Town of Saugerties
Claims Auditing
2024M-144 l May 2025
Division of Local Government and School Accountability
Contents
Report Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Claims Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What Is a Proper Claims Audit? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Board Did Not Properly Audit Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Board Did Not Properly Audit or Authorize Credit Card Purchases. . . . . . . . . . . 5
What Do We Recommend? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Appendix A – Response From Town Officials . . . . . . . . . . . . . . . . . . . . . . . . 9
Appendix B – Audit Methodology and Standards . . . . . . . . . . . . . . . . . . . . . .11
Appendix C – Resources and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Report Highlights
Town of Saugerties
Audit Objective
Audit Period
Determine whether the Town of Saugerties
(Town) Board (Board) properly audited claims and January 1, 2021 – December 31, 2022
authorized credit card purchases.
Background
Key Findings The Town is located in Ulster County
(County). The elected five-member
The Board did not properly audit claims or authorize
Board, including the Supervisor, is
credit card purchases. We reviewed 50 claims
responsible for overseeing Town
totaling $2.1 million and 50 credit card purchases
operations and finances.
totaling $28,815. We determined that the Board did
not conduct a thorough and deliberate audit of any The Supervisor serves as the chief fiscal
claims before payment or authorize all credit card officer and is responsible for the day-to-
purchases. As a result: day financial activities and operations.
l 15 purchases totaling $91,979 did not comply The Town bookkeeper (bookkeeper)
with the Town’s purchasing policy. For example, is responsible for preparing claims
Town officials paid a contractor $46,500 to clear documentation for audit and processing
debris for the highway department without bid payment of approved claims. In addition,
or documentation that it was an exempt source. the bookkeeper is responsible for
l 36 credit card purchases totaling $10,868 collecting receipts and reconciling credit
were not properly authorized. For example, card charges.
an unauthorized individual used the Town
The department heads are responsible
Supervisor’s (Supervisor) credit card to make
for credit card purchases made for their
an unauthorized purchase, totaling $383
respective departments.
without the Supervisor’s knowledge. The
equipment was shipped to the Town’s former
video supply contractor. The Supervisor and
we were unable to verify if the Town received Quick Facts
this purchase due to lack of supporting Number of Claims 5,131
documentation. Total Claims $25.7 million
Number of Credit Card
l The Supervisor used a Town credit card to pay 836
Charges
for lunch to celebrate an employee’s birthday.
Total Credit Card
This is not an appropriate use of taxpayer Expenditures
$328,629
money.
Key Recommendations
l Obtain training to understand the claims auditing process and Board duties.
l Perform a thorough and deliberate audit of claims and credit card purchases.
Of f ic e of t he New York State Comptroller 1
Claims Auditing
New York State Town Law Section 118 requires a town board to audit all claims against a town before
payment is made. Board members should understand their duties and attend training specific to their
responsibility.
What Is a Proper Claims Audit?
A proper claims audit ensures each claim contains enough supporting documentation to determine
whether it complies with statutory requirements and town policies (e.g., procurement, credit card and
travel policies) and that the amounts claimed represent actual and necessary town expenditures.
Auditing and approving claims before approving payment is an important part of a town board’s
responsibility to ensure tax dollars are spent efficiently and that all purchases are:
l Authorized,
l Adequately supported,
l Mathematically correct, and
l Valid and legal expenditures.
A board’s claims audit should also verify the availability of budget appropriations prior to authorizing a
purchase.
Town boards should approve claims by signing or initialing each individual voucher packet or an
abstract of audited claims. A town’s bookkeeper then forwards the approved claims to the town
supervisor to prepare and sign the checks. The town board meeting minutes should also reflect what
claims have been audited and whether they were allowed or disallowed, in whole or in part.
The Board Did Not Properly Audit Claims
We reviewed 50 claims totaling approximately $2.1 million to determine whether they had adequate
supporting documentation, were for appropriate Town purposes, and were properly audited and
approved by the Board before payment. Although the Board approved the payment of all claims listed
on abstracts, the Board did not properly audit any of the claims. The Board did not perform a deliberate
review of each individual claim.
Although the Board approved the payment of these claims, we determined the Board’s lack of a claims
audit resulted in the payment of claims:
l When appropriations were not available,
l Without adequate supporting documentation,
l That were not properly authorized, and
l That were mathematically incorrect.
2 Of f ic e of t he New York State Comptroller
Specifically:
Insufficient Appropriations – The Board approved 50 claims for payment without ensuring that sufficient
budget appropriations were available. For example, in 2022, Town officials paid $203,775 to replace
the water department’s roof when there were no appropriations available in the budget. As a result, the
accountant used a journal entry to borrow from the general town-outside-village fund to cover the water
district’s capital project.
Town officials also paid past due electric bills in 2022 totaling $121,380 when the amount budgeted
for the year was only $96,400. The Board continued to approve payments for electricity throughout
the year without verification of sufficient appropriations. As a result, Town officials exceeded budgeted
appropriations for electricity by at least $75,497. When the Board exceeds budgeted appropriations,
funds must be transferred from other budget lines or fund balance. As a result, financial resources may
not be available to ensure that planned services are properly funded.
Inadequate Supporting Documentation – Thirty-seven of the 50 claims (74 percent) reviewed totaling
$951,458 did not have adequate supporting documentation. These claims lacked documentation
indicating:
l Compliance with Town policies – The Town’s purchasing policy requires purchase contracts over
$20,000 and public works contracts over $35,000 to be competitively bid unless appropriately
documented as an exempt source. The purchasing policy also requires officials to obtain two
verbal quotes for purchases between $500 and $2,999; two written quotes for purchases between
$3,000 and $9,999; and three written quotes for purchases between $10,000 and $19,999.
However, we identified 15 claims (30 percent) that included purchases totaling $91,979 that did not
comply with the Town’s purchasing policy.
For example, Town officials paid a contractor $46,500 to clear debris for the highway department.
We reviewed one of the claims totaling $6,000 related to public work performed by the contractor
and did not find any evidence that the Board competitively bid for the contract or appropriately
documented this contractor as an exempt source as required by the Town’s purchasing policy.
Additionally, Town officials did not document that two verbal quotes were obtained for purchases
between $500 and $2,999.
When the Board does not ensure that claims comply with Town policies, there is an increased risk
that goods and services were not purchased in the most cost-effective manner, to ensure the most
prudent and economical use of public money, and without favoritism.
l Itemized invoices – For example, Town officials paid $15,950 to an accounting firm even though
the invoice did not include an hourly rate or total hours worked by the accountant.
When invoices are not sufficiently itemized, it is difficult for Town officials to confirm that services
were performed, and the invoiced amount adheres to contract terms.
Of f ic e of t he New York State Comptroller 3
l Whether goods or services were received – For example, Town officials could not provide
documentation verifying receipt of police car parts totaling $14,815.
Improper Authorization – The Board did not ensure that the purchases associated with five claims (10
percent) totaling $22,820 were properly authorized. The former bookkeeper approved the purchases on
behalf of the Supervisor. Because Town officials did not establish adequate controls over the financial
system, the former bookkeeper was able to enter and approve purchases without any additional review.
The Supervisor told us that he permitted her to approve purchases when he did not have access
to the financial system. Additionally, the 50 claims reviewed included a total of 98 purchase orders.
Among them, 60 purchase orders (61 percent), totaling $486,181, were approved and issued after the
corresponding invoices were generated.
As a result, Town officials cannot ensure that goods and services are purchased at a favorable cost
because necessary approvals by the department heads and Board are circumvented. In addition, goods
and services are received without knowing if sufficient appropriations are available to cover payments.
Further, the lack of proper authorization, coupled with the Board not auditing the corresponding claims,
creates an opportunity for inappropriate purchases to go undetected.
Mathematical Errors – Six claims (12 percent) totaling $14,320 were not mathematically correct. For
example, Town officials paid a $1,380 claim that included duplicate charges for website design services.
This resulted in an overpayment of $690 to that vendor. This payment was also entered and approved
in the financial system by the former bookkeeper without an independent review. If the Board performed
a thorough and deliberate audit of claims, they may have detected these mathematical errors and
prevented overpayments.
Although the claims and supporting documentation were available in the bookkeeper’s office
for Board members to review, they did not regularly review either. Board members told us that if
they had a question about a claim listed on the abstract, they would ask the department before
approving the abstract for payment. In addition, each Board member was designated as a liaison
for certain departments and was responsible for reviewing and preapproving the assigned
department’s purchases. However, department heads provided Board members with different types of
documentation, and each Board member used a different method to approve purchases. For example,
some Board members approved purchases in the financial system and others physically signed off on
supporting documentation, such as invoices and purchase orders.
Overall, the Board did not know how to conduct a proper claims audit or know that it was their
responsibility to audit claims. For example, some Board members told us that they did not have
experience or training in auditing claims, and they believed it was the bookkeeper and the external
accountant’s responsibility to audit claims. As a result, officials paid claims totaling $22,820 that lacked
proper authorization and included duplicate charges. Without a thorough review of all claims to be
paid, the Board’s ability to effectively monitor Town financial operations is diminished and errors and
irregularities may occur and remain undetected and uncorrected.
Additional information on how to properly audit and approve claims can be found in publications
and training tools offered by the Office of the State Comptroller, including our Local Government
4 Of f ic e of t he New York State Comptroller
Management Guide (LGMG) titled Improving the Effectiveness of Your Claims Auditing Process and
webinars through our Office’s Academy for New York State’s Local Officials (Figure 1).
FIGURE 1
OSC Publication and Webinar
LGMG – Improving the Effectiveness of Your Webinar: Improving the Effectiveness of Your
Claims Auditing Process Claims Auditing Process
This session will assist local officials in learning how to
establish an effective and efficient claims processing system.
A well-designed system ensures proper use of municipal
resources, provides local officials with useful information and
complies with all applicable laws and regulations.
Access
Access this
this publication
publication at:at:
https://www.osc.ny.gov/files/local- Access this webinar at:
https://www.osc.ny.gov/files/local-government/ Access this webinar at:
government/publications/pdf/improving-the-effectiveness-of- https://www.osc.ny.gov/local-government/academy/webinars
https://www.osc.ny.gov/local-government/academy/
publications/pdf/improving-the-effectiveness-of-
claims-auditing-process.pdf
claims-auditing-process.pdf webinars
The Board Did Not Properly Audit or Authorize Credit Card Purchases
The Board adopted a credit card and travel policy that allowed select Town departments to use credit
cards to purchase items for Town business such as gas, supplies, reservations for necessary travel
and meals. In addition, the credit card policy required the Board to authorize all credit card accounts,
approve advanced written requests for travel for meetings or education purposes, and audit claims at
each Board meeting. The credit card policy also required the person using the card to sign the receipt
before submitting it to the bookkeeper.
We reviewed 10 credit card claims (43 percent) totaling $71,687 and determined that the Board did not
audit or approve the claims before payment. Instead, credit card claims were paid through an automatic
withdrawal from the Town’s general fund operating account without any audit by the Board. Although
the Supervisor approved all 10 credit card payments in the financial system, he did not perform any
review or audit of the individual claims. Further, he approved seven of the 10 credit card payments
totaling $41,486 after the payments were made through automatic withdrawal from the Town’s
operating account. When payments are automatically withdrawn, individual purchases that are not
Of f ic e of t he New York State Comptroller 5
authorized, adequately supported, or are not valid and legal expenditures that comply with statues and
Town policy, may be paid and can go undetected.
We then reviewed individual purchases from each credit card claim and selected 50 credit card
purchases totaling $28,846 to determine whether they were properly authorized in accordance with the
Town’s credit card policy, supported with documentation, and for legitimate Town purposes. Because
the Board did not audit credit card claims, they did not detect that Town officials and employees
circumvented the purchase order system to make purchases that were not properly authorized,
supported with documentation, or for legitimate Town purposes. When a purchase order system is
circumvented, authorizations and necessary order information may be missing to confirm the purchase
and delivery location of a requested good/service. Specifically, questionable or unsupported purchases
may be made without proper authorization and could be delivered to a non-Town address.
Unauthorized Purchases – Thiry-six credit card purchases (72 percent) totaling $10,868 were made
by individuals that were not properly authorized. These purchases were for legitimate Town purposes;
however, they were made by individuals who were not Board-authorized credit card users. For
example, the ice arena director purchased a sports insurance policy totaling $2,204 using a Town
credit card. Although the purchase was appropriate, the ice arena director circumvented the purchasing
process by using the credit card and did not have the authority to make the purchase. Furthermore,
these credit card purchases were not audited and lacked Board approval.
Additionally, an unauthorized individual used the Supervisor’s credit card to make an unauthorized
purchase, totaling $383, for Justice Court audio equipment without the Supervisor’s knowledge. The
equipment was shipped to the Town’s former video supply contractor. We were unable to verify if the
Town received this purchase due to lack of supporting documentation. The Town’s television program
coordinator told us that she was instructed by the former Justice to use the Supervisor’s credit card to
order the audio equipment for the Town’s contractor to install. However, the Supervisor told us that he
was unaware of the purchase and not sure if
the Town received the equipment.
FIGURE 2
Unsupported purchases – Forty-six credit card
Unsupported Credit Card Purchases charges (92 percent) did not have sufficient
supporting documentation (see Figure 2).
Equipment
Repairs $383 For example, a recreation department
$2,337 Travel and Meal employee purchased building materials totaling
$3,009 $5,888 without obtaining a purchase order
Recreational and the department was unable to provide any
Materials & documentation supporting the materials were
Supplies Miscellaneous
received. The employee told us that they used
$13,646 $3,780
the credit card to purchase the materials to
Office build a small building behind the maintenance
Supplies garage because the vendor did not accept
$5,063 purchase orders. However, the Town’s credit
card policy does not allow employees to use
6 Of f ic e of t he New York State Comptroller
credit cards for purchases other than gas, supplies, reservations for necessary travel and meals. The
vendor’s unwillingness to accept purchase orders is not an appropriate reason to circumvent the Town’s
credit card policy.
Prohibited and Questionable Purchases – One credit card purchase, totaling $45, was not for legitimate
Town purposes. Specifically, the Supervisor used his credit card to pay $45 for lunch at a local
restaurant to celebrate an employee’s birthday. This is not an appropriate use of taxpayer money.
Town officials and department heads were generally able to provide a reasonable explanation for the
unauthorized and unsupported purchases referenced above. However, without sufficient documentation
or a thorough claims audit, the Board cannot ensure that these purchases were appropriate.
Furthermore, the Town credit card policy required all credit card accounts to be authorized by the
Board, and it limited the issuance of credit cards to the police department, the Supervisor’s office, the
highway department, and the recreation department. Although not authorized to do so, the Supervisor
told us that he verbally approved issuing 14 additional credit cards. The cards were issued to:
l Himself,
l Highway Superintendent,
l Deputy Highway Superintendent,
l Transfer Station supervisor,
l Supervisor of the Recreation and Buildings department and
l ten other recreation employees.
Except for the Supervisor’s card, the Board members were not aware of the $100,000 credit limit, the
payment method, and the other card holders.
We analyzed each credit card holder’s card usage and interviewed all credit card holders and
determined that nine credit card holders did not use or have a need for a card, of which eight belonged
to the Recreation and Buildings department employees who have supervisory responsibilities. Issuing
infrequently used and unneeded credit cards significantly increases the risks of theft or inappropriate
use. Further, credit cards also provided employees with the opportunity to circumvent the Town’s
policies and internal controls. For example, employees did not always maintain or submit receipts to
the bookkeeper for credit card charges. Although the Board approved abstracts, they did not include
detailed credit card transactions. Because the Board did not review individual credit card charges,
the Board approved credit card payments for which Board members had no knowledge of what was
purchased.
Because officials did not follow their credit card and travel policy or audit credit card claims, they had
no assurance that credit card purchases were in accordance with the Town’s policy: properly approved,
sufficiently documented with supporting documentation, and for valid business purposes. As a result, 36
credit card purchases (72 percent), totaling $10,868, were not properly authorized and one credit card
purchase (2 percent), totaling $45, was not for legitimate Town purposes.
Of f ic e of t he New York State Comptroller 7
What Do We Recommend?
The Board should:
1. Obtain training to understand the claims auditing process and their duties. We have Improving
the Effectiveness of Your Claims Auditing Process training available at our at: https://www.osc.
ny.gov/local-government/academy/webinars?order=field_tx_topics&sort=asc.
2. Conduct a thorough and deliberate audit of each claim, including credit card claims, before
authorizing payment to ensure that:
l Sufficient appropriations are available.
l Each claim contains sufficient supporting documentation (e.g., itemized invoices).
l Each claim complies with statutory requirements and Town policies (e.g., purchasing
policy).
l Each claim is mathematically correct and is a valid and legal expenditure.
3. Discontinue paying credit card claims automatically and prior to Board audit and approval.
4. Thoroughly review and audit all credit card purchases to ensure adequate documentation (e.g.,
itemized invoices or receipts), compliance with Town policies, and that all purchases are for
appropriate Town purposes.
5. Enforce the Town’s credit card and travel policy, which details authorized use, the approval
process, documentation requirements and receipt verification.
6. Consider canceling unnecessary credit cards or revising the Town’s credit card policy to ensure
that all credit cards issued are properly authorized.
The Supervisor should:
7. Limit the bookkeeper’s access to the financial system so they are unable to enter and approve
payments without the Supervisor’s review and approval.
8. Restrict credit card usage, per policy to necessary items for official Town business.
Department officials should:
9. Obtain proper approvals by using the purchase order process before making purchases and
committing the Town to liabilities.
8 Of f ic e of t he New York State Comptroller
Appendix A: Response From Town Officials
Of f ic e of t he New York State Comptroller 9
10 Of f ic e of t he New York State Comptroller
Appendix B: Audit Methodology and Standards
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State
Comptroller’s authority as set forth in Article 3 of the New York State General Municipal Law. We
obtained an understanding of internal controls that we deemed significant within the context of the
audit objective(s) and assessed those controls. Information related to the scope of our work on internal
controls, as well as the work performed in our audit procedures to achieve the audit objective and
obtain valid audit evidence, included the following:
l We interviewed Town officials and employees, and reviewed policies, procedures, and Board
meeting minutes to gain an understanding of internal controls over credit cards and the Town’s
process to prepare, approve, audit and pay claims.
l We randomly selected 10 claims, totaling $12,720, and used our professional judgment to select
an additional 40 claims, totaling approximately $2.1 million, based on high dollar values, payments
to employees and vendor names. We reviewed these claims to determine whether the Board
properly audited them before they were paid. In addition, we determined whether the claims were:
¡ Properly itemized,
¡ For valid and legal purposes,
¡ Authorized and approved,
¡ Adequately supported with documentation,
¡ Mathematically correct,
¡ In accordance with Town policies,
¡ Sufficiently covered by available appropriations,
¡ Not previously paid, and
¡ For goods and services that had been received.
l We used our professional judgment to select 10 of the 23 credit card claims totaling $71,686,
based on monthly statements that included high-risk transactions (e.g. travel and meal purchases),
to determine whether they were paid prior to Board approval.
l We reviewed individual purchases from the 10 credit card claims and used our professional
judgment to select 50 credit card purchases totaling $28,815, based on dollar value, questionable
charges and types of spending, to determine whether they were:
¡ For valid and legal purposes,
¡ Authorized and approved,
¡ Adequately supported by documentation,
¡ Mathematically correct,
¡ In accordance with Town policies and statutory requirements, and
¡ For goods and services that had been received.
Of f ic e of t he New York State Comptroller 11
l We interviewed all employees who had a Town credit card, reviewed their card usage, and
determined whether employees needed a card.
l We reviewed the Town’s credit card policy to determine whether Town officials followed the policy.
We conducted this performance audit in accordance with generally accepted government auditing
standards (GAGAS). Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our
audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.
The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP)
that addresses the findings and recommendations in this report should be prepared and provided to
our office within 90 days, pursuant to Section 35 of General Municipal Law. For more information on
preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which
you received with the draft audit report. We encourage the Board to make the CAP available for public
review in the Town Clerk’s office.
12 Of f ic e of t he New York State Comptroller
Appendix C: Resources and Services
Regional Office Directory
www.osc.ny.gov/files/local-government/pdf/regional-directory.pdf
Cost-Saving Ideas – Resources, advice and assistance on cost-saving ideas
www.osc.ny.gov/local-government/publications
Fiscal Stress Monitoring – Resources for local government officials experiencing fiscal problems
www.osc.ny.gov/local-government/fiscal-monitoring
Local Government Management Guides – Series of publications that include technical information
and suggested practices for local government management
www.osc.ny.gov/local-government/publications
Planning and Budgeting Guides – Resources for developing multiyear financial, capital, strategic and
other plans
www.osc.ny.gov/local-government/resources/planning-resources
Protecting Sensitive Data and Other Local Government Assets – A non-technical cybersecurity
guide for local government leaders
www.osc.ny.gov/files/local-government/publications/pdf/cyber-security-guide.pdf
Required Reporting – Information and resources for reports and forms that are filed with the Office of
the State Comptroller
www.osc.ny.gov/local-government/required-reporting
Research Reports/Publications – Reports on major policy issues facing local governments and State
policy-makers
www.osc.ny.gov/local-government/publications
Training – Resources for local government officials on in-person and online training opportunities on a
wide range of topics
www.osc.ny.gov/local-government/academy
Of f ic e of t he New York State Comptroller 13
Contact
Office of the New York State Comptroller
Division of Local Government and School Accountability
110 State Street, 12th Floor, Albany, New York 12236
Tel: (518) 474-4037 • Fax: (518) 486-6479 • Email:
[email protected]https://www.osc.ny.gov/local-government
Local Government and School Accountability Help Line: (866) 321-8503
NEWBURGH REGIONAL OFFICE – James L. Latainer, Chief of Municipal Audits
33 Airport Center Drive, Suite 102 • New Windsor, New York 12553-4725
Tel (845) 567-0858 • Fax (845) 567-0080 • Email:
[email protected]Serving: Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster, Westchester counties
osc.ny.gov
