Orange County Soil and Water Conservation District ......The Orange County Soil & Water Conservation District (District) is one of 58 such districts in New York State. These districts

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, 2014 — May 20, 2015

2015M-238

Orange County Soil & Water

Conservation DistrictFinancial Operations

thomas p. Dinapoli

Page

AUTHORITY LETTER 1

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

FINANCIAL OPERATIONS 4 Transparency 4 AdoptionofContracts 5 Recommendations 6

APPENDIX A ResponseFromDistrictOfficials 7APPENDIX B OSC Comments on the District’s Response 11APPENDIX C AuditMethodologyandStandards 12APPENDIX D HowtoObtainAdditionalCopiesoftheReport 13APPENDIX E LocalRegionalOfficeListing 14

Table of Contents

11Division of LocaL Government anD schooL accountabiLity

State of New YorkOffice of the State Comptroller

Division of Local Governmentand School Accountability December2015

DearDistrictOfficials:

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.

FollowingisareportofourauditoftheOrangeCountySoil&WaterConservationDistrict,entitledFinancialOperations.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 andMethodology

The Orange County Soil & Water Conservation District (District) is oneof58suchdistricts inNewYorkState.Thesedistrictsprovideservices and fund projects related to the conservation of soil and water resources, the improvementofwaterquality, thecontrolandprevention of soil erosion and the prevention of floodwater andsediment damage.

TheDistrictisgovernedbyafive-memberBoardofDirectors(Board).The Board is responsible for the general management and oversight of theDistrict’sfinancialandoperationalaffairs.TheDistrictManager(Manager) is responsible for the District’s daily operations and reports totheBoard.TheOfficeManager,whoisalsotheClerkoftheBoard,is responsible formaintainingfinancial records,preparingmonthlyreports and keeping complete and accurate records of Board meeting proceedings.

The District’s main sources of revenues are State and federal aid and grants, an appropriation fromOrangeCounty, Inter-MunicipalAgreements (IMA) with local governments and proceeds fromsales and services provided to customers. District expenditurestotaledapproximately$570,000for the2014fiscalyear,composedofcontractualexpendituresof$258,000,Districtpayroll(includingbenefits)of$254,000andgrantprogramexpendituresof$47,000.

The objective of our audit was to evaluate internal controls over financial operations. Our audit addressed the following relatedquestion:

• Did the Board implement adequate controls over the District’s fiscalaffairsandprovidesufficienttransparency?

We examined the District’s financial operations for the periodJanuary1,2014throughMay20,2015.WeexpandedourscopebacktoFebruary1,2013toverifyBoardapprovalofconsultingserviceagreements.

We conducted our audit in accordance with generally accepted governmentauditingstandards(GAGAS).Moreinformationonsuchstandards and the methodology used in performing this audit are includedinAppendixCofthisreport.Unlessotherwiseindicatedinthisreport,samplesfortestingwereselectedbasedonprofessionaljudgment,asitwasnottheintenttoprojecttheresultsontotheentirepopulation.Where applicable, information is presented concerning


Comments ofDistrict Officials andCorrective Action

the value and/or size of the relevant population and the sample selectedforexamination.

The results of our audit and recommendations have been discussed with District officials, and their comments, which appear inAppendixA,havebeenconsideredinpreparingthisreport.ExceptasindicatedinAppendixA,Districtofficialsgenerallyagreedwithour recommendationsand indicated theyhave taken,orplanned totake,correctiveaction.AppendixBincludesourcommentsonissuesraised in the District’s response.

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,whichyoureceived with the draft audit report. We encourage the Board to make thisplanavailableforpublicreviewintheDistrict’soffice.


Financial Operations

The Board is responsible for managing and overseeing the District’s overallfiscalaffairsandsafeguardingitsresources.Thisresponsibilityincludes establishing a system of internal controls to provide reasonable assurance that cash and other resources are properly safeguarded; transactions are authorized and properly recorded; financialreportsareaccurate,reliable,andfiledinatimelymanner;andapplicablelaws,rulesandregulationsarefollowed.

AlthoughtheBoardestablishedsystemsandproceduresformanaging,accounting for and reporting the District’s financial operations,they should be strengthened to provide for better transparency and accountability of Board actions. Board minutes did not provide an accurate picture of theBoard’s actions, and certain contractswerenotapproveduntilweeksormonthsafterbeingsigned.Asaresult,transparency is compromised and the District is at risk of not receiving the services desired at the intended price.

To ensure proper transparency of decisions and transactions that affect District residents, theBoard should disclose all aspects ofDistrictfinances.Therefore,itisimportantthattheBoardclearlyrecorditsactions so that District residents have the opportunity to know about and react to its plans.

The Clerk of the Board should keep a complete and accurate record oftheproceedingsofeachBoardmeeting.Ataminimum,meetingminutes should clearly record or summarize all motions and any other matterthattheBoardvotedon,sothatresidentsunderstandnotonlywhatdecisionsweremade,butwhytheBoardmadethem.NewYorkStateCountyLaw requires each resolution to have a prefixed titleconcisely stating the contents, and empowers theBoard to amend,rescind or supersede any adopted resolution or motion as needed.

Wefound that theBoardmeetingminuteswerenot transparent,asmotionswerenotalwaysclearlystatedortitled.Further,theBoarddidnot rescindmotions, evenwhenanewmotionwas adopted tosupersedethepreviousone.Forexample:

• According to the January 26, 2015 minutes, the Boarddecided(butdidnotvote)thattheDistrictwouldmakeaone-time rental payment to the Manager equivalent to the cost ofmaterialstoconstructashedroofononeofhisbarns.Inexchange, theDistrict’sutility terrainvehicle (UTV)wouldbestoredandavailableforstaff,asneeded.However,perthe

Transparency


February23,2015minutes,theBoardapprovedamotiontostoretheequipmentatasetcapof$900,whichwasamended,asstatedintheMarchminutes,toaone-yearrentalpaymentof$900.TheMay18,2015minutessubsequentlystatedthattwo motions had been previously voted on by the Board to compensate the Manager; however, we confirmed that theManager received no compensation for storage. The Board’s initialdecisiontomakeaone-timepaymenttotheManagerhad not been formally voted on.

• According to theOctober 21, 2013minutes, amotionwasmade to give the District approval to hire a private attorney to prepare an agreement for consulting services. The Orange County Law Department had agreed to prepare this contract for theDistrict,but theManagerwasconcerned that itwasalmost two months past the agreement start date of September 1,2013andtheDistrictstilldidnothaveasignedcontract.Ultimately, a private attorney was not hired because theOrangeCountyLawDepartment completed the agreement,but the motion to hire a private attorney was not rescinded and there was nothing in the minutes indicating that a private attorney was not hired.

• IntheFebruary24,2014minutes,theBoardmadeamotionto authorize the Manager to offer an increase in the rental payment to a farmer for space to store District equipment. Thepaymentwastoincreasefrom$150permonth(forwhichtheDistricthadafive-yearcontractthroughDecember2014)to$175permonth.Thefarmerreceivedpaymentof$175fortheMarchrentbutrejectedthemonthlyincrease,whichwasnotedintheMarch24,2014minutes.NofurtheractionsweretakenbytheBoardandpaymentsrevertedto$150permonth.However,therewasnorecordthatthemotiontoincreasetherental payments was rescinded.

According to a Director, the Board did not realize that a motionshouldberescindedonceanewmotionsupersedesit.Asaresult,theminutes were not clear and transparent because they did not provide adequate information about District activities and Board decisions.

The Board is responsible for ensuring that contracts are approved prior toenteringintoagreements.However,theBoarddidnotensurethatcertaincontractagreementswereapprovedina timelymanner,butinstead consistently approved agreements for engineering consulting services1atleastonemonthafterthecontractdate.Forexample:

1 Theseagreementswereallwiththesameengineeringfirmandhadoverlappingtimeframes; one agreement would commence while the previous agreement was still in effect.

Adoption of Contracts


Recommendations

• TheagreementdatedApril8,2013wasapprovedoverthreemonthslateronJuly15,2013.

• The agreement dated September 1, 2013 and ending onAugust31,2014wasnot recorded in theBoardminutesashavingbeenapproved.Evenso,theagreementwasamendedpertheAugust18,2014minutes,shortlybeforeitsexpiration,to increase the not-to-exceed cost terms from $50,000 to$60,000.Althoughthesubsequentcontracttermhadalreadybegun(seenextexample),themodifiedpaymentswereissuedontheSeptember1,2013agreement.Theengineeringservicesinvoicedated July29,2014exceeded the$50,000 limit; asa result, total payments issued on the September 1, 2013agreementwere$62,484,whichwas$12,484inexcessofthe$50,000not-to-exceedcostintheoriginalsignedagreement.

• The agreement dated June 1, 2014was approved over twomonthslateronAugust18,2014.

• TheagreementdatedJanuary1,2015wasapprovedalmosttwomonthslateronFebruary23,2015.

Districtofficialsindicatedthatagreementswerenotapprovedpriorto contract start dates due to delays in legal preparation, untimelysubmission of engineering reports and billing issues. Because the Board did not approve these contracts before entering into them,thereisariskofconfusionregardingcontractterms,andtheDistrictmaynotreceivetheservicesdesiredattheagreed-uponprice.

TheBoardshould:

1. EnsurethatmeetingminutesprovideaclearrecordofBoardactions,keydecisionsandtherationaleforthosedecisions,asappropriate.

2. Rescind or amend motions when necessary and ensure that minutes are complete and accurate.

3. Approvecontractualagreementsbefore theyaresignedanddated.


APPENDIX A

RESPONSE FROM DISTRICT OFFICIALS

TheDistrictofficials’responsetothisauditcanbefoundonthefollowingpages.



SeeNote1Page11

SeeNote1Page11

SeeNote2Page11

SeeNote3Page11


SeeNote1Page11

Chairman,John Wright


APPENDIX B

OSC COMMENTS ON THE DISTRICT’S RESPONSE

Note1

As theofficialpublic recordofaBoardmeeting, theminutesshouldclearlyandaccuratelyreflectallthebusinesstransacted.Thisrequirementisnotonlyforthebenefitofoutsidepartiesbut,mostimportantly, for informingDistrict residentswhoareentitled toaclearexplanationof theBoard’sdecisionsthattheirtaxmoneyssupport.

Note2

Wehavemodifiedthereporttoread“Director”insteadof“DistrictManager.”

Note3

AlthoughtheBoard’smotionwastoauthorizeanofferofincreasedrentalpayment,theBoardinfactpaidtheincreasedamountof$175inMarch2014,thensubsequentlyrevertedtopayingtheoriginalcontractedamountof$150afterthepayeedeclinedtheincrease.Therefore,themotionshouldhavebeenrescindedtoreflectthecircumstancesandthecontractedpaymentamount.


APPENDIX C

AUDIT METHODOLOGY AND STANDARDS

Toachieveourauditobjectiveandobtainvalidevidence,weperformedthefollowingprocedures:

• WeinterviewedDistrictofficials.

• WereviewedBoardminutesfromFebruary2013throughMay2015.

• WereviewedDistrictdisbursementsduringtheauditperiodforpaymentsforstoragerental,legal fees and consulting services.

• We reviewed consulting service agreements.

• We reviewed letters from the District to the consulting engineers.

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


APPENDIX D

HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT

OfficeoftheStateComptrollerPublicInformationOffice110StateStreet,15thFloorAlbany,NewYork12236(518)474-4015http://www.osc.state.ny.us/localgov/

Toobtaincopiesofthisreport,writeorvisitourwebpage:


APPENDIX EOFFICE 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

Documents

Orange County Soil and Water Conservation District ......The Orange County Soil & Water Conservation District (District) is one of 58 such districts in New York State. These districts