Medina Journal-Register — GAINES - For the first time in six years, the Town of Gaines listed to an audit of itself on Tuesday night.
Supervisor Carol Culhane said it is common practice for most municipalities to have itself audited annually. She said Tuesday’s report represented a “new beginning.”
“The audit shows specific concerns to be addressed,” she stated.
Randall Shepard, an accountant with Bonadio and Co., LLP, presented the preliminary audit to the town. While he said many items in the town’s purview did not have too many deficiencies and merely needed to be updated, one sticking point brought concern to the town board members.
Specifically, Shepard said that during the course of the audit he was made aware of some “potential fraudulent situations occurring in the town.” He said the audit was not designed to detect fraud.
However, he told the town board, “There is enough concern and we want to raise the matter to you.”
Shepard said part of the reason he was concerned about fraud was the fact that he was unable to fully audit the town’s payroll due to a lack of “comfort” with the figures provided.
“Things happen in municipalities when controls are not in place,” he stated. The controls he referred to are the town’s payroll procedures, which include both handwritten time cards and punch-clock time cards.
He also mentioned there were other instances of “weaknesses in internal control” that led to other budgetary areas with no formal opinions.
Shepard said that 13 employees were looked at during the audit, over two different pay periods. He said several deficiencies were found in the payroll process. Some discrepancies were found regarding overtime paid for some employees and others getting paid for hours that were not worked.
The punch cards were also inconsistently calculated, Shepard said, which sometimes led to employees being either under- or overpaid.
Since there was so much inconsistent data, Shepard said the audit could not form an educated opinion on the matter.
Trustee Sue Smith recommended a forensic audit, which was seconded by Doug Syck. Trustees David Kast and James Kirby hesitated, saying they wanted more time to digest the preliminary findings.
There was a brief discussion with Shepard, who said there are “some things that raise eyebrows and concern me that I would want to look closer.” At that point the board decided to go into a lengthy executive session, and upon reconvening it unanimously passed a measure calling for a forensic audit.
After the meeting Culhane said that whatever the audit finds, the town will “tackle it head on.” Deciding to include the audit in the town’s budget this past year was a decision she made after finding out there had not been an audit for several years.
“It’s common practice to have one every year,” she said. After soliciting for auditors, Culhane said a handful of groups responded, but two backed out because it had been so long since the town’s last audit.
“Little by little Bonadio has put this report together…and I feel confident we’re on the right path,” Culhane said. “We’re going to get the town to where it should be and maybe with some new things.
“We’ve already started with the segregation of duties, so little by little I think we’ll be fine,” she added.