town of hoosick - new york state · pdf fileexecutive summary the town of hoosick ... •...

Division of LocaL Government & schooL accountabiLity

o f f i c e o f t h e n e w y o r k s t a t e c o m p t r o L L e r

report of ExaminationPeriod Covered:

January 1, 2015 — August 31, 2016

2016M-428

Town of HoosickDepartmental Cash Collections

and Sales Tax Allocation

thomas p. Dinapoli

Page

AUTHORITY LETTER 1

EXECUTIVE SUMMARY 2

INTRODUCTION 4 Background 4 Objectives 4 Scope and Methodology 4 CommentsofLocalOfficialsandCorrectiveAction 5

DEPARTMENTAL CASH COLLECTIONS 6 Recommendations 9

SALES TAX ALLOCATION 10 Recommendations 11

APPENDIX A ResponseFromLocalOfficials 12APPENDIX B AuditMethodologyandStandards 17APPENDIX C HowtoObtainAdditionalCopiesoftheReport 18APPENDIX D LocalRegionalOfficeListing 19

Table of Contents

11Division of LocaL Government anD schooL accountabiLity

State of New YorkOffice of the State Comptroller

Division of Local Governmentand School Accountability April2017

DearTownOfficials:

A toppriorityof theOfficeof theStateComptroller is tohelp localgovernmentofficialsmanagegovernment resources efficiently and effectively and, by so doing, provide accountability for taxdollarsspenttosupportgovernmentoperations.TheComptrolleroverseesthefiscalaffairsoflocalgovernmentsstatewide,aswellascompliancewithrelevantstatutesandobservanceofgoodbusinesspractices.Thisfiscaloversightisaccomplished,inpart,throughouraudits,whichidentifyopportunitiesforimprovingoperationsandTownBoardgovernance.Auditsalsocanidentifystrategiestoreducecosts and to strengthen controls intended to safeguard local government assets.

Following is a report of our audit of the Town of Hoosick entitled Departmental Cash Collections and SalesTaxAllocation.ThisauditwasconductedpursuanttoArticleV,Section1oftheStateConstitutionandtheStateComptroller’sauthorityassetforthinArticle3oftheNewYorkStateGeneralMunicipalLaw.

This audit’s results and recommendations are resources for local government officials to use ineffectivelymanagingoperationsand inmeeting theexpectationsof their constituents. Ifyouhavequestionsaboutthisreport,pleasefeelfreetocontactthelocalregionalofficeforyourcounty,aslistedat the end of this report.

Respectfullysubmitted,

Office of the State ComptrollerDivision of Local Governmentand School Accountability

State of New YorkOffice of the State Comptroller

2 Office Of the New YOrk State cOmptrOller2

Office of the State ComptrollerState of New York

EXECUTIVE SUMMARY

The Town of Hoosick (Town), which encompasses the Village of Hoosick Falls, is located inRensselaerCounty andhas a populationof approximately 6,900.TheTownBoard (Board) is thelegislativebodyandhasoverallresponsibilityformanagingoperations,includingoverseeingfinancesandestablishinginternalcontrols.TheBoardiscomposedoffourelectedcouncilmembers,whoeachserveafour-yearterm,andanelectedTownSupervisor,whoservesatwo-yearterm.

TheTownprovidesvariousservices to its residents, includingstreet lighting, recreationprograms,streetmaintenanceandfireprotection.TheTownfinancestheseserviceswithrealpropertytaxes,salestax,Stateaidandfees.TheTown’s2016annualbudgetincludedappropriationsofapproximately$2.9million.

Scope and Objectives

The objectives of our audit were to assess the cash collection procedures at the Town’s pool and skatingrinkandtheallocationofsalestaxrevenuefortheperiodofJanuary1,2015toAugust31,2016.Wealsoexpandedourscopebackto2014todeterminetheextentoftheTown’spracticeofallocatingsalestax.Ourauditaddressedthefollowingrelatedquestions:

• Iscashcollectedatthepoolandskatingrinkaccuratelyaccountedforanddepositedtimelyandintact?

• Aresalestaxrevenuesbudgetedandallocatedproperlytomaintainequityamongtaxpayers?

Audit Results

TheTownannuallyoperatesacommunitypoolandskatingrinkforseasonalperiods.Althoughskatingrinkdepositsweremadetimelyin2015and2016andpooldepositsweremadetimelyin2015,pooldepositswerenotmadetimelyin2016.Additionally,collectionrecordswerenotadequatebecausetheydidnotincludetheformofpayment(i.e.,cashorcheck).Asaresult,wewereunabletodetermineifdepositsweremadeintact.Furthermore,wefoundtotaldepositsexceededtheamountsrecordedascollectedforthepoolin2015and2016.Wealsofoundthatamountsincludedinindividualdepositsfor2015skatingrinkcollectionsdidnotagreewiththeassociatedcollectionrecords.

Also,theBoarddidnotproperlyallocatesalestaxrevenues.Ifatowncontainsavillageandthevillagereceivessalestaxdirectly,thetownmustallocateallsalestaxrevenuestothepart-town(PT)fundstoeliminatethetaxlevypriortoallocatingtherevenuestothetown-widefunds.Duringtheperiod2014


through2016,theBoardimproperlyallocatedsalestaxrevenuestotaling$130,615tothetown-widefundswithouteliminatingthetaxlevyinthePTfunds,creatingataxpayerinequity.

Comments of Local Officials

The results of our audit and recommendations have been discussedwithTown officials and theircomments,whichappearinAppendixA,havebeenconsideredinpreparingthisreport.Townofficialsgenerallyagreedwithourfindingsandindicatedtheyplannedtotakecorrectiveaction.


Background

Introduction

Objectives

Scope and Methodology

TheTownofHoosick(Town),whichincludestheVillageofHoosickFalls(Village)withinitsboundaries,islocatedinRensselaerCounty(County)andhasapopulationofapproximately6,900residents.TheTown Board (Board) is the legislative body responsible for managing operations,includingoverseeingtheTown’sfinancialoperationsandestablishing effective internal controls. The Board is composed of fourelectedcouncilmembers,whoeachserveafour-yearterm,andan elected Town Supervisor (Supervisor), who serves a two-yearterm.TheSupervisoristheTown’schiefexecutiveofficerandchieffinancial officer and has overall responsibility for the accountingrecords. The elected Town Clerk serves a four-year term and is also theBoard-appointedTaxCollector.

TheTownprovidesvariousservicestoitsresidents,includingstreetlighting,recreationprograms,streetmaintenanceandfireprotection.The Town finances these services with real property taxes, salestax, State aid and fees. The Town’s 2016 annual budget includedappropriations1ofapproximately$2.9million.TheTown’srecreationprograms include a community pool, which operates during thesummermonths,andaniceskatingrink,whichoperatesduringthewinter months.

The objectives of our audit were to assess the cash collection procedures at the Town’s pool and skating rink and the allocation of sales tax revenue. Our audit addressed the following relatedquestions:

• Is cash collected at the pool and skating rink accuratelyaccounted for and deposited timely and intact?

• Are sales tax revenues budgeted and allocated properly tomaintainequityamongtaxpayers?

We reviewed cash collections at the Town’s pool and skating rink andtheallocationofsales taxrevenuefor theperiodofJanuary1,2015toAugust31,2016.Wealsoexpandedourscopebackto2014todeterminetheextentoftheTown’spracticeofallocatingsalestax.

We conducted our audit in accordance with generally accepted governmentauditingstandards(GAGAS).Moreinformationonsuch

1 Appropriations for the town-wide general, town-wide highway, part-towngeneral,part-townhighway,fireprotectionandlibraryfunds


Comments of Local Officials and Corrective Action

standards and the methodology used in performing this audit are includedinAppendixBofthisreport.

The results of our audit and recommendations have been discussed withTownofficials,andtheircomments,whichappearinAppendixA, have been considered in preparing this report. Town officialsgenerallyagreedwithourfindingsandindicatedtheyplannedtotakecorrective action.

The Board has the responsibility to initiate corrective action. Awrittencorrectiveactionplan(CAP)thataddressesthefindingsandrecommendations in this report should be prepared and forwarded to ourofficewithin90days,pursuanttoSection35ofGeneralMunicipalLaw.FormoreinformationonpreparingandfilingyourCAP,pleaserefertoourbrochure,Responding to an OSC Audit Report,whichyoureceived with the draft audit report. We encourage the Board to make thisplanavailableforpublicreviewintheClerk’soffice.


Departmental Cash Collections

To adequately safeguard cash collections, Town officials mustestablish a clear and consistent process that requires collections to be adequately documented and deposited timely and intact. This process should require employees collecting cash to issue duplicate press-numbered receipts or some other form of receipt that adequately documents thesource,date,amount, form(i.e.,cashorcheck)andpurpose of the collections.Additionally, all collections should bedeposited intact (in the sameamountand formas received). NewYorkStateTownLaw requirescollections tobedeposited into theTown’s bank accounts within 10 business days of receipt and sound business practices call for collections to be deposited as soon as possible to minimize the risk of theft or loss.

Collections at the pool were not always deposited timely and adequate records were not maintained to document collections at the poolandskatingrink.Asaresult,wecouldnotdeterminewhethercollections were deposited intact. Although adequate collectionsrecords (duplicate press-numbered receipts) were maintained for swimminglessonsatthepool,adequaterecordswerenotmaintainedfor other collections at the pool (admissions and concession stand sales)orskatingrink.Instead,thecollectionsweredocumentedusingdailycashreceiptreports,whichwerenotadequatebecausetheydidnot document the form of payment received.

Swimming Pool — The Town operates a public swimming pool duringtheperiodJunethroughAugusteachyear.2 The Town charges fees,asoutlinedinafeeschedule,forannualpoolmembershipsanddaily admission for resident adults and children and nonresidents. The Town also provides and charges residents for swimming lessons conducted at the pool and sells refreshments at a concessions area during the hours of operation.

Admissionfeesarecollectedatthepoolentrancebyswimmingpoolemployees,lifeguardsorthepoolsupervisor.Theemployeeassignedtocollectadmissionfeesrecordsthenumberofpoolattendees,feescollected for admission and the number of attendees with memberships on a daily admission sheet. The admission fees received during the dayare retained ina cashier’sboxwith thedaily attendance sheetuntil the end of the day when they are secured in a locked cabinet in thepoolsupervisor’soffice.However,theemployeeswhocollectedtheadmissionfeesdidnotcountthemoneyinthecashier’sboxor

2 Thepool’sseasonvariesannually.Forthe2016fiscalyear,thepool’sseasonwasJune27throughSeptember2.


reconcile the amount of cash on hand with the daily attendance sheet before turning it over to the pool supervisor. The pool supervisor or thewatersafetyinstructor(WSI)countedthecollectionsattheendofthedayorthenextmorningbutdidnotreconcilecollectionswiththe attendance sheet.

TheWSIcollectsfeesforswimminglessonsduringtheregistrationperiod,whichoccurspriortothepoolopeningfortheseason.TheWSIissues duplicate press-numbered receipts to document collections. The original receipt is given to the customer and the duplicate receipt is retained in the receipt book. The receipt book and collections are placedinacashier’sboxandthensecuredinalockedcabinetlocatedinthepoolsupervisor’sofficeuntiltheendoftheday.IftheWSIisnotavailable,aswimmingpoolemployeecollectsthefees,preparestheduplicatereceiptandturnsthemoneyovertotheWSIwhenshereturnstothepool.Attheendoftheday,thepoolsupervisorcountsthe day’s collections and records the cash count but did not reconcile the duplicate receipts to the collections for swimming lessons.

The Town also operates a concession area at the community pool atwhich candy, snacks and drinks are available for purchase.Theemployee responsible for operating the concession stand receives cash for the sales of these items and records the sales on a daily cash sheet. Thecollectionsarekeptinacashier’sboxuntiltheendofthedayandthen the cash sheets and collections are placed in a locked cabinet in thepoolsupervisor’soffice.However,noonereconciledtheamountreportedonthedailycashsheettothecollections.Furthermore,Townofficialsdonotmaintainaninventoryofitemspurchasedandsoldtobe reconciled with collections.

Wereviewedallthe2015collectionsforpooladmissions,swimminglessons and concessions according to the daily attendance and cash sheets and the duplicate receipts3 to determine if the collections were deposited timely.We found the 88 deposits, totaling $22,971, forthe2015collectionsweremadetimely.However,whilecollectionswere adequately documented on the duplicate receipts for swimming lessons, collections for admissions and concessions were notadequately documented because the daily collection sheets did not includethepayees’namesforpooladmissions,thequantityandtypesof items that were sold at the concessions stand or the form of payment (i.e., cash or check).As a result,we could not determinewhetherdeposits were made intact. Furthermore, we found that depositsexceededtotalcollectionsrecordedonthedailycollectionsheetsandtheduplicate receipt booksused for swimming lessons.Accordingto the daily cash sheets and duplicate receipt books, $19,320was

3 Includes89duplicatereceiptsissuedforswimminglessonfees


collectedin2015,whichwas$3,651less thanthe totaldepositsof$22,971in2015.

We also reviewed all collections according to pool records and all eight depositsmade in 2016 totaling $21,171.We found that fivedeposits were not made timely and included collections that were received10ormoredayspriortodeposit.Forinstance,onedeposittotaling$6,200,whichincluded$3,395incash,wasmadeonAugust23,2016and,accordingtocollectionrecords,containedcollectionstotaling $2,170 thatwere receivedmore than 10 days prior to thedeposit.Additionally,similarto2015,collectionsforadmissionsandconcessionswerenotadequatelydocumented,andasaresult,wecouldnot determine if depositsweremade intact.Also, similar to 2015,deposits exceeded the amounts recorded as collected. Specifically,$21,171 was deposited in 2016, but $19,399 of collections wererecorded on the daily cash sheets and in the duplicate receipt books. Asaresult,$1,772morewasdepositedthanwasdocumentedinthepool’s cash records.

Skating Rink—The Town operates a public skating rink, whichis generally4 open from December to March. The Town charges admission fees for adults and children to use the skating rink, aswell as fees for skate rentals, sharpeningskatebladesand the saleof hot chocolate. The fees are collected at the skating rink by a rink employee or the rink director (director). Collections are recorded on a dailycashsheetthatindicatesthefeecategory(e.g.,admission,skaterentalsorbladesharpening),amountcollected,numberofcustomersand the skating session.5Thedirectorreviewsthedailycashsheets,counts the daily collections and deposits collections. However,thereisnoindependentreviewofthedailycashcount.Additionally,in 2015 the skating rink employees used a cash register to recordcollections and the cash register receipts were attached to the daily sheets. Theformerdirectorleftafter the2015seasonandthenewdirector discontinued the use of the cash register in 2016 because she felt it would be easier for employees accepting collections to record them only on the daily cash sheet.

Accordingtothedailycashsheets,$8,204wascollectedattheskatingrinkin2015.Wereviewedall50depositsmadein2015whichtotaled$8,213andfoundtheyweremadetimely.However,wewereunableto determine if collections were deposited intact because there was nodocumentationof thecompositionof thedeposits.Additionally,

4 Forthe2015fiscalyear,therinkoperatedduringtheperiodJanuary5throughMarch9.Forthe2016fiscalyear,therinkoperatedduringtheperiodJanuary11throughFebruary3.

5 Theskatingrinkisopenforthreesessionsduringthehoursof12:30pmto2:30pm,3:30pmto5:30pmand6:00pmto8:00pm.


forfivedeposits, thetotaldepositedexceededtheamountrecordedascollected,andforfourdeposits,thetotaldepositedwaslessthantheamountrecordedascollected.Forinstance,ononeday,thetotalrecordedascollectedwas$181but$328wasdeposited,$147morethanrecorded.Thefollowingday,$123wasrecordedascollectedbutno deposit was made.

We also reviewed collections from the rink for 2016 and all eight depositsmadein2016totaling$4,719.Wefoundeachdepositwasmade timely and the total deposited agreed with collection records. However, we were unable to determine if the collections weredeposited intact because the daily collection records did not document the payee or form of payment.

These discrepancies occurred because the Town did not require employees collecting cash to maintain adequate records of collections or provide for oversight such as an independent reconciliation of collectionsanddeposits.Asaresult,theTownlacksassurancethatall collections were deposited intact and is at an increased risk that collections could be lost, stolen or misappropriated.Additionally,holding collections longer than necessary further increases the risk that collections could be lost or stolen.

TheBoardshould:

1. Establish and adopt policies and procedures that require employees collecting money to adequately document collections using the cash register, where applicable, andreceipts in all other instances.

2. Require daily cash counts to be reconciled with cash register and receipt totals for the day and then deposited daily.

Thepoolsupervisoranddirectorshould:

3. Requiretheuseofthecashregisterforallapplicablereceiptsand issue duplicate receipts that include the source, date,amount,form(i.e.,cashorcheck)andpurposeforallothercollections.

4. Reconcile collection records with amounts remitted for deposit and deposit receipts daily.

Recommendations


Sales Tax Allocation

TheBoardisresponsibleformakingsoundfinancialdecisionsthatareinthebestinterestoftheTownanditstaxpayers.NewYorkStateTaxLawprovides that countiesmayshare sales tax revenueswithcertain local governments. If a townwith a village receives salestax payments from the county and the village also receives suchpaymentsdirectlyfromthecounty,thetownmustfirstusethesalestaxproceedstobenefittheareaoutsidethevillagewhichisaccountedforinthepart-town(PT)funds.IfatowneliminatestherealpropertytaxlevyinitsPTfunds,itcanthenchoosetoallocateaportionofitssalestaxmoneystoitstown-wide(TW)funds.

The Town’s method of allocating sales tax is not in compliancewith statute. TheVillage is located within the Town’s boundariesand theVillage receives sales tax revenues from the County. TheTown improperly allocated portions of its sales tax revenue to theTW general fund and TW highway fund without first eliminatingthe tax levies in the PT funds.As such, taxpayer inequities haveoccurredbetweenthetaxbasecoveringthecompleteTownandthetaxbasecoveringthepartoftheTownoutsidetheVillageboundaries.Duringthe2014through2016fiscalyears,theTownreceivedsalestax revenues totaling$961,533. In the2014fiscalyear, theBoardallocated$34,969ofsalestaxtotheTWgeneralfundand$25,000ofsalestaxtotheTWhighwayfund.However,theBoardalsoleviedtaxesof$254,108inthePThighwayfundin2014.Also,in2015,theBoardallocated$40,646ofsalestaxtotheTWgeneralfundwhilealsolevyingtaxestotaling$220,837inthePThighwayfund.Lastly,inthe2016budget, theBoardallocated$30,000ofsalestaxtotheTWgeneralfundwhilealsolevyingtaxestotaling$239,658inthePThighway fund.

In effect,Town taxpayerswith realproperty located in theVillagehavereceivedanextrabenefitfromsalestaxdistributionsfromtheCountyattheexpenseoftaxpayerswithpropertylocatedoutsidetheVillage.Asaresult,forthe2014though2016fiscalyears,thetotaltaxlevy in the TW general fund and TW highway funds were incorrectly reducedby the sales taxallocated in theamountof$130,615.TheSupervisor told us that hewas unaware that sales taxmoneywasrequiredtobeallocatedtothePTfundsbeforeitcanbeallocatedtoTW funds.


TheBoardshould:

5. Allocate sales tax revenues to the PT funds in compliancewith statute.

6. Seeklegalcounselregardingthereturnofthe$130,615fromtheTWfundstothePTfunds.

Recommendations


APPENDIX A

RESPONSE FROM LOCAL OFFICIALS

Thelocalofficials’responsetothisauditcanbefoundonthefollowingpages.


APPENDIX B

AUDIT METHODOLOGY AND STANDARDS

Toachieveourauditobjectivesandobtainvalidevidence,weperformedthefollowingprocedures:

• We interviewed Town officials and employees and reviewed Town policies and variousfinancial records and reports related to the cash receipts collected at theTown’s pool andskating rink to gain an understanding of the cash receipt process.

• Wereviewedallpoolandskatingrinkcashcollectionrecordsfor2015and2016andcompared

themtoalldepositsmadein2015and2016.

• WeinterviewedTownofficialsandemployeestogainanunderstandingofthebudgetprocessandtheTown’spracticefortheallocationofsalestaxrevenues.

• WereviewedvariousfinancialrecordsfortheTWandPTfundsforthe2014through2016fiscalyears.

WeconductedthisperformanceauditinaccordancewithGAGAS.Thosestandardsrequirethatweplanandperformtheaudittoobtainsufficient,appropriateevidencetoprovideareasonablebasisforourfindingsandconclusionsbasedonourauditobjectives.Webelieve that theevidenceobtainedprovidesareasonablebasisforourfindingsandconclusionsbasedonourauditobjectives.


APPENDIX C

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT

OfficeoftheStateComptrollerPublicInformationOffice110StateStreet,15thFloorAlbany,NewYork12236(518)474-4015http://www.osc.state.ny.us/localgov/

Toobtaincopiesofthisreport,writeorvisitourwebpage:


APPENDIX DOFFICE OF THE STATE COMPTROLLER

DIVISION OF LOCAL GOVERNMENTAND SCHOOL ACCOUNTABILITYAndrewA.SanFilippo,ExecutiveDeputyComptroller

GabrielF.Deyo,DeputyComptrollerTraceyHitchenBoyd,AssistantComptroller

LOCAL REGIONAL OFFICE LISTING

BINGHAMTON REGIONAL OFFICEH.ToddEames,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Suite170244 Hawley StreetBinghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313Email:[email protected]

Serving:Broome,Chenango,Cortland,Delaware,Otsego,Schoharie,Sullivan,Tioga,TompkinsCounties

BUFFALO REGIONAL OFFICEJeffreyD.Mazula,ChiefExaminerOfficeoftheStateComptroller295MainStreet,Suite1032Buffalo,NewYork14203-2510(716)847-3647Fax(716)847-3643Email:[email protected]

Serving:Allegany,Cattaraugus,Chautauqua,Erie,Genesee,Niagara,Orleans,WyomingCounties

GLENS FALLS REGIONAL OFFICEJeffreyP.Leonard,ChiefExaminerOfficeoftheStateComptrollerOneBroadStreetPlazaGlensFalls,NewYork12801-4396(518)793-0057Fax(518)793-5797Email:[email protected]

Serving:Albany,Clinton,Essex,Franklin,Fulton,Hamilton,Montgomery,Rensselaer,Saratoga,Schenectady,Warren,WashingtonCounties

HAUPPAUGE REGIONAL OFFICEIraMcCracken,ChiefExaminerOfficeoftheStateComptrollerNYSOfficeBuilding,Room3A10250VeteransMemorialHighwayHauppauge,NewYork11788-5533(631)952-6534Fax(631)952-6530Email:[email protected]

Serving:NassauandSuffolkCounties

NEWBURGH REGIONAL OFFICETennehBlamah,ChiefExaminerOfficeoftheStateComptroller33AirportCenterDrive,Suite103NewWindsor,NewYork12553-4725(845)567-0858Fax(845)567-0080Email:[email protected]

Serving:Columbia,Dutchess,Greene,Orange,Putnam,Rockland,Ulster,WestchesterCounties

ROCHESTER REGIONAL OFFICEEdwardV.Grant,Jr.,ChiefExaminerOfficeoftheStateComptrollerThePowersBuilding16WestMainStreet,Suite522Rochester,NewYork14614-1608(585)454-2460Fax(585)454-3545Email:[email protected]

Serving:Cayuga,Chemung,Livingston,Monroe,Ontario,Schuyler,Seneca,Steuben,Wayne,YatesCounties

SYRACUSE REGIONAL OFFICERebeccaWilcox,ChiefExaminerOfficeoftheStateComptrollerStateOfficeBuilding,Room409333E.WashingtonStreetSyracuse,NewYork13202-1428(315)428-4192Fax(315)426-2119Email:[email protected]

Serving:Herkimer,Jefferson,Lewis,Madison,Oneida,Onondaga,Oswego,St.LawrenceCounties

STATEWIDE AUDITSAnnC.Singer,ChiefExaminerStateOfficeBuilding,Suite170244 Hawley Street Binghamton,NewYork13901-4417(607)721-8306Fax(607)721-8313

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