Elba gets dinged in state audit for use of cash from scrap sales
Submitted by Howard Owens on January 4, 2011 - 7:34pm
As soon as the Elba Town Board found out about cash from scrap metal sales being used to buy a flat-screen TV, popcorn popper and coffeemaker for the highway department, the board instituted new accounting controls to better track funds from the sales, according to Town Supervisor Lucine Kauffman.
Disclosure of the sales and purchases were part of an audit report on nine Western New York governments and the Batavia School District by the NYS Comptroller's Office.
Investigators specifically looked into how procedures for scrap material sales were handled. The finding: Of the $132,000 in scrap sales, there was inadequate tracking and accounting of more than $27,000 in cash.
Elba had the distinction of the only flat-screen TV purchased with the cash.
"It was not a practice we (the board) knew about and we put a stop to it immediately," Kauffman said.
According to the report, the highway superintendent for Elba at the time, Allan Totten, made $5,605 in scrap sales from June 2006 to July 2009. The scrap buyer paid with a check for $1,119 in purchases and paid cash on 18 occasions, totalling $4,486.
When he got checks, Totten reportedly turned the checks over to the town and the money went into the general fund.
Kauffman says the Town of Elba contracts with a vendor to pick up scrap metal from its transfer station and it rents a receptacle from the vendor. Proceeds from the sale of this scrap metal has been in the form of a check mailed directly to her.
The scrap metal sold by the highway department employees for cash consisted of items they transported to the vendor. When he got cash, Totten treated it as a "coffee fund" -- petty cash to use within his department.
After auditors questioned this practice, Totten reportedly turned over $1,113 to the town. He didn't have receipts for the purchase of the TV and small appliances, but auditors said they visually confirmed those items were in the highway offices.
Kauffman said in response, that the town notified the scrap buyer that all purchases must be paid for by check from now on, that specific accounting of each transaction must take place. Furthermore, there is no "coffee fund" now.
Purchases for refreshments are reimbursable only under specific conditions, one of which is that the refreshments are for highway department employees from other municipalities assisting with Town of Elba projects.
These purchases will be specifically regulated as to how much money can be spent on authorized items. The town also adopted a code of ethics and wrote a scrap metal policy.
And writing the policy was made a bit harder, Kauffman said, because she couldn't find another jurisdiction that could provide an example of their own (written) scrap sales policies. They just didn't exist, Kauffman said.
That was one of the issues the comptroller's office apparently was trying to address in its audit of government agencies.
In the Batavia School District, auditors identified nearly $4,700 in cash sale proceeds for the period September 2006 through November 2008 that were not recorded or documented.
Some of the sales were recorded in the names of district employees and employees included personal scrap in the pile.
The City of Batavia and Town of Oakfield were found to have informal procedures for accounting for scrap sales and the audit report suggests that formal procedures be adopted.