Comptroller prompts Little Falls to adopt 2021 audit recommendations

LITTLE FALLS — New York State Comptroller Thomas P. DiNapoli’s office is taking the City of Little Falls to task three years after it audited the city’s financials and made recommendations because the city has not implemented any of the recommended actions. DiNapoli’s office conducted a review in March to assess the city’s progress since releasing its audit report in June 2021, according to a news release from DiNapoli. “Our follow-up review was limited to interviews with city personnel and inspection of certain documents related to the issues identified in our report,” Deputy Comptroller Robin L. Lois wrote in a July letter to Little Falls Mayor Deborah Kaufman. “We also reviewed the city’s corrective action plan (CAP) for the audit, which was approved by the council on September 7, 2021. Based on our limited procedures, the city has not made progress implementing corrective action, as none of the 12 audit recommendations were implemented. City officials could not provide reasonable explanations for their lack of corrective action.” The letter went on to note that while Kaufman was new to the role of mayor, taking office at the beginning of this year, seven of the eight city council members were present on the council when the original audit took place. Additionally, four individuals have served as treasurer since the audit began, with the current treasurer serving since July 2022. The original audit focused on whether the common council and city officials adopted realistic budgets that were structurally balanced, routinely monitored financial operations, and took appropriate actions to maintain the city’s fiscal stability. The initial scope of the audit spanned Jan. 1, 2019, through July 31, 2020, but was expanded back to Jan. 1, 2017, and forward to Dec. 31, 2020, in order to review current operating results, according to the original audit report. The audit found that the council and city officials did not adopt structurally balanced budgets, properly monitor the city’s financial operations, or take appropriate actions to maintain fiscal stability, putting the city under significant fiscal stress. The comptroller’s office noted the city’s former treasurer over-reported the fund balance from 2017 through 2019 by more than $200,000. The general-fund balance dropped to $244,000 at the end of 2019 and, combined with a lack of sufficient financial reports, city officials relied on loans for cash flow. As a result of those findings, the state comptroller’s office recommended the Little Falls City Council adopt a written fund-balance policy that addresses the reasonable amount of fund balance the city should maintain in each of its funds. Other recommendations included: • Adopting balanced budgets that include realistic estimates and fund-recurring expenditures with recurring revenues; • Amending the city charter as part of a review the budget adoption and real property tax-collection timing to require adopting the budget prior to the beginning of the fiscal year; • Reviewing periodic financial reports that include cash activity and reconciled cash balances, balance-sheet accounts, and budget-to-actual comparisons for revenues and expenditures; • Monitoring city finances including available fund balance and cash balances; • Eliminating the city’s golf fund-balance deficit and ensuring the fund is self-sustaining; • Ensuring bond proceeds are used for their intended purpose; • Monitoring the budget throughout the year to ensure timely budget modifications are made when necessary and to avoid spending over appropriation amounts; • Developing and adopting comprehensive, written, multi-year financial and capital plans to provide a framework for preparing future budgets; • Correcting errors in the accounting records and ensuring accurate results are reported; • Performing monthly bank reconciliations in a timely manner; and • Maintaining complete records for each capital project to track all financial activity. “During our review, we discussed the basis for our recommendations and the operational considerations related to these issues, and we provided technical assistance to the current mayor and treasurer,” the Lois letter stated. “We encourage city officials to continue their efforts to fully implement our recommended improvements.”