The Board of Trustees for Nelsonville needs to improve its oversight of the financial operations of the 628-resident village, according to a new audit by state Comptroller Thomas DiNapoli’s office. The village should be auditing the clerk-treasurer’s financial records and reports annually, certifying payroll before checks are processed, making sure the clerk-treasurer reconciles bank accounts monthly and reviewing the clerk-treasurer’s work, the audit said.
In a Feb. 20 response to the audit, Nelsonville Mayor Thomas Corless said village officials generally agree with the audit’s findings and adopted procedures to comply with the recommendations on Feb. 19. The village’s clerk-treasurer, Pauline Minners, is now reconciling bank accounts monthly and reporting the information to the Board of Trustees. The village obtained a financial-software package that will enable the clerk-treasurer to better peform her job. The board will make sure audits are performed regularly in the future, Corless wrote.
One of the problems state auditors found is the board didn’t ensure the clerk-treasurer was reconciling bank accounts monthly and that payroll was being certified, as required by law. As of Aug. 31, 2012, the combined balance for the village’s six bank accounts was $372,092. The clerk-treasurer didn’t reconcile the general checking and the trust and agency accounts. She maintained a general-ledger balance, but she didn’t compare it to the bank balance to detect any discrepancies, the audit said.
The clerk-treasurer started to properly reconcile the general checking account before state auditors completed their field work. But she did not reconcile the other four accounts, which had a combined balance of $117,515 as of Aug. 31, 2012. She told auditors that she hadn’t been doing that because there was no activity in the accounts. The audit said she should still reconcile them and report the cash balances to the board.
A village official should examine payroll and certify that employees have worked the hours claimed and are paid at board-approved rates, the audit said. Village officials and staff told auditors they weren’t aware someone else should review all payroll transactions. In reviewing transactions for the fiscal year ending May 31, 2012, they found the clerk-treasurer erroneously deducted $240 from the mayor’s retirement pay and didn’t deduct Social Security tax from three employees’ salaries in July 2011.
Another finding was the board did not audit the clerk-treasurer’s financial records and reports on an annual basis, meaning there was no independent verification that transactions were properly recorded and reported and cash properly accounted for. Village officials told auditors they were not aware of any annual audits for previous years.
The audit also said the clerk-treasurer should not perform all the duties related to cash collections, disbursements, recordkeeping and account reconciliations. Having one person do all that means “there is an increased risk that cash could be misappropriated without detection,” the report said. If there isn’t enough staff to separate duties, the board could regularly review bank statements, canceled checks, cash receipt records and reconciliations, and compare those with the monthly records the clerk-treasurer provides.
Corless wrote that since the village doesn’t a relatively small amount of business and Minners is the only full-time employee, the Board of Trustees will oversee her work, rather than segregate her duties.