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Elba gets dinged in state audit for use of cash from scrap sales

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.

Lincoln DeCoursey
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During bad winter storms, men work days-on-end out of these local highway departments, the little they can/do sleep may be right there in the shop on some old couch or table. In addition to plowing they do most of the mechanical work on their trucks. A television, coffee maker and popcorn popper are probably appropriate things to have around the shop, not extravagances. Sounds like these folks just had an idea about how to cut through red tape. Scolded for buying a coffee pot, probably from Walmart, really? Now they'll likely have to go through a months-long process just to get some small piece of equipment or supply that's urgently required and it'll just end up costing the taxpayer more due to lost productivity.
Bob Harker
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Lincoln, you fail to mention he was in possession of over $1100 in cash also. The town would have provided funds for a coffee pot. Popcorn maker? maybe. Funds for a flatscreen TV in a "work" area? No way. These people chose their profession knowing full well that there would be long hours (and mega OT) during storms. If they needed a TV, why didn't someone bring one home? "Now they'll likely have to go through a months-long process just to get some small piece of equipment or supply that's urgently required". A TV, coffee maker, and TV constitute urgently needed equipment?!?! I disdain government "red tape" as much as the next guy. However! There is a huge difference between a small office "coffee fund" and a slush fund such as this. ESPECIALLY when it's taxpayer money. Every single government entity MUST be held accountable for every penny spent.
Lincoln DeCoursey
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Requiring strict accounting when it comes to loose cash is the standard practice for business and certainly the correct thing to do in government also. There's legitimate reasons for such controls. Anybody who has to deal with the various controls emanating from these compliance auditing firms knows, and I'm not speaking about cash in particular since I don't work with that, but in general - such well-designed controls truly can be an impediment to productivity. Certainly a popcorn popper is not an urgently needed supply, but who knows, maybe next weekend some actual item will be required to fix a downed truck and the cash which had always been locked in the boss's drawer for that type of contingency is no longer there but rather in the general fund. This may mean that instead of grabbing the item at the local Autozone with cash, someone may have to drive extra miles to the particular place where the town has an open account, or wait till Monday, or who knows what. When people actually are being honest and prudent, stringent controls can be counter-productive. So yes I agree that government should operate on at least the same accountability standard as is prevalent in business. And yes, $1,000-$4,000 of taxpayer cash is significantly too much to have on the loose in any context, especially with a chunk of it already spent and with no particular accounting for how that happened - but I don't really see any evidence of foul play here, just poor accounting controls and a fair bit of associated uncertainty. As an aside, at some point does the ooh-aah emphasis come off of flat-screen television, so that these will just be called TVs? I haven't been checking closely, but I haven't seen any other kind of TV on sale in the past few years.
Ricky G. Hale
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Hey, if you're going to watch a movie on your new flat screen TV, you have to have some popcorn to go along with it. Who ever heard of watching a movie without popcorn? While they were at it, they should have bought a couple of nice comfy-cozy lounge chairs. Who ever heard of watching a movie and eating popcorn in one of those hard uncomfortable small wooden chairs? What about the beer? They ought to have a keg on tap. Who ever heard of watching a movie, while eating popcorn in a comfy-cozy chair without the beer? Did I forget any thing? But I'm not sure what the coffee maker was all about.
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