The state comptroller’s office will not audit Westhampton Beach Village’s books after a risk assessment completed last week determined that the municipality’s finances are in order, according to Mayor Conrad Teller.
“They said that there was no red flags flying, there was no nothing,” Mr. Teller said Monday afternoon regarding the financial examination that was completed last Wednesday, January 9, by a pair of auditors from the state comptroller’s office. It was triggered by a payroll error during the 2011-12 fiscal year that resulted in the village’s employees being overpaid by approximately $22,000. The village is taking corrective measures to recoup the funds.
“There is no money missing,” the mayor later added. “Our other auditors have been in and haven’t raised any red flags,” he said, referring to village’s auditing firm, Satty, Levine & Ciacco of Jericho, which is now examining the entire village budget for the 2011-12 fiscal year and recalculating the payroll figures to ensure that the employees are being properly paid. The audit is expected to be completed within the next two weeks.
State examiners, however, will be conducting a comprehensive audit of the village’s information technology and computer systems in the coming weeks, according to the mayor, after finding several weaknesses in those areas, namely outdated computers and security systems, and questionable backup procedures.
The financial examination completed last week, called a “risk assessment,” was requested by Mr. Teller after the payroll error was discovered last year. Divided over which direction to take, the Village Board also requested that the village’s auditing firm examine the entire village budget for the 2011-12 fiscal year for an extra fee.
Brian Butry, a spokesman for the state comptroller’s office, said Tuesday that he could only confirm that his office has completed the risk assessment and that “no further determination has been made at this time” regarding what actions, if any, that the state will take in Westhampton Beach. Both Mr. Teller and Deputy Mayor Hank Tucker, who sat down separately with the state auditors last week to discuss the findings of their assessment, said they were told that the state would return to conduct the audit focusing on the village’s IT and computer systems.
Unlike the mayor, Mr. Tucker argues that the risk assessment did raise a few red flags, pointing to the village’s outdated procurement policy, an ineffective purchase order system and the completion of purchases without first seeking requests for proposals, the latter of which, he said, “isn’t necessarily breaking the law but is a matter of best business practices.”
Mr. Tucker also stated that Mr. Teller failed to protect taxpayers when he denied for several months that no overpayments were made to village employees—an allegation that was dismissed by the mayor. Mr. Teller said measures have been taken to address the payroll error, but that certain board members, led by Mr. Tucker, are using that mistake to build an argument to fire Village Clerk and Treasurer Rebecca Molinaro.
“It’s definitely personal,” Mr. Teller said of Mr. Tucker’s desire to terminate the village clerk. “Hank has asked me twice, probably three times, to let her go. He had no confidence in her.
“The payroll error is nickel-and-dime stuff—it happens,” the mayor continued. “They cannot fire her. I have to do it, and they have to come up with gross negligence. There’s nothing there.”
“I can’t discuss specifics about a particular employee with you at present,” Mr. Tucker wrote in an email when asked if he is seeking, or has sought, Ms. Molinaro’s termination. “That’s not legal. The fact that the mayor does shows his lack of ethics.”
The deputy mayor is also insisting that Mr. Teller, as the village’s budget officer, has approved certain payouts that, in Mr. Tucker’s opinion, should have been reviewed first by the entire board.
“He didn’t protect the taxpayers when he approved legal payouts of close to $3,000 without Board knowledge and approval,” Mr. Tucker wrote in an email. “He didn’t protect the taxpayers when he paid an employee $9,000 without Board knowledge and approval. If any of these issues turns out not to be illegal, they certainly aren’t how the taxpayers expect their government to manage or spend their money.”
When asked for details about those specific payouts, Mr. Tucker wrote: “I can’t release that now. I will let you know as soon as we can.”
The mayor said the payouts—one to Westhampton Beach Village Police Chief Ray Dean, when he bought back unused vacation days, and the other pertaining to a former village employee who is now deceased—were legal when he made them and were reviewed by the state examiners. “The state looked at it and said, ‘No problem,’” Mr. Teller said.
State examiners concluded that the village’s procurement policy contains bidding thresholds that are more restrictive than state law allows, stating that it must be changed. The policy, according to Ms. Molinaro, currently requires that the village bid out equipment purchases when they total more than $10,000; state law requires that the limit be raised to $20,000. Mr. Tucker also said the village must raise its bidding threshold for the Department of Public Works, stating that purchases totaling at least $35,000 for that department must now be put out to bid; the village’s current policy, once again, was more restrictive than the state law, setting the limit at $20,000.
The mayor said two of the other issues raised by state auditors—the village’s outdated purchase system, and the fact that funds were not being deposited in a bank in a timely fashion—are being overblown. While he acknowledged that the village does not have a solid purchase system, Mr. Teller said it does not make enough purchases to warrant such detailed record keeping. “Nothing is wrong with our purchase order system,” he said. “We’re going to adjust to specific forms and keep a regular log. There weren’t enough [orders]. If we write 10 to 15 purchase orders in a year, we’re doing a lot and we’re spending money, and we don’t spend that much.”
The other criticism, Mr. Teller added, refers to one instance when an employee failed to deposit funds collected at the village beaches before the end of the day. In that instance, he said, it took 72 hours to deposit the money, but the mayor added that there was “no money missing.”
“As long as we’re repairing the damage, that we’re aware of it, there is no fault to be found,” Mr. Teller said, referring to the payroll error.
In a joint statement, Mr. Tucker and Trustees Patricia DiBenedetto and Charlie Palmer said that while they will not be conducting an audit, state examiners did identify several “critical weaknesses” at Village Hall, pointing to the outdated procurement policy, the ineffective purchase order system and the fact that beach revenues were not deposited on time.
While it will not audit village finances, “the state has decided that we have a serious enough problem or potential problems with internal IT controls such as restricting network access, systematic password changes, and maintaining audit logs, that they will be performing a comprehensive audit,” the statement reads.
“Pending the outcome of the audit review, the Board of Trustees will take the necessary steps to fix the aforementioned problems, implement tighter financial controls and recoup any village funds that have been misspent,” it continues.
The recent state examination focused on a dozen financial areas, including payroll, purchasing, cash disbursement and revenues taken in by the court and tax receiver. State employees also took a close look at the village’s financial records, policies and reports, Mr. Teller said.
Additionally, the mayor notes, the state auditors examined specific areas of the budget, as requested by Mr. Tucker and the other trustees, including payroll calculations, budget transfers during the 2011-12 fiscal year, and payments to current and past village employees.
Mr. Teller also took an indirect shot at Mr. Tucker, Ms. DiBenedetto and Mr. Palmer, the three trustees who supported the motion to hire, at an additional cost of $175 per hour, former Bellport Village Clerk Scott Augustine to complete a separate analysis of village finances. The state completed its examination at no charge.
“Rather than await this free review, these same board members voted to retain the additional services of the village’s independent auditing firm at a cost of over $7,000 to taxpayers,” Mr. Teller wrote. “Their work is yet to be completed; however, I am fully confident they will concur with the findings of the Office of the State Comptroller.”
In their joint statement, the trustees pointed out that the state was not contacted by the mayor until after they hired Mr. Augustine “to oversee an investigation of questionable financial transactions and salary overpayments.” At that time, according to the same joint statement, the state informed the trustees that they might not audit their finances and recommended that they should take the necessary steps to correct past and current payroll errors.
It was then that the trustees said they found other “potential financial discrepancies” now under review by the village’s outside auditors. Though they have not offered specifics about the other alleged discrepancies, Mr. Tucker, Ms. DiBenedetto and Mr. Palmer said the transactions in question “would not have been found nor were they found during the normal course of our audit.”