Nassau County Comptroller Elaine Phillips’ audit of Ocean-side Sanitary District No. 7 revealed a lack of policies and procedures for hiring, budgeting, fuel inventory, payroll processing and health benefits, in addition to showing a deficit of $357,932.
The audit, which covered records from 2018 through 2021, noted that in 2021, the district took in $9,042,206 in revenue, primarily from property taxes, and had $9,400,138 in expenses, 89 percent of which went to employees’ salaries and benefits.
The audit was called for by district Commissioner Austin Graff after he was elected and before the coronavirus pandemic, to see what positive changes the district could make overall and during day-to-day operating.
“I reached out to the comptroller’s office, and I asked them to audit, and I’m glad that they did,” Graff said. “Now we will have, or already put in place, policies that strengthen our financial protections for taxpayer money.”
Throughout the auditing process, the comptroller’s office and the district have been in continuous communication to troubleshoot the systems in place and develop newer ways to keep track of operating costs.
“Audits have the power to help local municipalities, agencies, and departments manage government resources efficiently and effectively,” a press release from Phillips’ office stated. “By auditing these agencies, the Comptroller’s Office provides accountability for the use of tax dollars.”
In the formal response to the audit reports, district board Chairman John Mannone said, “For far too long the district was run by a group of people who ran the district without regard for the taxpayers’ concerns and the concerns of the employees of the district, as was found in prior audits.”
Mannone continued, “This board believes the comptroller’s recommendations are appropriate, important to implement, and in some cases have already been implemented. If the recommendation has not already been implemented, it will be done so shortly by the district.”
The audit discovered that expenditures had been kept in four different places — and when all those were recovered, statements differed. Auditors noticed specifically that the fund balance information in the district’s QuickBooks file did not agree with the fund balance information in the district’s audited financial statements for 2019 and 2020.
According to the audit report, when asked about these differences, the “district treasurer stated that the district’s fund balance had not been recorded in QuickBooks. Instead, the fund balance was tracked outside of QuickBooks in a separate Microsoft Excel worksheet. The district treasurer was not sure why this had been done.” This wasn’t the first time during the audit that an employee didn’t know an answer.
The audit determined that dental benefits were inappropriately being given to those who were no longer employed. The individuals were still being listed as full-time employees in monthly reports to the Civil Service Employees Association. The report states, “The investigation also identified certain district employees who were responsible for this mishandling of the district’s dental benefit. When questioned about who monitored the IBT dental plan if the names were not included on the invoices, the then-board chairman responded, ‘I guess no one.’”
Discrepancies arose mostly when auditors looked at the district’s procurement, purchasing, vendor payments and cash controls. Disorganization of vendor lists led to auditors having a tough time trying to review audit trails.
They did find that contracts were not maintained in individual vendor files for hard-copy or digital versions and that a complete list of vendor contracts didn’t exist. When doing business with vendors, the auditors found that the district didn’t generate 1099 forms for all applicable vendors, which led to a potential under-reporting of $93,542.
The full four-part audit report can be found at nassaucountyny.gov/2377/Field-Audits.