Comptroller faults Town of Shelby for accounting discrepancies

SHELBY – The state comptroller’s office has issued a report of the town’s fiscal affairs since 2021 and found many accounting discrepancies. The comptroller’s office said there is no evidence of missing funds, but the town is not properly reconciling accounts.

The comptroller found $29,993 in unreconciled differences in 2021 out of a $3,233,773 budget, $31,881 in differences in 2022 out of $3,593,795 budget, and $102,712 in unreconciled difference in 2023 out of a $3,665,533 budget. The comptroller’s office said in a report posted on Friday that it couldn’t do reconciliations in 2024 because of incomplete accounting records.

The comptroller’s office said it has tried to get the town supervisor and bookkeeper to make changes since an audit in December 2021, but six of the seven recommendations have not been implemented, and the other recommendation was only partially followed.

Town Supervisor Scott Wengewicz was faulted for not providing monthly financial reports from the town supervisor, and not providing proper oversight of the bookkeeper’s work, to make sure the bank accounts and accounting records matched. Wengewicz was appointed town supervisor on Dec. 13, 2022. He applied for the position after Jeff Smith stepped down as town supervisor about two months earlier.

Town bookkeeper Miranda Bennett stood before the Town Board at last Tuesday’s meeting and resigned, effective Aug. 28.

She told the Town Board the past five years working for the town have not been easy, and have taken toll on her health and family.

“I’ve chosen to live a happier life away from the constant drama and finger-pointing,” she told the board on Tuesday, three days before the report from the comptroller was made public. “I’ve learned a long time ago that life is too short to deal with constant harassment and name-calling.”

“I step down knowing I’ve made some lifetime connections that I hope to never break and some that I hope to walk away with my head held high.”

Bennett also served as secretary to town supervisor, human resources manager, and IT program manager. Wengewicz would like her to continue in a part-time role as confidential secretary until a replacement can be found. Wengewicz said at the board meeting he foresees it as 20 hours a week at $22 an hour.

The board last week also hired an accounting firm for the remainder of the year, to make sure the town bills are being paid. The board expects to seek proposals from firms to do the work in 2025.

The comptroller’s report posted on Friday urges the town to “take appropriate actions to fullt implement our recommendations.”

Those recommendations from 2021 include:

• Recommendation 1 (not implemented) – Resolve discrepancies in the town’s accounting records. The town supervisor and bookkeeper could not provide a “reasonable explanation for not correcting the discrepancies in the town’s accounting records,” according to the report from Robin L. Lois, the state’s deputy comptroller.

• Recommendation 2 (not implemented) – Complete bank reconciliations. Neither the town supervisor or bookkeeper performed monthly reconciliations between bank accounts and accounting records, the report states.

The comptroller’s office noted that the town supervisor and bookkeeper attributed accounting discrepancies and unreconciled differences to a change in the accounting system. But the comptroller’s office said the issues existed before the change in an accounting system.

“As the Town’s chief financial officer, the Supervisor is responsible for maintaining complete and accurate accounting records,” the comptroller’s report states. “Without complete and accurate records, the Board and Town officials do not have sufficient information to properly manage and monitor Town financial operations.”

The report notes that two accounts that weren’t reconciled resulted in 28 bank overdraft charges at $38 each, collectively totaling $1,064 from Jan. 1, 2023 to May 31, 2024. In a three-day period, from May 24-26, 2023, an account was overdrawn 16 times because the bookkeeper issued 15 of those checks 12 days before the money needed to cover those checks was transferred and available in the bank account. Another check was issued five days prior to money being transferred into the account.

“Had transfers been made prior to or at the time checks were issued, these overdraft fees would not have been incurred,” the report states. “incurring overdraft fees is an unnecessary cost and form of wasteful spending that could be easily avoided by requiring the bookkeeper to monitor cash flow and to make transfers prior to issuing checks.”

• Recommendation 3 (not implemented) – Review records and reports, and monthly bank reconciliations. The town supervisor did not provide a proper review of the bookkeeper’s reports. In 2023, Town Supervisor Scott Wengewicz did not sign off on the monthly reports from the bookkeeper in 11 of 12 months to indicate he reviewed them.

Wengewicz told comptroller staff he relied on the bookkeeper and reviewed the reports with her. In six of the reports, the beginning balance did not agree with the ending balance from the previous month, according to the comptroller’s report.

“However, had the Supervisor completed a proper review, he likely would have identified those discrepancies,” the report said.

The town supervisor also didn’t generate or review any financial reports for fiscal year 2024 and did not ensure that bank reconciliations were completed, the report said.

• Recommendation 4 (not implemented) – Monthly financial reports to the board. The town supervisor hasn’t been providing monthly financial reports to the other Town Board members, detailing all money received and disbursed.

Two Town Board members, Linda Limina and Ed Zelazny, have been opposing paying town bills due to the lack of accurate financial records and reconciliations of all accounts.

• Recommendation 5 (not implemented) – Annual financial reports to the Office of the State Comptroller. The reports for 2021 and 20022 were filled 60 days late, while 2023 was submitted on time but the amounts for all three years were not supported by accounting records, the comptroller’s office stated.

• Recommendation 6 (partially implemented) – Attend trainings. The town supervisor and bookkeeper both attended trainings but they are not properly performing all of their accounting responsibilities, the report stated.

“We encourage the Supervisor and bookkeeper to apply what they learned from training courses into their daily work, and seek out additional training as needed,” the report stated.

• Recommendation 7 (not implemented) – Implement CPA recommendations. A CPA management letter in 2021 recommended a standard policy that ensures that bank reconciliations be performed and be reviewed on a timely basis. Cash accounts should be reconciled on a routine basis to ensure that all transactions are accounted for, according to the CPA letter, which also urged the town to have a preparer and reviewer sign off on the bank reconciliation.

The comptroller’s office said that neither the town supervisor or bookkeeper prepared proper bank reconciliations, and the Town Board did not adopt a policy requiring bank reconciliations be performed and reviewed on a timely basis by designated town employees.

To see the report from the comptroller’s office, click here.