Audit finds lack of oversight of funds

Required to develop corrective action plan

BENSON — As a result of an audit done by the state comptroller’s office that found a lack of oversight for bank account transfers and check disbursements, the town board was required to develop a corrective action plan that addresses the findings and recommendations given by the comptroller.

The objective of the audit was to determine whether the supervisor established adequate control procedures over check disbursements and bank account transfers. The period the audit covered was from Jan. 1, 2018 to Dec. 31, 2018.

According to the audit, the supervisor permitted a county employee to sign checks using a rubber signature stamp.

“After the account clerk printed checks, she affixed the supervisor’s signature using a rubber stamp to 379 of 452 checks totaling $375,916 during the audit period,” the audit states. “The supervisor told us he was not aware town law did not permit the use of a signature stamp and was under the impression he could allow the account clerk to sign checks using the signature stamp.”

The audit states that once the supervisor’s signature was affixed to the checks they were mailed and made payroll checks available for pickup by town officials, however, the town supervisor and board members did not periodically monitor the check disbursements.

The comptroller’s office recommended Supervisor John Stortecky to destroy the two signature stamps; authorize disbursements by properly affixing his signature to checks and compare checks to abstracts or certified payrolls prior to them being issued.

According to the town’s corrective action plan, the town, along with Hamilton County, destroyed all rubber signature stamps. The town of Benson purchased an electronic facsimile signature of the town supervisor that was promptly installed into the county’s electronic check signature machine.

“The supervisor will now compare the electronically signed checks to the abstracts and certified payrolls prior to them being disbursed to ensure that they are for the correct amount and for the authorized purpose,” according to the CAP. “The supervisor will now monitor all check disbursements to control the process of check signing to decrease the risk of errors or irregularities that could occur.”

According to the audit, the Stortecky approved the creation of an online banking profile for the account clerk to allow her to on-line access to the town’s bank accounts to process transactions more conveniently.

“During our audit period, the supervisor made eight transfers between the town bank accounts totaling $475,092,” the audit states. “The account clerk made 79 on-line bank transfers totaling $427,704 between the town’s various bank accounts.”

Although it is the account clerk’s responsibility to maintain a record and support for all online bank transfers, neither the Stortecky nor the town board authorized or reviewed the transfers.

The state comptroller’s office recommended that Supervisor Stortecky authorize all online banking transfers and remove the account clerk’s access to online banking and modify the online banking privileges of the account clerk to read only access for reconciling purposes, and recommended the town board to review online banking transfers, bank statements and canceled check images periodically to ensure disbursements are issued for appropriate purposes.

According to the town’s CAP, modifying the account clerk’s online banking privileges to read only would be difficult because “the county’s payroll system automatically creates the retirement, state, social security and federal tax amounts,” the CAP states. “The system creates the files to automatically transfer and pay these tax amounts to the appropriate taxing authority through the online banking transfers. Therefore, it is impossible to perform the town’s payroll duties and services per the shared services contract agreement, if the county does not have full access to the town’s online banking system.”

The town suggested the state comptroller’s office revise their recommendation of removing the county from the online banking.

They will, however, establish adequate control procedures over the check disbursement and bank transfers that the county performs for them through a shared services municipal agreement.

According to the audit, the town board lacked oversight of supervisor Stortecky, and did not audit his records. “Because the board did not perform annual audits of the supervisor’s records and reports, its ability to effectively monitor financial operations including disbursements was diminished,” the audit states. “Had the board performed the required annual audits, it may have recognized the deficiencies in the supervisor’s procedures and brought them to his attention to encourage corrective action.”

The state comptroller’s office recommends the town board perform an adequate annual audit of, or retain an independent public accountant to audit the supervisor’s records and reports.

According to the town’s CAP, Supervisor Stortecky presented board members with monthly expense reports and revenue reports at each monthly town board meeting and will continue to do this.

“The supervisor will now schedule a quarterly review of all bank statements, reconciliation, abstracts, vouchers, payroll registers, etc. with his board on a quarterly basis and ask them to certify their review of these documents,” the CAP states.

Stortecky will also schedule an annual review with the board to certify that they have reviewed his transactions.

“I appreciate the Office of the State Comptroller’s audit report, as it identifies opportunities for improving and safeguarding our Town operations and town government,” Stortecky states in the CAP. “We are taking these findings and recommendations seriously, and will take the opportunity to correct actions that will improve our operations.”