This is a New York State Comptroller audit report (2011M-69) on the West Seneca Fire District #1, covering November 2003 through December 2010. It was filed with the Erie County Clerk in April 2012.
Main finding
The audit found $137,866 in apparent misappropriation over about eight years. Of that, $115,402 went to the Treasurer’s wife (61 payments) and $22,464 to the Treasurer himself (16 payments), for 77 unauthorized payments in total. The Treasurer has held the position since 1986. Records before 2003 weren’t available, so the audit couldn’t establish when the payments began. The district’s general fund budget for 2011 was only $409,321.
How it was concealed
The Treasurer’s reports to the Board disguised the payments in several ways:
39 checks ($62,649) were reported as payments to the Treasurer’s employer, but were actually written to and endorsed by him or his wife.
17 checks ($37,154) were reported as voided, but were actually cashed by him or his wife.
Others were reported as payments to a regular vendor, a “miscellaneous vendor,” or “Pat,” or were left off the reports entirely.
Two salary checks exceeded his Board-approved pay.
When auditors first asked, the Treasurer said he paid his wife to archive district records. He later admitted he prepared fictitious claims and altered district records to avoid detection. He said the unauthorized payments had only gone on for two years, which the audit’s findings contradict.
Why it wasn’t caught
The Board approved payments based on the Treasurer’s own reports instead of auditing individual claims.
The Board never reviewed bank statements, canceled checks, or check sequences.
The district had no independent annual audit, as Town Law requires since 2009.
The Treasurer hadn’t filed an annual financial report with the Comptroller since fiscal 2006.
Recommendations
Take action to recover the misappropriated money.
Audit claims before payment.
Periodically review bank statements and canceled check images against claims.
Have the Treasurer file the required annual reports, with Board review.
Obtain an independent audit as required by statute.
District response (Appendix A)
The Board did not contest the findings. It reported that it had:
retrieved all financial records and the Treasurer’s laptop
removed him from any authority over funds
required two signatures on all checks
instituted Commissioner review of vouchers and bank statements
sent the Deputy Treasurer and several Commissioners to training
authorized the district attorney to pursue recovery
planned an RFP for an annual independent CPA audit
Other details
The matter was referred to the Erie County District Attorney’s Office.
Appendix C breaks down the unauthorized payments by year. The peak was $37,003 in 2006, and the lowest recent year was $1,650 in 2009.
The 2003 figure of $3,630 is understated, because auditors found five more suspicious checks totaling $8,998 whose canceled checks weren’t available.
