The protesters, led by Islip Town Board members Trish Bergin Weichbrodt and Steven Flotteron, who are Republicans, claimed Nolan “whitewashed” important, potentially incriminating parts of the audit while it was still in draft form.
Nolan and DiNapoli, both Democrats, said parts of the draft were altered, but the changes were legal, vetted by experts and are part of the process of finalizing an official document. They added that Bergin Weichbrodt and Flotteron had the opportunity to make changes to the document but never submitted any in writing.
DiNapoli’s official audit states that there is $12,250 missing from the town, and that from 2006 to 2008, town officials unnecessarily put $14.3 million a year in its fund balance, or municipal savings account.
Additionally, the report said the town comptroller charged about $10 million in revenues and expenditures to the wrong funds, leading to unfair tax increases.
Nolan, who took office in 2006, said the financial woes came from long-term mismanagement by previous town administrations.
“We’re going to keep taxes low and the bond rating high,” Nolan said after the conference.
Islip Town Comptroller Joseph Ludwig said the municipality has high bond ratings: AAA from Standard & Poors, the highest the firm gives; and Aa2 from Moody’s. The Aa2 is Moody’s third-highest rank.
After the press conference, Flotteron and Bergin Weichbrodt said the draft report stated that there was $23 million funneled into two different town accounts in order to make it appear the town was cash-poor.
They said Nolan used that as a reason to lay-off workers and raise taxes. Come next year, Nolan’s election year, he will be able to lower taxes, helping him get re-elected, Flotteron and Bergin Weichbrodt explained.
Nolan countered by stating that Flotteron and Bergin Weichbrodt do not understand the documents. He added that much of the money they are referencing was already set aside for future bills.
DiNapoli’s audit recommends that Town Clerk Regina Duffy investigate the missing funds and assign an employee to make sure all the cash adds up, among other proactive measures to ensure a financial mess does not happen again.
Audit: Accounting made Islip finances seem worse August 9, 2010 by JENNIFER MALONEY / jennifer.maloney@newsday.com
The Town of Islip overtaxed village residents, gave unauthorized benefits to managers and for three years overstated its projected expenses by about $14 million a year, making its financial position appear worse than it was, according to a state audit released Monday.
All three issues stemmed from long-standing accounting problems dating as far back as 20 years, State Comptroller Thomas DiNapoli said Monday.
The probe, covering January 2007 to August 2008, was requested by Islip Supervisor Phil Nolan after the town discovered a decades-old deficit of more than $3 million in its capital projects fund.
The audit, which also discovered the town clerk's office in 2007 and 2008 misplaced $12,250 in cash, refuted Town Clerk Regina Duffy's claim that she had located 80 percent of the missing money. She has recovered none of it, said deputy comptroller Steve Hancox.
DiNapoli has referred the issue of the missing $12,250 - misplaced by Duffy and her predecessor, Joan Johnson - to the Suffolk County district attorney's office, which Monday confirmed it had received the referral.
Duffy said she recently discovered $7,875 in her office's checking account, and thought it to be part of the missing funds. But it turned out to be bingo revenue that hadn't been transferred to the proper department. "We will find them, guaranteed," she said.
The audit found residents in Islip's four villages, Brightwaters, Saltaire, Ocean Beach and Islandia, in 2007 and 2008 paid $9 million in debt service that should have been shared among all town residents. As a result, the average assessed home paid an estimated $40 more than necessary in each of those years, town comptroller Joseph Ludwig said. The overpayments began in 2002, he said, and were the result of errors in the revenues and expenses assigned to the general fund and the village fund.
From 2006 to 2008, town officials designated about $14 million a year for projected expenses, or encumbrances, "that did not exist," the audit said.
Ludwig said most of that money was set aside for unforeseen spikes in health care and pension costs. The town's practice was to draw up a purchase order for the amount, rather than move the money to a designated fund, as required by state regulations.
For more than 20 years, managers received leave time and other fringe benefits not authorized by the town board, the audit said. The benefits totaled $111,000 in 2007 and 2008.
Noting Islip's low taxes and high bond rating, Nolan said the town has rectified or is in the process of addressing "every single thing discussed in this audit." As for problems during his tenure, Nolan, who took office in November 2006, said, "You can't get everything rectified the first day you're here."
Islip council members Trish Bergin and Steven Flotteron Monday called on the district attorney and the Attorney General to investigate DiNapoli's handling of the audit. They took issue with the deletion of passages in the first draft critical of the current administration, including a conclusion that the town deliberately misstated its financial position and suggestions it could have used its surplus to lower taxes or cap the Lincoln Avenue Landfill.
DiNapoli Monday said that because the current administration was following a long-standing accounting practice, it was unfair to characterize its overstatement of projected expenses as "deliberate." As for ideas on how to spend the surplus, he said, "It's not our place to direct the town board on how to spend the town's money."
Making changes to draft audits after hearing comments from town officials, he said, is common practice.
What the state comptroller found:
The town clerk's office in 2007 and 2008 misplaced $12,250 in cash. State Comptroller Thomas DiNapoli has referred the issue to the Suffolk County district attorney's office.
Village residents in 2007 and 2008 paid $9 million in debt service that should have been shared among all town residents. As a result, the average assessed home in the town's four villages paid an estimated $40 more than necessary in each of those years.
******From 2006 to 2008, town officials designated about $14 million a year for projected expenses, or encumbrances, "that did not exist," making the town's financial position appear worse than it was.
For more than 20 years, managers received leave time and other fringe benefits that were not authorized by the town board. The unauthorized benefits totaled $111,000 in 2007 and 2008.
The audit confirmed the presence of a decades-old $3.3 million deficit in the town's capital projects fund.
The audit also recommended revising the town's procurement policy to establish a competitive process for issuing professional services contracts.
The audit found residents in Islip's four villages, Brightwaters, Saltaire, Ocean Beach and Islandia, in 2007 and 2008 paid $9 million in debt service that should have been shared among all town residents. As a result, the average assessed home paid an estimated $40 more than necessary in each of those years, town comptroller Joseph Ludwig said. The overpayments began in 2002, he said, and were the result of errors in the revenues and expenses assigned to the general fund and the village fund.
We found that in the last few days of each fiscal year, Town officials created accounting entries for encumbrances that did not exist. These entries misstated the Town’s financial position by overstating its expenditures and creating the impression that the Town had fewer
resources than it actually did. We reviewed a sample of 69 purchase orders from the general town-wide fund, general part-town fund, and highway fund totaling $68.29 million that were opened on or near the final closing date for the fiscal years ended December 31, 2006, 2007,
and 2008 to determine if these purchase orders had valid commitments for payments related to unperformed contracts for goods or services in that year. Almost 65 percent of the encumbrances in our sample ($42.78 million) were not supported by any valid purchase orders placed with vendors. For example, the Town’s encumbrances at December 31, 2007 consisted of 819 entries totaling $32,043,261. Of the 819 entries, 136 totaling $29,874,091 were dated either December 30 or December 31, 2007. We reviewed the supporting documentation for 22 of these entries, totaling $29,633,622, and found that $16,555,630 was not supported by any valid purchase orders placed with vendors. As a result, the available fund balance was understated by at least $16.6 million.
As a second example, 2008 records showed 214 entries, totaling $24,311,974, that were made on December 30 and 31, 2008. We reviewed the supporting documentation for 29 of these entries, totaling $24,191,009, and found that $11,839,927 was not supported by valid purchase orders. As a result, the preliminary fund balance available for 2009 was understated by almost $12 million.
2Therefore, Town officials inaccurately reserved an average of $14.3 million a year in fund balance for encumbrances that did not exist during our audit period.
Professional Services — The Board-adopted procurement policy did not require the Town to solicit competition before awardingprofessional service contracts, and the Town does not have writtenprocedures for documenting how to procure these services. TheTown paid 214 professionals approximately $5.9 million for theirservices during our audit period. These professionals providedvarious services to the Town, including security, consulting, andprofessional golf services. We tested 270 claims for 18 professional service providers, totaling $740,681, and found that they were paid according to their respective agreements with the Town. However, the Town procured the services of all 18 providers without solicitingcompetitive proposals. The Town paid these providers a total of $1,154,094 during our audit period.
We tested 21 claims packages for credit card purchases totaling $17,483 and found that the Board did not authorize these credit cards and did not have a list of authorized users. Furthermore, we could not determine the credit card users for 12 claims totaling $10,307. Nine of these 12 claims totaling $5,454 did not have the credit card slips and/or receipts attached, and there was no signature on the attached receipts for three claims. The lack of receipts could result in approving payment for an expense that does not serve a proper Town purpose.
