town of kirkwood - new york state comptrollerthe town of kirkwood (town) is located in broome county...

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 — September 30, 2016

2016M-414

Town of KirkwoodJustice Court Operations

thomas p. Dinapoli

Page

AUTHORITY LETTER 1

INTRODUCTION 2 Background 2 Objective 2 Scope and Methodology 2 CommentsofLocalOfficialsandCorrectiveAction 3

JUSTICE COURT OPERATIONS 4 Recommendations 6

APPENDIX A ResponseFromLocalOfficials 7APPENDIX B AuditMethodologyandStandards 11APPENDIX C HowtoObtainAdditionalCopiesoftheReport 12APPENDIX D LocalRegionalOfficeListing 13

Table of Contents

11Division of LocaL Government anD schooL accountabiLity

State of New YorkOffice of the State Comptroller

Division of Local Governmentand School Accountability March2017

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,whichidentifyopportunitiesforimprovingoperationsandBoardgovernance.Auditsalsocanidentifystrategiestoreducecostsandto strengthen controls intended to safeguard local government assets.

FollowingisareportofourauditoftheTownofKirkwood,entitledJusticeCourtOperations.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

Background

Introduction

Objective

Scope and Methodology

The Town of Kirkwood (Town) is located in Broome County and has approximately 5,800 residents. The Town is governed by anelected Town Board (Board) composed of four Board members and aSupervisor.TheSupervisoristheTown’schiefexecutiveandchieffiscalofficer.TheBoardisresponsibleforthegeneraloversightoftheTown’sfinancialactivities,includingtheJusticeCourt.

TheTownhastwoelectedJustices(JusticeBenjaminF.WeingartnerandJusticeWardE.Coe)whoareresponsibleforCourtoperations.Each Justice appoints a full-time clerk to assist in processing theCourt’sfinancialactivities.Inaddition,thereisapart-timeclerkwhoprovidessupporttobothJustices.InJanuary2016,JusticeCoe’sfull-timeclerkretiredandanewfull-timeclerkwasappointed.

TheCourthasjurisdictionovervehicleandtraffic,criminal,civilandsmallclaimscases.TheJustices imposeandcollectfines, feesandbailmoney, and are responsible for reporting theCourt’s financialactivitieseachmonthtotheStateComptroller’sJusticeCourtFund(JCF) and remitting all money collected to the Supervisor. TheJusticesuseacomputersoftwaresystemtorecordCourttransactions.

TheTown’s 2016 general fund budget totaled approximately $1.7million.Duringtheauditperiod,bothJusticescollectedandremittedmore than $1 million in fines, fees, surcharges and bail money,generating$229,014inrevenuefortheTown.1

The objective of our audit was to review the internal controls over the Court’sfinancialactivity.Ourauditaddressedthefollowingrelatedquestion:

• Are the Justices ensuring that monthly accountabilities areaccurate and complete?

WeexaminedtherecordsandreportsofbothJusticesfortheperiodJanuary1,2015throughSeptember30,2016.

We conducted our audit in accordance with generally acceptedgovernmentauditingstandards(GAGAS).Moreinformationonsuchstandards and the methodology used in performing this audit are includedinAppendixBofthisreport.Unlessotherwiseindicatedinthisreport,samplesfortestingwereselectedbasedonprofessional

1 TheJCFreviewsmonthlyreportstodeterminethedistributionoffundscollectedandfeesearnedtotheState,counties,townsandvillages.


Comments of Local Officials and Corrective Action

judgment,asitwasnottheintenttoprojecttheresultsontotheentirepopulation.Where applicable, information is presented concerningthe value and/or size of the relevant population and the sample selectedforexamination.

The results of our audit and recommendations have been discussed withTownofficials,andtheircomments,whichappearinAppendixA, have been considered in preparing this report. Town officialsgenerally agreed with our recommendations and indicated they have taken,orplantotake,correctiveaction.

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, which you receivedwiththedraftauditreport.WeencouragetheTownBoardtomakethisplanavailableforpublicreviewintheTownClerk’soffice.


Justice Court Operations

JusticesareresponsibleforadjudicatingcasesbroughtbeforethemaswellasaccountingforandreportingtheCourt’sfinancialactivitiestotheJCF.Theyshouldoverseeoperationstoensurethattheappointedclerks maintain complete and accurate accounting records on their behalf.EachmonththeJusticesarerequiredtoaccountforallreceiptsand disbursements and turn over the fines, fees and surchargescollected. Additionally, the Justices are required to present theirrecordsandfilesatleastonceeachyeartobeauditedbytheBoardoran independent public accountant.

The Justices should ensure that monthly bank reconciliations arecompleted in a timely manner and that an accountability of funds is performed by preparing a list of Court liabilities and comparing it to the reconciled bank balance and cash on hand. This accountability analysis documents the status of money held by the Court and provides a means of demonstrating that the Court is properly addressing its custodial responsibilities.

Both Justices ensured that fines and surcharges collected wereaccurately reported to the JCF and the correct amountwas turnedovertotheSupervisoreachmonth.However,neitheroftheJusticesensured that monthly accountabilities were accurately completed because they did not ensure that all bank accounts were reconciled eachmonth.Inaddition,theTown’sBudgetOfficer(alsoaCertifiedPublicAccountant)performedanannualauditoftheCourtrecordsand reported the results to theBoard; however, theBoard did notcommunicatetheauditresultstotheJustices.

Theclerkscollectandrecordallfinancialactivityusingatransactionregister.Eachmonththeytracedailydeposittotalsfromthetransactionregister to the bank statement.The clerks and Justices ensure thatthetotalreportedtotheJCFmatchesthetotalcollectedandturnedover to the Supervisor. Both clerks also perform a similar review for bailmoneyreceivedanddisbursed.Whilethisreviewhelpsensuretransactionsarerecorded,moneyisdepositedandfinesareremittedtotheSupervisor,thisisnotacompleteaccountabilityanalysis.Anaccountability analysis compares total liabilities to total cash on hand. Bycomparingonlycurrentmonthactivities,theclerks(andJustices)donotknowwhetherornottheircashonhandissufficienttocoveroutstandingliabilities,suchaspendingbail.

Fines and Surcharges—Duringtheauditperiod,JusticeWeingartner’sclerkreconciledthebankstatementbalancetohistransactionregister,


but JusticeCoe’s clerk did not.After JusticeCoe’s full-time clerkretired in January 2016, the part-time clerk attempted to reconcilethe register to the bank statement balance and discovered a shortage of$180.To investigate thisvariance, thebudgetdirector tracedallreceipts and disbursements from the register to the bank statements forthe2015fiscalyearandfoundtheywereallaccountedfor.Thisvariance was not resolved during our audit period.

Bail—Neitherclerk reconciled thebankstatementbalance to theoutstanding bail liabilities held by the Court at the end of each month. Weattempted to reconcile thebail liabilities to thebankstatementbalance as of September 30, 2016 for both Justices. For JusticeWeingartner,ouradjustedbankstatementbalancetotaled$8,445andtheoutstandingbailbalancetotaled$8,950,indicatingashortageof$505.Wealsoattemptedtotracetwooutstandingbailstotaling$2,000fromthelistofliabilitiestothecasefiles.Onebail($500)representsacurrent liability. The other bail amount represents a case that is more than 12 years old. There was no disposition recorded in the system andJusticeWeingartnercouldnotlocatethecasefile.Therefore,wecouldnotdeterminewhetherthisbail($1,500)representsaliability.

ForJusticeCoe, theadjustedbankbalancetotaled$11,242andtheoutstandingliabilitiestotaled$10,540,indicatinganoverageof$702as of September 30, 2016.We attempted to trace two outstandingbailstotaling$1,250fromthelistofliabilitiestothecasefiles.Onebail ($500) representsacurrent liability,but JusticeCoecouldnotlocatethecasefileassociatedwiththe$750bail.Thiscaseismorethan11yearsold,andalthoughthiscasewasdisposedaccordingtothesystem,therewasnorecordsupportingJusticeCoe’sattempttoreturnthebail.Therefore,wecouldnotdetermineifthe$750isthecorrect liability amount.

Oversight — The Board appointed the Town’s Budget Officer toconductanannualauditoftheCourtforthe2015fiscalyear,whichidentifiedthelackofcompletedreconciliationsofthebankbalancetothecheckregisterasaconcern.However,theBoarddidnotinformtheJusticesoftheauditresultsormakeanyrecommendationstoaddresstheweaknessesidentifiedduringtheaudit.BothJusticesconductedmonthlyreviewsoffinesassessedandtotalmoneycollected,reportedto theJCFand remitted to theSupervisor.They thought that thesemonthlyreviews(andtheclerks’work)weresufficienttoaccountforall court money collected and disbursed.

Bynotperformingbankreconciliationsandmonthlyaccountabilities,the Justices are not ensuring Court money on hand equals theliabilities,andtheyarenotidentifying,investigatingandcorrectinganydiscrepanciesonatimelybasis.Moreover,becausetheBoarddid


notaddresstheweaknessesfoundduringtheannualaudit,theydidnotprovideadequateoversightoftheCourt’sfinancialoperations.

TheJusticesshould:

1. Ensureallbankaccountsarereconciledonamonthlybasisand promptly investigate and resolve any variances noted,includingthoseidentifiedinthisreport.

2. PerformanaccountabilityoffundsheldbypreparingalistofCourt liabilities and comparing this listing with the reconciled bank balance and money on hand.

3. Followuponallbailmoneyheldtodeterminewhatcourseofaction is applicable.

TheBoardshould:

4. Inform the Justices of the results of the annual audit andensure corrective action is taken.

Recommendations


APPENDIX A

RESPONSE FROM LOCAL OFFICIALS

Thelocalofficials’responsetothisauditcanbefoundonthefollowingpages.


APPENDIX B

AUDIT METHODOLOGY AND STANDARDS

Toachieveourauditobjectiveandobtainvalidevidence,weperformedthefollowingprocedures:

• WeinterviewedTownofficialsandreviewedrecordsandreportstogainanunderstandingofCourtoperationsandoversight,includingmonthlyaccountabilitiesandannualaudits.

• WetracedthetotalcollectionsfortheauditperiodasshownonthemonthlyCourtreportstotheJCFmonthlysummaryreportstodeterminewhethertheJusticesreportedCourtfinancialactivitytotheJCFaccuratelyandinatimelymanner.

• We traced the total collected eachmonth per themonthly reports submitted to the JCF tothe canceled check images to determinewhether the Justiceswere correctly reporting andremitting all money collected to the Supervisor.

• We reviewed the monthly bank reconciliations performed by the Court clerks (if any) todetermineiftheywereaccurate,completeandpreparedinatimelymanner.

• ForeachJustice,wejudgmentallyselected twoliabilitiesfromtheCourt liabilities list.Wetracedthemtocasefiles,duplicatereceiptsandtheCourtsoftwaresystemtodeterminewhetherthey were a current liability or stale bail funds.

• We performed bank reconciliations for each Justice for the lastmonth of the audit periodverifying all reconciling items (outstanding checks, deposits in transit) and using them todetermine our adjusted bank balances.

• Wecomparedtheadjustedbankbalanceof thebailaccountsforbothJustices to the listofCourt liabilities at the end of the audit period to determine whether there was any unaccounted for money and whether the bail balance represents a current liability.

• Wereviewedthebankreconciliation,preparedby thebudgetdirector,ofJusticeCoe’sbailaccountasofDecember31,2015andtracedallreconcilingitemstosourcedocumentsandtheCourt software system to determine whether the reconciliation was prepared accurately.

• Wereviewedthe2015independentannualCourtauditresultsandfollowedupontheweaknessesidentifiedtodeterminewhethertheBoardtookcorrectiveactionforanyfindings.

WeconductedthisperformanceauditinaccordancewithGAGAS.Thosestandardsrequirethatweplanandperform theaudit toobtainsufficient,appropriateevidence toprovidea reasonablebasisforourfindingsandconclusionsbasedonourauditobjective.Webelievethattheevidenceobtainedprovidesareasonablebasisforourfindingsandconclusionsbasedonourauditobjective.


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

Table of ContentsAuthority LetterIntroductionBackgroundObjectiveScope and MethodologyComments of Local Officials and Corrective Action

Justice Court OperationsRecommendations

AppendicesResponse From Local OfficialsAudit Methodology and StandardsHow to Obtain Additional Copies of the ReportLocal Regional Office Listing

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