SCHROEPPEL — A town of Schroeppel official was fired in August after neglecting to properly oversee the local government’s cash flow for nearly three years, according to an investigation by the New York State Office of the Comptroller.
The investigation began in March.
Town officials learned the hard way the importance of diligent record keeping this year when state officials scrutinized Town Comptroller Merle Dingman for failing to keep accurate accounting records, checking them against banking statements and maintaining monthly reports to the town board.
“When you get into government, a lot of the times you don’t realize there’s a problem until an item like this comes out,” said Schroeppel Town Supervisor Lynett Greco, who Monday said Dingman was “in over his head.”
Greco said newly appointed Town Comptroller Brenda Weissenberg — described by Greco as “absolutely wonderful” — is correcting records dating back to 2016.
“She’s literally going through every single account and reconciling and making sure everything is accounted for,” Greco said. “She and I have worked very closely with the state to get this right going forward.”
At least since Dingman began employment in January 2017, town officials have not had access to accurate and timely financial reports “necessary for the board to make informed decisions” regarding the town’s more than $2 million operating budgets, according to the state comptroller’s report. The report said the town’s comptroller should provide scrupulous and periodic updates to the board.
State officials also laid blame at the feet of the four-member town board and Supervisor Greco. They said town leadership reportedly “did not develop policies and procedures to ensure that the town’s accounting records and reports were complete, accurate and up-to-date.”
In a letter last month addressed to Chief Examiner Rebecca Wilcox of the state comptroller’s office, Schroeppel town officials conceded this point.
“The town of Schroeppel does accept the need to improve the functionality of the office of the town comptroller, as well as the daily activities performed by the town comptroller to ensure that safeguards are in place to provide proper oversight of the town’s finances by the town board,” town of Schroeppel officials said in the letter.
The report from the state comptroller’s office revealed unscrupulous mistakes including imbalances between town and bank statements, incorrect payments to town employees, late filings of important financial documents, and missing and inaccurate accounting records.
The state comptroller’s office calculated adjusted bank balances for each of the town’s 21 bank accounts — totaling more than $1.56 million — to total cash recorded in all funds in the accounting records as of Dec. 31, 2018 — totaling more than $1.38 million. Total adjusted bank balances exceeded the recorded cash balances by $180,116.
The town’s balance sheet for Dec. 31, 2018 was out of balance for all six funds and 11 of the 14 special districts, according to the state comptroller’s office. The report for the town-wide highway fund showed assets that exceeded liabilities plus fund balance by $144,122, while the report for the part-town highway fund showed total liabilities and fund balance exceeded assets by $492,466.
“Although our testing disclosed no instances of fraud or abuse, it is imperative that the supervisor and board provide additional oversight to ensure the town’s record-keeping practices are improved to help prevent and/or detect efforts or irregularities that could occur,” officials from the state comptroller’s office said in their report.
Due to outdated electronic direct deposit transmittal forms, several payroll errors occurred that are in the process of being rectified, according to town officials. From December 2018 to February 2019, five town employees were underpaid a total of $1,475. Another two employees were overpaid a total of $530. One employee was overpaid $30 and another was overpaid $500.
The state comptroller’s office report said “no one was comparing the direct deposit reports provided to the (Schroeppel) comptroller to the amounts he disbursed, which could have identified most of the errors.”
Officials at the state comptroller’s office reported there were differences between the account balances in the 2017 annual financial report — referred to as an annual update document (AUD) — filed one year late in March 2019, and the corresponding balances in the accounting records as of Dec. 31, 2017.
According to state officials, town officials attempted to re-create the 2018 AUD, but without accurate and consistent accounting records, this so far has proved to be a fruitless endeavor. The town’s plan was to add all 2018 recorded revenues and expenditures to the established beginning balances to re-create ending account balances for each fund at the end of 2018, though this did not lead to an accurate record based on trial calculations by officials at the comptroller’s office.
“The lack of accurate monthly financial reports inhibits the board’s ability to effectively monitor and manage the town’s financial operations throughout the year and evaluate the town’s financial condition,” said the state comptroller’s office report. “When the AUD is not accurate or filed in a timely manner, the transparency of town operations is compromised and it leaves the town without a means to demonstrate its financial standing to the board, taxpayers, OSC and other interested parties.”
State comptroller’s office officials urged the town to audit their comptroller’s accounting records and reports in the future, either themselves or by contracting an independent public accountant.
“As a result of the board’s inaction to require an annual audit, the board does not have adequate assurance that the comptroller properly accounted for all town financial resources,” state officials said. “Therefore, there is an increased risk that public money could be misappropriated or errors or irregularities could occur and remain undetected an uncorrected.”