled check for one claim totaling $3,200 was payable
to a gas station but endorsed3 by the Treasurer.
The Treasurer told us that the $3,200 check was cashed to provide
money to the members attending training. The accounting records
indicated that the $1,300 check was for raffle expense, and deposits
totaling $1,740 were the return of a portion of these amounts.
However, the remaining $3,260 was unaccounted for with no
supporting documentation. In addition, there was no evidence that the
Board audited the previously discussed 572 disbursements totaling
$283,401, which were not included in the Treasurers reports.
3
Signed on the back to make it payable to the Treasurer.
The Board did not establish adequate internal controls to ensure all
fundraising proceeds are properly accounted for and deposited. After
fundraising activities, a general fundraiser report should be completed,
which details the money spent to hold the fundraiser and the amounts
collected. Company officials did not track amounts spent for specific
fundraisers or document the amounts received. The President told us
that because fundraisers, such as dinners and brunches, are held to
allow the Company to give back to the community, there is no charge
to attend these functions, although donations are accepted.
The Company officials response to this audit can be found on the following pages.
See
Note 2
Page 12
See
Note 2
Page 12
See
Note 3
Page 12
Note 1
The Company bylaws state that the Board is responsible for verifying expenses. Further, the Board is
responsible for financial oversight.
Note 2
Note 3
As stated in our report, appropriations were overestimated in 2013 and 2014 and exceeded actual
expenditures for both years.
Note 4
The Board did not provide adequate oversight of Company financial affairs and the Treasurer did not
provide the Board complete and accurate accounting reports. As a result, the Board did not properly
approve 572 disbursements totaling approximately $283,400 that were not shown on the Treasurers
reports and included three disbursements totaling $5,000 that were payable to or endorsed and cashed
by the Treasurer.
To achieve our audit objective and obtain valid evidence, we performed the following procedures:
We reviewed the Company bylaws and documented the roles and responsibilities of various
officers fiscal responsibilities including financial oversight, cash receipts and disbursements.
We reviewed Board minutes for information related to policies and procedures, to identify
revenues, purchases and related disbursements, personnel changes and fundraising activities.
We reviewed supporting documentation for all disbursements made during the audit period
to determine whether purchases were made for valid purposes, included Board signature
authorizations and complied with the bylaws.
We documented the composition of deposits and verified whether all donations identified in
the minutes and Treasurers reports were deposited. Also, we analyzed revenues to determine
whether they were from recurring sources.
We compared bank records for the audit period to the accounting records to determine whether
the accounting records were complete and accurate.
We conducted this performance audit in accordance with GAGAS. Those standards require that we
plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis
for our findings and conclusions based on our audit objective. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit objective.
Serving: Allegany, Cattaraugus, Chautauqua, Erie, Serving: Cayuga, Chemung, Livingston, Monroe,
Genesee, Niagara, Orleans, Wyoming Counties Ontario, Schuyler, Seneca, Steuben, Wayne, Yates Counties