SENECA FALLS — A state Comptroller’s Office audit has found that the Town Board approved payment for 236 credit-card purchases totaling $24,416 without adequate supporting documentation.
The report covered credit-card and travel expenditures for the period of Jan. 1, 2016, to March 31, 2018. Its objective was to determine whether the board ensured those expenditures were adequately supported and used for legitimate purposes.
The audit noted that former assistant Recreation Director Wendy Caraher used the town’s credit card to make 160 personal purchases totaling $12,938, for which the town incurred $3,774 in interest and finance charges.
Auditors recommended that:
• The board establish an adequate, written credit-card policy.
• Require credit-card users to submit adequate supporting documentation for purchases and ensure documentation is intact and reconciled to credit-card statements before approving claims for payment.
• Ensure credit-card payments are made in full in a timely manner to avoid unnecessary interest charges or late fees.
State auditors said town officials agreed with their recommendations and have initiated, or plan to initiate, corrective action.
“I feel very good about the new credit-card policy, which we changed shortly after the auditors told us we had to have a stronger policy,” Supervisor Greg Lazzaro wrote in an email. “As part of our internal controls, we are looking at making more changes.”
Town officials issue credit cards and purchase cards to certain department heads and employees to use for business purposes. In October 2017, town officials identified personal purchases made on one employee’s town-issued credit card. The employee resigned in September 2017 and signed a restitution agreement to repay the money.
A source familiar with the situation identified that employee as Caraher.
“The board did not establish effective policies and procedures that ensured credit card claims were properly supported and were for appropriate purposes,” the report stated. “Additionally, the board did not thoroughly review claims before approving them for payment and instead, approved payments solely based on the abstract.”
An abstract is a summary of disbursements that does not include supporting detail or additional explanation for the related purchases.
The town has one credit-card account and four purchase-card accounts. In November 2017, town officials engaged its independent auditors to complete a review of those purchases and transactions. After the incident, Supervisor Greg Lazzaro requested that all cards be turned over to the town clerk for safekeeping. If an employee needed to make a purchase using a credit card, they had to sign it out and return it to the town clerk.
Auditors tested all 1,020 credit-card purchases totaling $118,772 and all 209 purchase-card transaction totaling $22,308 for the period of Jan. 1, 2016, to Dec. 31, 2017. Auditors said 19 percent of those purchases lacked adequate supporting documentation for the purchase of gift cards, travel, meals, refreshments and certain purchases of tools and equipment that could have been for personal use.
“Town officials and department heads were generally able to provide a reasonable explanation for these purchases,” auditors said. “However, without adequate policies and procedures, officials were unable to determine whether all these purchases were appropriate.”
Auditors also identified 45 purchases totaling $4,305 that were shipped directly to an employee’s personal residence. These purchases were found to have been for legitimate purposes, but having them shipped to a personal residence “is not a good business practice and could lead to fraud, abuse or misappropriation.”
According to the audit, Caraher’s transactions were personal purchases from a college or university and its associated bookstore, grocery stores, restaurants, and various large online retail vendors. A clerk in the Recreation Department would review the credit-card amounts and mark the personal purchases believed to have been made by Caraher, but did not include those purchases for payment on the voucher or abstracts submitted to the board for payment. As a result, an outstanding balance was carried and interest accrued on those charges