State Audit: Village Needs to Shore Up Fiscal Operations

Babylon Village must improve internal controls within financial operations, make better use of competitive bidding, shore up technology security and determine strategies to improve declining fund balances, according to a new audit report released by the Office of the New York State Comptroller.

“The board has not provided sufficient oversight of village financial operations. Auditors found weaknesses in internal controls over several aspects of village operations, including monitoring of the village's financial condition," states the report.

"The board adopted policies that require competitive bidding, but village officials did not always follow these policies. The village also needs to improve internal controls relating to information technology,” states the report which was released to the public last week.

The audit, which reviewed the village's fiscal operations between June 1, 2008 and December 31, 2009,  is available at the comptroller’s website.

In response village officials said the state feedback is welcome given that the last audit was in 1999 and that so many new rules and changes have come into play in the last decade.

“There is always room for improvement,” Babylon Village Mayor Ralph Scordino told Patch.

“A lot has changed and the state is doing their job to look at the different areas and how municipalities can improve processes. I have no problem with the report or recommendations as we’re always trying to give residents the biggest bang for their buck,” he said.

The state’s audit effort, initiated last June and completed in January, is focused on helping local governments manage resources efficiently and effectively, according to the comptroller’s office.

“The comptroller oversees the fiscal affairs of local government statewide and observance of good business practices. This fiscal oversight is accomplished in part through the audit,” states a letter from the comptroller’s office in regard to the audit report.

According to the report the board is not providing sufficient oversight of financial operations with weakness ranging from monitoring the village’s financial condition and declining balances in the general fund and enterprise fund due to poor planning for capital projects. It also cites the village administration for not filing a statement of revenue and expenditures on time.

The village is also chided for not following adopted competitive bid processes that require written quotes and request for proposal (RFP).

The audit notes the village paid $466,162 to six vendors without soliciting competitive bids, paid $73,714 to 10 vendors without obtaining quotes and paid $123,071 to four professional service providers without using RFPs. The report notes that the village purchased asphalt totaling $108,018 and a street sweeper for $190,844 without the “benefit of competitive bidding.” According to the state the village was required to solicit bids on both projects.

“As a result village officials cannot be assured that the purchase of goods or services were obtained at the lowest possible price and public monies were used in the best interest of the taxpayers,” states the report

But Scordino disputes those contentions and says the village strives to get the best price on every purchase and hire the best person for the needed job.

“We saved $40,000 on that sweeper purchase for example. We’ve found the lowest price on asphalt. We always try to make the right judgment in getting the best prices,” he said.

In regard to the bid process issues, the village said it will take further action to amend and expand its current procurement policy.  One big change is that all submitted requisitions must now have the required quote documentation before authorization is given. The village is also getting needed contracts and agreements from current professionals services firms.

In regard to the filing of revenue reports the village has hired part time staff to help the treasurer.

“We are making changes to give that department more resources to do all the things they need to do,” Scordino said.

In its response letter to the comptroller’s office Scordino wrote the “Village of Babylon has taken the audit recommendations very seriously” and is already implementing recommended changes.

“We will be developing a plan to institute further changes to strengthen financial controls and reporting,” wrote Scordino.

With regard to the declining fund balance issues, the village is increasing fees at the golf course to help the operation become self-sustaining.

“We are applying for grants before undertaking any capital improvements and remaining conscious of paying for goods and services at the best possible price and looking for ways to reduce expenditures,” states the village's written response.

The state audit report also notes the village needs to improve it technology plans and institute a disaster recovery plan to ensure systems and data is backed up and securely protected in light of an unforeseen event. The village also needs to implement an audit network trail system that provides insight on network access and use.

According to Scordino the village is working with its current technology provider to create the recovery plan and is alreaday working on developing the audit trail process.

The village uses an outside vendor that maintains and monitors the village computer network and the deputy treasurer is the onsite coordinator. The village has upgraded its maintenance agreement to provide greater reliability, performance and productivity, according to the village’s audit response.