Pound Ridge addresses financial policies after audit findings

POUND RIDGE, N.Y. - Pound Ridge is moving to tighten up internal financial controls after the state Comptroller’s Office uncovered gaps in certain procurement and claims practices.

Describing the independent audit's findings as a “standard part of the state’s oversight process,” Supervisor Kevin Hansan noted in his Aug. 8 newsletter that “this year it was our turn.”

The financial review, conducted over a six-month period in 2024, was focused on compliance with state requirements from January 2022 to November 2023.

In a separate letter to residents, he pointed out that the 23-month audit period had included more than $10 million in expenditures and close to 3,000 payment vouchers.

“Though time-consuming, it's an important element of transparency and accountability in local government,” the newsletter read.

Calling the findings “primarily procedural,” Hansan said they emphasized “the importance of keeping all backup documentation clearly organized” and of “modernizing” the management of purchasing records.

One of the state recommendations noted that some town policies actually held it to “a stricter standard than required by state law,” he added.

Hansan asked the town’s finance director, Steve Conti, to “briefly” describe the audit process at the Town Board’s Aug. 5 meeting.

Many of the audit’s recommended improvements have already been implemented or are being worked on, he said, highlighting the paperwork issue.

According to Conti, some things weren’t deemed not “properly documented” when a board resolution approving payments wasn’t physically attached to the “actual claim form.”

Conti also noted that some of the town’s own procurement rules were more “restrictive” than the state requires. Those could be modified as well, he said, adding that the finance department was “looking forward to rolling out all these changes that we’ve done in the last 18 months.”

“The audit helped us fast-track their implementation in 2024,” Hansan agreed in his newsletter.

In an Aug. 6 letter to residents, the supervisor pointed out that “the audit found no misuse, misappropriation, or fraudulent use of town funds – a testament to the professionalism and integrity of our employees.”

All claims reviewed by the auditors “were used for legitimate town purposes,” Hansan said.

While its spending was “appropriate,” the town still takes the comptroller’s and the annual recommendations from its own external auditors “seriously” and is always looking for way to improve documentation and procedures, he explained in the letter.

Those include:

• Documenting in writing all aspects of purchasing decisions, even those that seem self-evident;

• Modifying historic local procurement practices for compliance with state requirements, and;

• Correcting overly restrictive local procurement policies for consistency with less stringent state law.

Listed as steps already taken in Hansan’s Aug. 6 letter to residents included:

• Enhanced Claims Review (2024) – Documentation is attached to each claim rather than being filed separately or presented verbally to the Town Board so that compliance with policy can be verified easily.

• Updated Procurement Policy (2024) – Prepayments are limited to utilities, postage, and shipping charges.

• New Credit Card Policy (2024) – Documentation is attached to each claim so that compliance with written policy can be verified easily.

• Revised Meeting Schedule (2024) – Town Board meetings are now held on the first and third Tuesday of each month, with bills paid at both to avoid delays and late fees.

A mandatory “Corrective Action Plan” formalizing those changes will be submitted to the Comptroller’s Office and made available for public review at the town clerk’s office and on the town website “within 90 days,” he wrote.

Key Findings

According to the audit, "town officials did not procure all goods and services in accordance with Board policy and applicable statutory requirements.”

Because of that, they couldn’t “support” that all goods and services were obtained in “the most cost-effective manner,” meaning that higher operational costs could have been passed onto taxpayers.

Furthermore, the Town Board “also did not always properly audit claims before approving them for payment,” the comptroller found.

When a “thorough and effective claims audit is not conducted” it affects a town’s ability to effectively monitor its financial operations and increases the “risk that claims could have been paid for inappropriate purposes,” the document read.

The audit cited several examples:

· Town officials did not seek competition or maintain supporting documentation for 28 purchases totaling approximately $745,372;

· 48 claims totaling approximately $299,716 were not properly audited by the Town Board before payment, including 23 credit card claims (685 purchases) totaling $179,716;

· 226 credit card purchases totaling $54,359 did not have supporting documentation such as receipts or itemized invoices.

Pushback

Resident John D. “Jock” McCown didn’t have a positive spin to offer on the situation.

In a Aug. 10 Letter to the Editor send to Halston Media, he pointed to Hansan’s initial response to the audit contained in a July 15 letter to Comptroller Thomas P. DiNapoli.

Attached to the document as “Appendix A,” it read:

“We are pleased that the audit found no misuse, misappropriation, or fraudulent use of Town funds, which we believe is a direct reflection of the exceptional professionalism and dedication of our Town of Pound Ridge employees. At the same time, we fully acknowledge the areas identified for improvement regarding procurement procedures, claims auditing, and credit card administration, and we are committed to addressing them promptly.”

Meanwhile, McCown pointed out, the OSC “annotated” the town's comment in “Appendix B”

“Note 1” read:

“The audit objective focused on procurement and claims auditing. The audit team assessed the risk of fraud occurring that is significant within the context of this audit objective, as required by generally accepted government auditing standards. Therefore, these audit results cannot be used to conclude there is no fraud, theft or professional misconduct in the Town’s operations.”

McCown is running for supervisor this fall on the independent Pound Ridge Party line in the hopes of unseating Hansan, who’s been endorsed for re-election by the Democrats.

He urged folks to read the OSC audit report as well as the town’s "Corrective Action Plan" once that’s filed.

McCown was present at the Town Board’s Aug. 5 meeting but did not speak about the audit.