DIVISION OF LOCAL GOVERNMENT

& SCHOOL ACCOUNTABILITY

OF F I C E O F T H E NE W Y O R K S T A T E CO M P T R O L L E R
Report of Examination
Period Covered:
January 1, 2012 December 10, 2013
2014M-25
Le Roy Fire
Department, Inc.
Oversight of Fire
Department Finances
Thomas P. DiNapoli
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DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY

Page
AUTHORITY LETTER 2
INTRODUCTION 3
Background 3
Objective 3
Scope and Methodology 3
Comments of Department Ofcials and Corrective Action 4
OVERSIGHT OF FIRE DEPARTMENT FINANCES 5
Cash Disbursements and Receipts 5
Reported Cash 10
Recommendations 11


APPENDIX A Response From Department Ofcials 12
APPENDIX B Audit Methodology and Standards 14
APPENDIX C How to Obtain Additional Copies of the Report 15
APPENDIX D Local Regional Ofce Listing 16
Table of Contents
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OFFICE OF THE NEW YORK STATE COMPTROLLER
2
State of New York
Ofce of the State Comptroller
Division of Local Government
and School Accountability

October 2014
Dear Fire Department Ofcials:
The Ofce of the State Comptroller works to identify areas where re department ofcials can improve
their operations and provide guidance and services that will assist them in making those improvements.
Our goals are to develop and promote short-term and long-term strategies to enable and encourage
re department ofcials to reduce costs, improve service delivery, and to account for and protect their
entitys assets.
Following is a report of our audit of the Le Roy Fire Department, entitled Oversight of Fire Department
Finances. This audit was conducted pursuant to Article V, Section 1 of the State Constitution and the
State Comptrollers authority as set forth in Article 3 of the General Municipal Law.
This audits results and recommendations are resources for Department ofcials to use in effectively
managing operations and in meeting the expectations of their constituents. If you have questions about
this report, please feel free to contact the local regional ofce for your county, as listed at the end of
this report.
Respectfully submitted,
Ofce of the State Comptroller
Division of Local Government
and School Accountability
State of New York
Ofce of the State Comptroller
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DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY
Background
Introduction
Objective
Scope and
Methodology
The Le Roy Fire Department, Inc. (Department) provides re
protection services to the Village and Town of Le Roy in Genesee
County. The Department is comprised of members from the Oatka
Hose Company, Excelsior Hook and Ladder Company, and the
Chemical and Hose Company.
1

The Departments ofcers include, among others, a President, Vice-
President, Secretary, Treasurer, Chaplain, Department Chief, two
Assistant Chiefs, and a Board of Directors. The Board of Directors
generally consists of ve members, with one person from each re
company and two at-large members.
2

According to the bylaws, the Business Ofcers
3
have control and
management of the Departments nancial affairs. The Treasurers
duties include the maintenance of all bank accounts, accounting
records and reports. The Treasurer of the Department is, by law, also
the Treasurer of the Firemens Benevolent Association of the Village
of Le Roy. We also conducted an audit of the Firemens Benevolent
Association of the Village of Le Roy and issued a separate report,
Oversight of the Associations Foreign Fire Insurance Tax Moneys
(2014M-26).
The Departments revenue for the past three scal years 2011
through 2013 averaged about $3,400, primarily from fundraising
and donations. The average expenditures for the three years were
$2,400, for fundraiser prizes, antique re truck expenses, little league
sponsorship and donations.
The objective of our audit was to examine internal controls over
the Departments nancial operations and addressed the following
related question:
Are Department controls adequate to ensure that nancial
activity is properly recorded and reported and that Department
moneys are safeguarded?
We initially examined the Departments records and reports for the
period January 1, 2012 through December 10, 2013. Upon identifying
questionable transactions, we expanded our scope back to 2005.
____________________
1
Each of these companies has a separate Treasurer who is responsible for
maintaining nancial records for their respective companies.
2
At-large members can come from any of the Departments three re companies.
3
Business Ofcers include the Board of Directors, President, Vice-President,
Treasurer and Secretary.
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OFFICE OF THE NEW YORK STATE COMPTROLLER
4
Comments of
Department Ofcials and
Corrective Action
We conducted our audit in accordance with generally accepted
government auditing standards (GAGAS). More information on such
standards and the methodology used in performing this audit are
included in Appendix B of this report.
The results of our audit and recommendations have been discussed
with Department ofcials and their comments, which appear
in Appendix A, have been considered in preparing this report.
Department ofcials generally agreed with our ndings and indicated
they planned to initiate corrective action.
The Departments Business Ofcers have the responsibility to
initiate corrective action. A written corrective action plan (CAP) that
addresses the ndings and recommendations in this report should
be prepared and forwarded to our ofce within 90 days. For more
information on preparing and ling your CAP, please refer to our
brochure, Responding to an OSC Audit Report, which you received
with the draft audit report. We encourage the Department to make
this plan available for public review.

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DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY
Oversight of Fire Department Finances
The Departments Business Ofcers are responsible for establishing
adequate internal controls over cash receipts and disbursements.
The Business Ofcers should periodically review the Departments
nancial records to ensure that the Treasurer accurately records and
promptly deposits all cash receipts. They should also periodically
compare nancial transactions on bank statements and canceled check
images with the amounts recorded by the Treasurer as received and
disbursed. In addition, they should compare cash balances on bank
statements (as adjusted for deposits in transit and outstanding checks)
with the corresponding cash balances in the accounting records and
reported by the Treasurer in the annual nancial report.
The Business Ofcers did not establish adequate internal controls
over cash receipts and disbursements to ensure that Department
moneys were safeguarded. The Treasurer managed the Departments
funds with little or no oversight by any of the other Business
Ofcers. We found that the Treasurer made approximately $18,100
in questionable disbursements that were not supported by invoices or
authorized by the Departments membership. Of this amount, checks
totaling $7,866 were paid to the Treasurer, checks totaling $6,925
were paid to Total Quality Plus (a business purportedly owned by the
Treasurer), and electronic funds transfers totaling $3,307 were made
to a credit card company. In addition, cash receipts totaling almost
$2,600 were unaccounted for. Further, 14 transfers totaling $14,305
were made from the Le Roy Firemens Benevolent Associations
(Association) bank accounts to the Departments checking account,
and four unauthorized transfers totaling $8,600 were made from the
Department to the Association. The Department Treasurer is also
Treasurer of the Association. Ofcials from the Department and
Association told us that there should be no reason for transfers to
occur between these two organizations.
The Departments bank balance on October 10, 2013 was $7,824
less than the cash balance in the Treasurers accounting records.
Subsequently, the Treasurer made an unexplained deposit of $7,500
on October 24, 2013 to the Departments bank account, which
was composed entirely of cash. In November 2013, the President
of the Department accepted the Treasurers request for a leave of
absence pending the full resolution of our audit and any subsequent
investigation.
The Departments bylaws require that the Treasurer manage all
moneys received and disbursed by the Department and keep an
accurate record of all cash receipts and disbursements. The bylaws
Cash Disbursements
and Receipts
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OFFICE OF THE NEW YORK STATE COMPTROLLER
6
require that the membership approve expenditures greater than $500
prior to payment. The bylaws also state that withdrawals can only be
made with the signature of any two of the following ofcers: President,
Vice-President or Treasurer. Also, no money can be withdrawn from
any bank unless authorized by Department ofcials at a regular,
annual or special meeting. Good management practice suggests that
Department ofcials issue press numbered duplicate receipts when
no other documentation to support the receipt of cash is available, and
deposit cash and checks received in a timely manner.
Cash Disbursements The Treasurer processed cash disbursements
with limited oversight by other Business Ofcers. Bank withdrawals
and expenditures over $500 were not authorized by the membership
and cash disbursement records were not accurate. We identied
questionable disbursements totaling $18,098 that were made by the
Treasurer from September 2007 through September 2013, as indicated
in Table 1. Of this amount, 19 checks totaling $7,866 were paid to
the Treasurer, nine checks totaling $6,925 were paid to Total Quality
Plus and ve electronic funds transfers totaling $3,307 were made to
a credit card company. None of these payments were supported by
invoices, included on the annual Treasurers report or approved by
other Business Ofcers or the membership as noted in the minutes.
The Department Secretary and former President told us that they
did not authorize any compensation to be paid to the Treasurer and
did not authorize Total Quality Plus to provide any services to the
Department. In addition, they did not provide the Treasurer with
a credit card or have knowledge of reimbursements made to the
Treasurer for any Department transactions for which the Treasurers
personal credit card would have been used.
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DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY
Table 1: Questionable Disbursements
Date Disbursement Type/Payee Amount
9/18/2007 Check Treasurer $783
2/26/2008 Check Treasurer $218
9/9/2008 Check Treasurer $507
9/23/2010 Check Treasurer $425
12/21/2010 Check Treasurer $655
4/5/2011 Check Treasurer $650
7/18/2011 Check Treasurer $225
7/26/2011 Check Treasurer $279
8/30/2011 Check Treasurer $206
11/17/2011 Check Treasurer $503
4/11/2012 Check Treasurer $232
6/19/2012 Check Treasurer $759
6/20/2012 Check Treasurer $329
7/25/2012 Check Treasurer $335
9/5/2012 Check Treasurer $289
9/11/2012 Check Treasurer $215
11/6/2012 Check Treasurer $479
4/23/2013 Check Treasurer $165
9/4/2013 Check Treasurer $612
7/23/2009 Check Total Quality Plus $895
9/8/2010 Check Total Quality Plus $350
9/16/2010 Check Total Quality Plus $1,550
9/29/2010 Check Total Quality Plus $595
12/21/2010 Check Total Quality Plus $200
9/7/2011 Check Total Quality Plus $950
1/4/2012 Check Total Quality Plus $995
8/28/2012 Check Total Quality Plus $500
9/18/2012 Check Total Quality Plus $890
10/19/2010 EFT Credit Card Payment $578
11/8/2010 EFT Credit Card Payment $200
8/19/2011 EFT Credit Card Payment $212
9/7/2011 EFT Credit Card Payment $1,567
2/6/2012 EFT Credit Card Payment $750
Total $18,098
We reviewed the canceled check images and found that all 28 checks
included the purported signatures of the Treasurer and another
Department ofcial. We showed the canceled check images to the
former Department President, whose signature appeared on 23 of
these checks. He indicated that he did not recall signing these checks
and that the signature on the canceled check image did not appear to
be his. We attempted to contact two other former Presidents, including
the Treasurers son, whose signature appeared on the ve remaining
checks, but they did not return our calls.
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OFFICE OF THE NEW YORK STATE COMPTROLLER
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Cash Receipts We found ve instances where the amount recorded
as received in the Treasurers records was more than the amount
deposited. As indicated in Table 2, cash receipts totaling $2,592 are
unaccounted for.
Table 2: Cash Receipts
Date Description From Records
Treasurers
Report
Bank
Deposit
Difference
8/21/2010 Donation $2,420 $2,030 ($390)
7/9/2011 Parade Prize $35 $0 ($35)
8/18/2011 Fundraiser Rafe Ticket Sales $1,640 $1,440 ($200)
8/22/2011 Fundraiser Rafe Ticket Sales & Donations $3,665 $3,355 ($310)
8/31/2013 Fundraiser Proceeds $1,657 $0 ($1,657)
Unaccounted for Cash Receipts ($2,592)
The fundraising activity consisted primarily of an annual rafe at a
local camping resort. Department members who managed the rafe
told us they collected, counted and recorded the proceeds from the
event, then provided the cash and checks collected to the Treasurer,
who was responsible for making the bank deposit.
We also obtained deposit compositions for the Departments bank
accounts and compared them to the Treasurers records. As indicated
in Table 3, we found nine deposits totaling $2,290 of cash and checks
that were not included in the Treasurers records. The Department
Secretary was unable to explain these deposits. Department ofcials
did not issue duplicate receipts when they collected cash; therefore,
we are unsure of the source of the cash deposits and whether any
of the amounts deposited relate to the unaccounted for cash receipts
included in Table 2. The dates and the amounts of these deposits do not
align with any of the unaccounted for receipts previously discussed.
For example, the largest receipt ($1,657) that was not deposited was
for fundraiser proceeds recorded as received on August 31, 2013.
Unidentied cash after this date totaled $400, which was deposited
on October 16, 2013.
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DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY
Table 3: Unrecorded Deposits
Date Composition Amount
3/7/2005 NA
a
$200
10/19/2007 Cash $100
4/7/2008 Cash $500
4/15/2010 Four Checks $355
10/12/2012 One Check $25
1/9/2013 Cash $310
2/12/2013 Cash $300
8/12/2013 Cash $100
10/16/2013 Cash $400
Total $2,290
a
A bank composition for this deposit was not
available due to its age. We are unsure if this
was cash or checks.
The four checks deposited on April 15, 2010 included three donations
of $50, $100 and $200, and one $5 check for a re report. The check
deposited on October 12, 2012 was an award from another Fire
Department which was labeled Best Pumper.
Transfers The Treasurer of the Department is also the Treasurer of
the Association. We found that 14 transfers totaling $14,305 were
made from the Associations bank accounts to the Departments
checking account. In addition, four transfers totaling $8,600 were
made from the Department to the Association. According to ofcials
from the Department and the Association, there should be no reason
for transfers to occur between these two organizations.
4
We found that
at least seven of the transfers from the Association to the Department
were likely made to ensure adequate moneys were on hand prior
to questionable disbursements being made to the Treasurer or his
business. The net effect of these transfers is that the Department may
owe the Association $5,705.
We asked the Treasurer about the questionable cash disbursements,
receipts and transfers. He stated that he provided all available
supporting documentation to us and that, on many occasions, he paid
for Department expenses with cash, personal checks and personal
credit cards and then reimbursed himself at a later date. He also
indicated that, on numerous occasions, he would transfer moneys as
needed to prevent overdrafts. However, he did not provide us with
any additional documentation to support these transactions.
____________________
4
The Departments bylaws state that no money shall be withdrawn from any
bank unless authorized at a regular, annual or special meeting. There was no
documentation in the minutes indicating the transfers were authorized by any of
the other Business Ofcers.
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OFFICE OF THE NEW YORK STATE COMPTROLLER
10
Reported Cash The Treasurer should prepare and submit annual reports to the
Business Ofcers. These reports provide the Business Ofcers with
information necessary to monitor Department operations and give
other interested parties a summary of the Departments nancial
activities.
At the annual meeting held in April 2013, the Treasurer presented an
annual report of the Departments nancial activity to the membership.
The report listed receipts and disbursements from the prior calendar
year and a Statement of Accounts and Funds, which included the
Departments bank account balances. The minutes indicate that no one
present questioned any of the nancial information on the Treasurers
report. We reviewed year-end bank account balances dating back to
2005 and found that the amounts reported by the Treasurer were
consistently more than the corresponding balances found on the bank
statements (as adjusted for deposits in transit and outstanding checks)
since 2006, as indicated in Table 4.
The Business Ofcers did not compare transactions on the bank
statements with amounts recorded by the Treasurer, or cash balances
with the accounting records or annual report. Department ofcials
told us that bank statements were mailed to the Treasurers home and
that he always kept the bank statements and canceled checks there
and they never saw them.
Table 4: December 31 Bank Balance Comparison
Fiscal Year Per Treasurers
Report
Per Bank
Statements
Difference
2005 $4,939
a
$5,004 $65
2006 $5,834 $1,137 ($4,697)
2007 $4,899 $3,897 ($1,002)
2008 $4,812 $1,025 ($3,787)
2009 $4,301 $619 ($3,682)
2010 $5,263 $1,754 ($3,509)
2011 $8,717 $5,254 ($3,463)
2012 $8,315 $795 ($7,520)
2013
b
$8,247 $423 ($7,824)
a
A deposit of $4,947 in Foreign Fire Insurance Tax proceeds was made into
a Department bank account in 2005, but was not recorded on the 2005
annual report. If this deposit had been recorded on the annual report, the
difference would have been ($4,882).
b
General Ledger balance at October 10, 2013
The Departments bank balance on October 10, 2013 was $7,824
less than the cash balance in the Treasurers accounting records.
Subsequently, the Treasurer made an unexplained deposit of $7,500
on October 24, 2013
5
to the Department bank account, which was
____________________
5
We initially contacted the Treasurer, who agreed to meet with us on October 11,
2013. He did not make himself available on that date and instead provided the
Secretary with virtually none of the records we requested.
11 11
DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY
composed entirely of cash. When we questioned him regarding the
source of that cash, he stated that this was a return of funds that he
had invested for the Department. We found nothing in the minutes
to indicate that the Business Ofcers had authorized the Treasurer
to make any investments with Department funds. When we asked
for documentation to demonstrate what investments he had made, he
stated that where these funds were invested was irrelevant and that
the funds were always available for Department use.
The Business Ofcers should:
1. Investigate the questionable nancial transactions identied in this
report and take appropriate action to recover any misappropriated
moneys, as necessary;
2. Approve disbursements and transfers as required in the bylaws;
and
3. Periodically request and review bank statements and canceled
check images, comparing them with invoices and the Treasurers
accounting records.
Recommendations
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OFFICE OF THE NEW YORK STATE COMPTROLLER
12
APPENDIX A
RESPONSE FROM DEPARTMENT OFFICIALS
The Department ofcials response to this audit can be found on the following page.
13 13
DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY
14
OFFICE OF THE NEW YORK STATE COMPTROLLER
14
APPENDIX B
AUDIT METHODOLOGY AND STANDARDS
We performed the following audit procedures to complete our audit objective:
Reviewed the Departments minutes and available documentation for information concerning
approval of disbursements and the annual Treasurers reports;
Reviewed the Departments bylaws to determine what guidelines were in place regarding
nancial activity;
Interviewed Department ofcials in regards to nancial operations, with a focus on the receipt,
deposit and disbursement practices and procedures;
Compared canceled checks, check images and activity noted on bank statements to Treasurer
reports, available receipts and invoices, and other Department records to determine the validity
of disbursements; and
Reviewed payments made to Department ofcials to determine if they were authorized.
We conducted this performance audit in accordance with GAGAS. Those standards require that we
plan and perform the audit to obtain sufcient, appropriate evidence to provide a reasonable basis
for our ndings and conclusions based on our audit objective. We believe that the evidence obtained
provides a reasonable basis for our ndings and conclusions based on our audit objective.
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DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY
APPENDIX C
HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT
Ofce of the State Comptroller
Public Information Ofce
110 State Street, 15th Floor
Albany, New York 12236
(518) 474-4015
http://www.osc.state.ny.us/localgov/
To obtain copies of this report, write or visit our web page:
16
OFFICE OF THE NEW YORK STATE COMPTROLLER
16
APPENDIX D
OFFICE OF THE STATE COMPTROLLER
DIVISION OF LOCAL GOVERNMENT
AND SCHOOL ACCOUNTABILITY
Andrew A. SanFilippo, Executive Deputy Comptroller
Gabriel F. Deyo, Deputy Comptroller
Nathaalie N. Carey, Assistant Comptroller
LOCAL REGIONAL OFFICE LISTING
BINGHAMTON REGIONAL OFFICE
H. Todd Eames, Chief Examiner
Ofce of the State Comptroller
State Ofce Building - Suite 1702
44 Hawley Street
Binghamton, New York 13901-4417
(607) 721-8306 Fax (607) 721-8313
Email: [email protected]
Serving: Broome, Chenango, Cortland, Delaware,
Otsego, Schoharie, Sullivan, Tioga, Tompkins Counties
BUFFALO REGIONAL OFFICE
Jeffrey D. Mazula, Chief Examiner
Ofce of the State Comptroller
295 Main Street, Suite 1032
Buffalo, New York 14203-2510
(716) 847-3647 Fax (716) 847-3643
Email: [email protected]
Serving: Allegany, Cattaraugus, Chautauqua, Erie,
Genesee, Niagara, Orleans, Wyoming Counties
GLENS FALLS REGIONAL OFFICE
Jeffrey P. Leonard, Chief Examiner
Ofce of the State Comptroller
One Broad Street Plaza
Glens Falls, New York 12801-4396
(518) 793-0057 Fax (518) 793-5797
Email: [email protected]
Serving: Albany, Clinton, Essex, Franklin,
Fulton, Hamilton, Montgomery, Rensselaer,
Saratoga, Schenectady, Warren, Washington Counties
HAUPPAUGE REGIONAL OFFICE
Ira McCracken, Chief Examiner
Ofce of the State Comptroller
NYS Ofce Building, Room 3A10
250 Veterans Memorial Highway
Hauppauge, New York 11788-5533
(631) 952-6534 Fax (631) 952-6530
Email: [email protected]
Serving: Nassau and Suffolk Counties
NEWBURGH REGIONAL OFFICE
Tenneh Blamah, Chief Examiner
Ofce of the State Comptroller
33 Airport Center Drive, Suite 103
New Windsor, New York 12553-4725
(845) 567-0858 Fax (845) 567-0080
Email: [email protected]
Serving: Columbia, Dutchess, Greene, Orange,
Putnam, Rockland, Ulster, Westchester Counties
ROCHESTER REGIONAL OFFICE
Edward V. Grant, Jr., Chief Examiner
Ofce of the State Comptroller
The Powers Building
16 West Main Street Suite 522
Rochester, New York 14614-1608
(585) 454-2460 Fax (585) 454-3545
Email: [email protected]
Serving: Cayuga, Chemung, Livingston, Monroe,
Ontario, Schuyler, Seneca, Steuben, Wayne, Yates Counties
SYRACUSE REGIONAL OFFICE
Rebecca Wilcox, Chief Examiner
Ofce of the State Comptroller
State Ofce Building, Room 409
333 E. Washington Street
Syracuse, New York 13202-1428
(315) 428-4192 Fax (315) 426-2119
Email: [email protected]
Serving: Herkimer, Jefferson, Lewis, Madison,
Oneida, Onondaga, Oswego, St. Lawrence Counties
STATEWIDE AUDITS
Ann C. Singer, Chief Examiner
State Ofce Building - Suite 1702
44 Hawley Street
Binghamton, New York 13901-4417
(607) 721-8306 Fax (607) 721-8313