State Audit Reveals Mismanagement of Capital Project Funds at Fulton | News

FULTON — The results of the state comptroller’s year-long audit of Fulton’s financial affairs revealed discrepancies in the handling of its capital projects account.

The report’s key findings are that the City Chamberlain failed to keep complete and up-to-date records of capital projects. Out of 308 capital projects, 279 projects remained open. Additionally, Fulton Common Council has not approved capital project budgets, tracked financial results or approved closure for more than 90% of open projects on the city’s books since 1987, the report said.

Projects included general, water, sewer, waste and garbage works.

Based on the fiscal year ending in 2020, 279 completed projects had a closing fund (cash balance) totaling $872,534, including 218 projects with residual cash balances totaling $967,711, plus 21 additional projects totaling deficits of $95. $177 which required additional funding.

City of Fulton records revealed that the remaining 40 completed projects broke even and had no residual fund balance.

Dan O’Brien, the current City Chamberlain, said the audit was good for the office and he welcomed it.

“After reviewing the audit, we now have a good understanding of our issues in our capital fund account,” O’Brien said. “From this well-received report, we will develop a clear corrective action plan to address current issues and ensure we have the tools in place to maintain the level of reporting needed for the future.”

The report stated: “No file contained a complete financial history of capital projects. We have identified the following record keeping deficiencies:”

• Sub-revenue ledger and general ledger accounts in the accounting system (eg cash, accounts receivable and payable, fund balance) were not broken down by individual project. Only related expenditure accounts were separated by project in the accounting system.

• At the start of the controller’s fieldwork, the spreadsheet had not been updated for about two years (since May 2019). Although the spreadsheet presents the balance sheet, revenue and expense control accounts by individual project, it does not contain detailed revenue and expense transactions.

• Budgeted revenues were not included in the accounting system or in the spreadsheet. As a result, officials did not have readily available information to monitor the availability and timeliness of estimated revenues (eg, grants, state aid, serial bonds) intended to fund each project.

• The spreadsheet has 143 projects with start dates ranging from 1987 to 2003 that are combined and have a total fund balance of $155,731. However, the spreadsheet does not show the results of individual projects or the final balance of funds for those projects. The Chamberlain updated the spreadsheet during the audit.

According to the report, the main recommendations of the state comptroller’s office were to maintain accurate and up-to-date capital project records for individual projects, approve and monitor capital project budgets, correct accounting errors and close completed projects in a timely manner.

The report also said Fulton city officials agreed with the report’s findings and said they planned to take corrective action.

O’Brien told the Palladium-Times steps have been taken to ensure this.

“The mayor and I have already begun a preliminary look at what some of the elements of the corrective action plan will look like,” O’Brien said. “These points will be shared with the common board for review and comment.”

As for the audit, Assistant Comptroller of Local Government and Schools Accountability Elliott Auerbach said nothing probably went wrong, but life went on and sometimes it’s all about focus on the laser project by project. Auerbach called the errors “a paperwork effort to make sure, once again, that everything is accounted for.”

Auerbach confirmed the audit was done at the invitation of Fulton Mayor Deana Michaels in January, with the goal of improving management.

Michaels confirmed Auerbach’s comments to the Palladium-Times with a clarification of how the city intends to move forward.

“When I took office in January 2020, I knew that one of the first orders of the day was to request an audit by the New York State Comptroller to ensure that we were laying the foundation for a management and strong financial oversight,” Michaels said. “That’s exactly what I did.”

Michaels said they didn’t know that in January 2020, a pandemic would soon follow causing great disruption in everyone’s lives. Nevertheless, they stayed the course.

“We spent nearly two years working side-by-side with the Office of the State Comptroller during their engagement,” she said. “It was a pleasure to work with the team and learn from what they had to offer. While there has certainly been work to do in terms of managing capital projects for decades, there are also a lot of positive things to come out of this audit. We are committed to improving the way we manage capital projects and we are committed to improving how each department operates. Getting our internal affairs in order will only strengthen and support the growth and development of the city.

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