Comptroller blasts town's lax oversight of credit card

DiNapoli

The Office of New York State Comptroller Thomas DiNapoli audited seven years’ worth of credit card purchases made by the town of Springfield after a more than $1,000 payment was deducted from the town’s bank account for credit card purchases made by the previous town supervisor more than six months after his resignation.

The audit was initiated after a $1,051 automatic payment was deducted from the town’s general fund checking account in December 2018 for a town credit card authorized to former town supervisor Bill Elsey, who served as Springfield town supervisor from 2009 until his March 2018 resignation, citing kidney disease and other unspecified illnesses.

The payment was found to be made for credit card charges made by Elsey in October and November 2018, more than six months after he resigned.

Former town councilman Bill Freeland was appointed to replace Elsey in late March 2018. He was formally elected to the position in November 2019 and served until his retirement in December.

Elsey issued a personal check to the town for $1,052 in March 2019, according to the report. Freeland canceled the automatic payments but did not cancel the credit card. A new card in Elsey’s name was sent to the town hall when the previous one expired, but town officials did not open a new card in Freeland’s name and have not used the credit card since Elsey’s November 2018 charges.

The audit found that the town lacked policies and procedures to authorize and control the use of credit cards. The board did not thoroughly review credit card claims before approving them for payment, according to the audit. Payments were approved based solely on the claims voucher prepared by the purchaser — former supervisor Elsey — without reviewing the associated receipts and invoices. 

The audit also found that credit card statements were mailed to Elsey’s residence and not provided to the board or reconciled with supporting documentation before approval.

“As a result, the Board could not know whether the purchases were for appropriate purposes,” the report read.

Freeland resigned shortly after the conclusion of the audit but before the report was issued. He was succeeded by Galen Criqui, a Wall Street investor and former Princeton basketball player who maintained homes in New Jersey and Springfield for more than a decade.

A landline number listed for Criqui’s Springfield address was not connected as of Wednesday, May 11. 

A review of all 409 credit card purchases made throughout the audit period and totaling $62,268 found that 116 purchases totaling $18,014 did not have adequate supporting documentation, such as invoices or receipts detailing the items purchased and prices charged. Of those, 103 purchases totaling $15,142 did not have a corresponding voucher or other indication of board approval.

“Due to the lack of documentation to support the business purpose of credit card purchases, we were unable to determine whether all purchases were for appropriate Town purposes,” the report read. “Without adequate policies, procedures and supporting documentation, officials also could not be sure that all purchases were appropriate.”

The audit found that 37 purchases totaling $5,557 were shipped directly to the prior Elsey’s personal residence. A review of 10 purchases, totaling $2,125 and including a computer, printer, storage cabinet, office supplies and cleaning supplies, found that they were made for appropriate purposes and shipped to Elsey’s residence for convenience.

“Such a practice without appropriate controls could lead to fraud, abuse or misappropriation,” the report read. “Although we determined that most of the purchases were for Town purposes, the lack of controls over credit card use increased the risk that purchases could be unauthorized and inappropriate.”

The town, which is exempt from paying sales tax, paid sales taxes totaling $384 and late fees and interest charges totaling $69.

“Any payments of sales tax, as well as late fees and interest charges, are an unnecessary burden for taxpayers,” the report read, noting that such payments could be recouped through proper recourse with the state Department of Taxation and Finance.

Four annual charges totaling $420 were found to be for an Amazon Prime online shopping membership, according to the report. State examiners said they were “unable to determine whether there was a reasonable need for the town to have such a service.”

An additional review of 59 items valued at $17,000 purchased by the town credit card that could be used for personal purposes, including refrigerators, TVs and audio/visual equipment, computers, ladders, chairs and tables, found that each was located on town property with the exception of a $585 ladder, according to the report.

State examiners also found that 125,000 credit card rewards points with a cash value of $1,250 or a travel redemption value of $1,563 were redeemed during the audit, but said they were unable to determine how the points were redeemed.

In an April 3 response letter, Criqui said that the town agreed with the audit findings.

“I will send a follow up letter in the next few weeks on how we plan to address and rectify the many prior flaws of previous years,” he wrote.

A separate two-and-a-half-year audit, beginning Jan. 1, 2018, found that Freeland “did not maintain complete, accurate and timely accounting records and reports” during his time in office.

The audit found that Freeland tracked receipts and bank deposits in a computerized spreadsheet, but did not record receipts or the adopted budget in the financial accounting software. He recorded transactions in the financial accounting software to create disbursement checks, but “duplicated his efforts” by tracking monthly expenditures by account code in a spreadsheet separate from the financial accounting software.

The audit also found that Freeland did not maintain running cash checkbook balances, “which prevented him from preparing accurate monthly bank reconciliations,” according to the report.

A review of all cash receipts from January through March 2019, disbursements for February 2019, and all 101 bank transfers totaling $960,599 from Jan. 1, 2018, through May 31, 2019, found no significant deficiencies, according to the report, but Freeland told state examiners that he was not proficient with the town’s financial accounting software.

“Without accurate, complete and up-to-date accounting records, the Board cannot be sure that all transactions are properly recorded,” the report read.

The report noted that Freeland implemented some of the state examiners’ suggestions and began providing more financial information to the board as the audit progressed, but “due to the inadequate recordkeeping, he was unable to provide sufficient timely information to the Board.”

As a result, the board was not provided with the necessary financial reports and information to properly oversee town finances, according to the report.

Freeland provided the board with monthly bank balances, but did not include deposits-in-transit or outstanding checks, according to the report. He also provided a summary of all deposits made and monthly expenditure totals, but no budget-to-actual reports could be prepared because the budget was not maintained in the financial accounting software.

The report also found that in 2019, when Freeland deposited all real property taxes into a general fund bank account, the reported general fund cash balances were overstated and highway fund cash balances were understated by up to $410,410.

“Without complete, accurate and timely financial reports, a clear and accurate financial picture was not provided to assist the Supervisor and Board in making informed financial decisions,” the report read. “In addition, because bank reconciliations were not prepared, errors could occur and remain undetected and uncorrected.”

Criqui issued an identical response letter, also fated April 3, indicating that the town board agreed with the audit findings and promised a follow-up letter “in the next few weeks.”

Sarah Eames, staff writer, can be reached at seames@thedailystar.com or 607-441-7213.

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