The Times
  • Herkimer implements changes in wake of state audit

  • The village of Herkimer is undergoing several changes with how it manages its finances as a result of an audit completed by the state Comptroller’s Office earlier this year.

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  • The village of Herkimer is undergoing several changes with how it manages its finances as a result of an audit completed by the state Comptroller’s Office earlier this year.
    Changes the village is currently implementing or has already implemented include:
    •Developing a plan for future expenditures by re-examining the current inventory and having a written list of all future purchases that may be needed, and determining funding for financial operations.
    •Having the clerk-treasurer provide the board of trustees with monthly cash projections and balance statements to make sure all accounts are reconciled.
    •Having all bank accounts reconciled and recorded in a ledger; receipts are kept and all moneys received are deposited daily.
    •Having the village attorney examine and research the capital reserve accounts to determine the proper procedure for expenditures to make sure the village is compliant.
    •Auditing the financial records on a yearly basis.
    These changes and others were detailed in an April 18 letter Mayor Mark Ainsworth sent to the comptroller’s office in Syracuse in response to the audit.
    “We’ve definitely made some improvement,” said Ainsworth during a telephone interview on Thursday afternoon. “I requested their assistance to come in and look at our budget to give us some direction and to try to help us to look at ways to reduce cost in the village government. We knew things were going to be really, really tight this year.”
    Among the key findings from auditors for state Comptroller Thomas DiNapoli were:
    •The board has not established a multi-year financial plan to address the village’s finances.
    •The use of a transfer of approximately $175,000 from the capital reserve for funding the 2011 - 2012 budget may ultimately compromise the village’s financial stability.
    •The village is nearing its constitutional tax limit and therefore will be limited in its ability to increase real property taxes to finance operations.
    The audit reports the board has adopted budgets in the last three fiscal years that have “appropriated unexpended surplus funds to cover planned operating deficits.” This has led to a decrease in the general fund balance of $355,763 — or 33 percent — in the last three years.
    “If you keep relying on it, eventually it’s going to run out,” said Brian Butry, a spokesperson with DiNapoli’s office during a telephone interview on Thursday afternoon. “[While] there is a significant amount of fund balance left, this is just highlighting something the auditors found. While they are still in a financially sound position, this is something they may want to look at.”
    The audit also shows the $175,000 transfer is primarily a bookkeeping issue, said Butry.
    “You want to make sure you’re comparing apples to apples,” he said.
    The report also states the village’s “records and reports are inadequate.”
    Page 2 of 2 - This includes board members not receiving information on balance sheet accounts, including fund balance and cash, in its interim financial reports.
    Also, according to the report, the general ledger, from which the financial reports are generated, does not include bank account activity for 29 of 42 bank accounts maintained by the village.
    Of the 42 bank accounts, 13 are the village’s main operating cash.
    Two of the board members were unaware the village had 42 bank accounts — and instead believed it to be between 6 to 12 accounts.
    According to the audit, “If the board received complete interim financial reports, including cash balances, board members may have realized more bank accounts exist and it would be able to more appropriately monitor all cash accounts and activity.”
    Village Clerk-Treasurer Amanda Viscomi said at least ten of these accounts will be closed with the start of the new fiscal year in June. “We’re still getting those things in order,” she said.
    DiNapoli’s office, in the audit, also made the following recommendations to the board:
    •Create and routinely update a multi-year financial plan to provide a framework for preparing future budgets and managing the village’s financial operations.
    •Before budgeting a transfer from the capital reserve as a revenue in the general fund budget, identify specific capital projects or purchases included in the budget that meet the purpose for which the reserve fund was established.
    •Regularly monitor the constitutional tax limit and ensure budgeted tax levies are within those limits.
    Ainsworth said he would like more direction from the comptroller’s office about how to handle its finances. “Overall, we’d like a bit more direction, but they can’t tell you how to correct a problem. They can only make a suggestion,” he said.
    The report states the purpose of the audit was to review the village’s financial management for the period June 1, 2010 through Dec. 31, 2011.
    This is the second audit released by the comptroller’s office on the village in the past two weeks. DiNapoli’s office said in April the village’s proposed budget for the 2012 - 2013 fiscal year the “tax levy limit seems to exceed the village’s constitutional tax limit.”
    Viscomi said the village adopted its final 2012 - 2013 budget on April 30 which included the necessary changes to its budget.