Audit slams Gaines for lack of ‘checks and balances’

Firm claims $100K improperly paid out

GAINES – An audit of the town of Gaines blasts town officials for not establishing formal policies and procedures for expense reimbursements, cash receipts, fuel usage and other functions and operations within the town.

The report from Bonadio and Company was presented during Tuesday’s Town Board meeting. The firm said there are “several deficiencies” in internal controls, as well as a lack of “checks and balances.”

Town Supervisor Carol Culhane sought out the forensic audit after a recent audit cited several deficiencies in internal controls.

“There will be some serious questions that have to be answered,” Culhane said today. “The audit on Tuesday was the first step. There will be more to come.”

The town is seeking advice from the Connors and Vilardo law firm in Buffalo over whether to pursue civil or legal action. Attorney Terrence Connors presented the audit results at Tuesday’s board meeting. (The document is also available on the town web site. Click here to see it.)

In the Bonadio audit, the firm noted what it said were improper mileage reimbursements for Town Clerk Jean Klatt. She claimed reimbursement for a conference to Saratoga from April 22-25, 2012. She was reimbursed $260.10 for the trip. However, she carpooled there with three town clerks and the town of Byron had already been paid Gaines’s share of the trip when Klatt sought the full reimbursement, seven months after the event.

Klatt also was faulted in the audit for claiming 20 miles of mileage for trips to Albion on April 23 and April 25, when she was at the Saratoga conference.

“An employee and/or elected official submitting expense reimbursement requests for expenses not incurred is a punishable offense, and one that should not be taken lightly by the Town,” according to the audit.

Klatt and Highway Superintendent Ron Mannella each received $10,400 buyout options in 2011 and 2012. They weren’t eligible for the buyout because they aren’t members of the town’s union, which includes highway department employees. Union employees only were eligible for the $10,400 health insurance buyout, but the Town Board approved it for both Mannella and Klatt.

The board last year voted against offering the bigger buyouts for the highway superintendent and clerk for 2013, reducing the health insurance buyout for the two to $2,500 each.

Mannella was faulted for signing off on $79,423 to a vendor from 2010 to 2013 for services and materials that have not been received by the town.

“The Highway Superintendent knowingly signed a document stating that materials and services were rendered, when in fact none were provided,” according to the audit.

Bonadio said the highway superintendent would pre-pay for services and materials to use up his budgeted funds to avoid budget cuts in the future. Bonadio said that practice did not allow the Town Board to manage the actual costs for the department and resulted in a tax levy that was “unrealistic.”

Bonadio questions the “ethical nature” and validity between the vendor and highway superintendent for providing invoices that were approved when the services weren’t rendered.

Bonadio said the vendor, Barre Stone Products, should refund the $79,423 immediately and the highway department should stop the practice of spending down its budget because annual expenditures often are not accurately reported.

The town had not completed an audit since 2007. Culhane was elected in November 2011 and took over as town supervisor in January 2012. She was inquiring about a grant for local government consolidation efforts when she realized the town hadn’t been audited since 2007.

She called the town supervisors at other local towns to see how they handled audits.

“They all said it should be done every year,” she said.