Riga's record keeping found not in compliance with state regs

Riga’s record keeping found
not in compliance with state regs

The Town of Riga has been found to not be in compliance with New York state regulations requiring municipalities to operate under an accrual accounting system, not a cash system.

"We didn't receive a clean bill of health and we need to go to the state comptroller's office and request an audit," Supervisor Pamela Moore said at the March 14 board meeting. The town did request, and receive, an extension on the report it is required to file annually with the comptroller's office.

Preliminary findings discovered by CPA Raymond Wager show that in addition to the town operating under a cash system, there are also questions on what the town "truly" has in cash reserves and fund balances, Moore said. "Without those figures we can't even begin to do any long term planning," she said.

"The town doesn't have an accounting system. It has an archaic system where checks are handwritten and journal entries are made," Moore said. "We need to get this under control quickly as our extension is until May."

Councilman Bob Ottley said he was disappointed with the CPA's findings because officials were told they would be receiving an audit from the CPA, not a report.

"He can't do an audit until we move to an accrual system," Moore explained when asking the board for a resolution to approve an extension to the CPA's contract not to exceed 100 hours at $65 per hour.

Ottley disagreed that the accountant couldn't perform an audit because the town was on the cash accounting system. "Many businesses operate under a cash system," he said. "Rather than going back and finding fault with the prior administration, the CPA could do an audit. He could compile enough information to do that."

Moore agreed that an audit could be completed with the town's finances the way they are but said, "We are out of compliance with New York state laws and that is a major deficiency. We need to get into compliance and it just isn't cost effective to request an audit now when we have many steps that need to be taken before an audit makes sense."

"We are the stewards of this town's money and we need to get a handle on both the physical and non physical assets," she said. "We don't even know how many computers we have but we did find we were operating with pirated software."

Use of pirated software could result in a fine of $150,000 per "willful use" and the town had 15 to 17 computers incorrectly sharing software. "We spent $8,000 on new software to bring us into compliance with that issue," Moore said. "The town was also five months overdue on payments for our workers compensation."

In a conversation following the meeting, Moore said she has been asking since January for a list of what bills are owed and to whom so that she could monitor it. "I still don't have (the list) and have been told there is no need for that information," she said. "That's unacceptable."

Moore was elected supervisor last fall, took office in January, and previously served on the town board.

When asked, after the meeting, how town officials didn't know the state of the finances prior to the CPA review, Moore said that reports previously provided to board members were given on a monthly basis with the word “accrual” written at the top. “The previous accountant should have known that municipalities are required to report on an accrual or modified accrual system,” Moore said. “Maybe he did know, maybe he verbally advised the town that it needed to switch from a cash to an accrual system. It’s impossible to tell because he never generated a written report to the town board, only an invoice.”

Moore said the state comptroller’s office, likewise, would not have been aware of the town’s accounting system because the way the state report is structured there is no risk assessment question that asks the type of accounting system the town utilized.

“In the past, access to information about the finances was always very restricted,” Moore said. “When (as a town board member) I was first appointed liaison to the recreation board, I asked to see how much money was in the account for capital improvements and initially I was denied the request. I persisted and the information was provided but I was told I couldn’t tell anyone - which was ridiculous as it was public information.”

Lack of an approved accounting system has led to lack of control in the town’s finances, Moore said.

The town did request an audit from the comptroller but was told that because the office was short staffed and overloaded with completing school audits one couldn’t be granted. “The staff said they receive many requests from newly elected boards who want to start their administrations with clean slates,” Moore said.

Another red flag for the town, Moore said, was in previous reports to the state the town indicated it had an investment policy when in fact it did not. “We have one now,” Moore said.

If the state comes to audit, Moore said the officials will have demonstrated they are making an honest attempt to improve things and come into compliance. “We know where our greatest risk factors are, have identified many things and are working to correct them,” she said.

When asking for the resolution to retain the CPA for an additional 100 hours, Moore said the accountant will attempt to accomplish three things: assist in the conversion to an accrual system; assist the town in completing its annual state audit report before the deadline; and train employees in the use of bookkeeping software. “One of our problems is, too, that we only have one person responsible for the bookkeeping and that is a significant issue,” she said.

Part of the CPA’s research determined that funds were either incorrectly moved in the 2005 budget or were not accounted for in the 2006 one. Those included money to replace the highway garage roof, construction of a salt storage shed, money for athletic field rehab and money for the purchase of a generator. A resolution was made to correctly move those funds as well as setting aside $6,500 for the accounting fees and $125,000 in a contingency fund.

“I’m confused about these transfers,” Ottley said. “We budgeted for them last year and moved some of those items over.”

Moore agreed that some of the money was budgeted but explained it was moved from line items incorrectly and needed to be reauthorized.

“The finances in the town have been a total nightmare and my issues are not partisan,” she said after the meeting. “Running a smooth financial operation should be something that rolls on smoothly every day of every year and a new supervisor should be transparent to the day-to-day process.

Ottley was the lone dissenting vote to proceed with the hiring of the CPA for an additional 100 hours in an attempt to bring the town into compliance.