The New York State Comptroller’s Office recently audited the Village of Hillburn. The comptroller’s auditors found the village’s most recent bank reconciliation showed a $11,451 unreconciled difference. The auditors advised the village to update some of its bookkeeping procedures to ensure transparency and minimize the possibility of errors or fraud.
The comptroller’s auditors said, “The board needs to improve its oversight of the village’s financial operations. The clerk-treasurer’s duties are not segregated and village officials do not provide adequate compensating controls, such as ensuring that bank reconciliations are properly performed and reviewed.”
The Comptroller’s Office offered the following eight pieces of advice:
1. The Hillburn Board should adopt written policies and procedures to provide guidance on cash receipt and disbursement functions, including segregating incompatible duties where possible.
2. The Board should routinely monitor the Clerk-Treasurer’s work by reviewing bank reconciliations in conjunction with check images and accounting records/reports to ensure that all cash disbursements are supported by appropriate documentation.
3. Village ofﬁcials should investigate and determine the reasons for the bank reconciliation differences identiﬁed in their report and make necessary adjustments to Village records.
4. The Board should review all bank reconciliations to ensure that they are performed properly and that discrepancies are investigated and corrected immediately.
5. The Board should adopt policies and establish written procedures to ensure that pre-numbered receipts are issued for all collections. The receipt numbers should be issued sequentially and accounted for.
6. Village ofﬁcials should ensure that all cash assets are kept on Village premises in a secure location, such as a cash drawer, safe or lockbox, until they are deposited.
7. The entire Board, a Board-appointed claims auditor or a formally appointed committee of the Board should audit and sign all claims presented for payment. The claims audit should include a veriﬁcation that each claim includes the required department head approval.
8. The Board should establish a procedure requiring the review and retention of all canceled checks or canceled check images by a Village ofﬁcial who is independent of the cash disbursement process.