Recent Audit Reveals Long-Standing Finance Issues in Town of Islip

A recent audit of the Town of Islip, completed by New York State Comptroller Thomas DiNapoli's office, found long-standing finance and management problems – some dating back 20 years.

The audit, which was requested by Town of Islip Supervisor Phil Nolan after discovering $3.3 million in unfunded expenditures, covered January 2007 to August 2008. 

DiNapoli's report stated that the town clerk's office had a cash shortage of $12,250, which included: solid waste permit application receipts totaling $6,750; towing business licenses totaling $3,600; and commercial boat hauler permits and deposit differences totaling $1,900.

"We are working on our end of it to find everything," said Deputy Town Clerk Patricia Curci.

DiNapoli has referred his report to the Suffolk County District Attorney's Office for further investigation. While the DA's office declined to comment, they did confirm that they received the referral.

"We found a number of long-standing problems in the town that needed to be corrected to prevent future cash shortfalls and unwelcome tax increases," said DiNapoli. "The good news is that the town is correcting these issues under the leadership of Supervisor Nolan, together with members of the town board. They've been working closely with my auditors to address the issues we identified."

In response to the audit, Nolan said, "All of the issues identified in the audit report were long-standing practices and we have corrected, or are in the process of correcting, every single one of them."

DiNapoli's auditors found that from 2006 to 2008, town officials unnecessarily designated $14.3 million a year in its fund balance. In addition, long-running and antiquated processes led the town comptroller to incorrectly charge approximately $10 million in revenues and expenditures to the wrong funds, which resulted in inequitable tax increases.

Village residents paid for $8,999,911 in debt service that should have been shared with all town residents. Town residents living outside of the villages paid for $765,225 in expenses that should have been shared with village residents; and the town comptroller incorrectly posted an operating surplus totaling $192,871 for the Division of Land Management.

DiNapoli's report also stated that for at least 10 years, town employees received leave time and other fringe benefits without board authorization, resulting in the town incurring more than $111,000 in unauthorized expenses.

Some of DiNapoli's recommendations included:

• The town clerk investigate why funds are missing and take steps to ensure cash, checks, receipts, permits are maintained in secure areas.
• The town clerk assign cash drawer reconciliation to an employee who does not also collect cash and enter cash receipt transactions to the computer system.
• Create encumbrances that are valid commitments to expend to funds for specific purposes and ensure that each expenditure and revenue is classified in the proper fund.
• Ensure that separation payments are reviewed and approved by the board prior to making those payments to individuals leaving town employment.
• Develop written policies for the accrual of and carry-over of leave time for employees.

For a full copy of the audit, click here.