OBSERVER Photo by Braden Carmen Sheridan Town Supervisor Tom Wik responded to the State Comptroller’s recent audits of the Town.

SHERIDAN — New York State Comptroller Thomas P. DiNapoli had quite a bit of work to do thanks to municipalities in Chautauqua County. When DiNapoli recently announced a list of local government and school audits, the North Chautauqua County Water District was not alone on the list from the region.

The Town of Sheridan appeared twice on the list of audits released recently by DiNapoli’s office. The Town was cited for claims and payroll disbursements that were not adequately supported or approved for Town purchases, in addition to inequitable reimbursements for shared services costs related to Chadwick Bay Intermunicipal Water Works.

Related to the audit regarding claims and payroll disbursements, the audit period ran from Jan. 1, 2021 through July 25, 2022. It was determined that of 755 claims over that period of time, 225 claims totaling $590,622 lacked supporting documentation indicating that they were received and for appropriate Town purposes; 234 claims totaling $313,112 were not audited or approved by the Board; 194 claims totaling $531,960 lacked supporting documentation and were not audited or approved by the Board; and 50 claims totaling $27,124 were not for a Town purpose.

The Comptroller’s Office report flagged purchases that “did not have any documentation attached, were missing one or more invoices to support the total claim, or were paid based on an account statement that lacked detail rather than an itemized invoice or receipt.”

Highway Department purchases accounted for 56% of the total amount flagged in the report, totaling $332,475, while general fund purchases accounted for 38% of the issues cited, totaling $224,845. The report listed 13 claims totaling $227,858 for road materials as one of the items of note.

Sheridan Highway Superintendent Jeffrey Feinen and another highway employee were paid $12,858 more than the Board authorized, while Town Clerk Rebecca Schafer was paid an additional $12,775 to perform some of the Town Supervisor’s financial duties and act as a bookkeeper, which was cited as “an incompatible position or duty” in the report. Schafer is no longer serving as bookkeeper, as an accounting firm has been contracted to assist newly elected Supervisor Tom Wik with the additional duties.

According to the report, Schafer told the Comptroller’s Office that she “was not always provided with supporting documentation for claims and, in those instances, she submitted the claims for approval and payment based on statement balances rather than detailed, itemized receipts.” Additionally, the report states that multiple Town Board members said a claim “rarely lacked sufficient documentation and if one did, they would ask the appropriate department head for more detail on what was being purchased before approving the claim for payment.”

However, the report still cited the Board because many claims were paid without supporting documentation and no discussions were documented in the Board meeting minutes regarding documentation to support claims. The report stated, “When claims are not adequately supported, there is an increased risk that the Town could incur unnecessary costs or pay for goods and services that were not actually received or were not for Town purposes.”

Additionally, 10 individuals were paid $372,636 to exclusively conduct non-Town work related to an intermunicipal agreement, and the former Supervisor, John H. Walker II, was paid $22,500 to oversee the work, all without Board approval. The agreement in question relates to Chadwick Bay Intermunicipal Water Works (CBI), which also resulted in a separate audit from the Comptroller’s Office. The Town is no longer serving as Treasurer of CBI.

The Town of Sheridan is one of five municipalities in the North Chautauqua County Water District. In January 2019, the municipalities entered into an agreement to create an operating group referred to as CBI for the purposes of managing and maintaining water operations. In February 2021, the Town of Sheridan was designated to implement functions of the agreement, and was to be reimbursed by CBI for all joint operations. Former Town Supervisor Walker was a board member for the North Chautauqua County Water District and CBI, and was compensated as the supervisor of CBI.

The Comptroller’s Office determined the Town was not reimbursed equitably for shared service costs related to the intermunicipal agreement and CBI. The Town paid a total of $474,134 for payroll and other expenditures related to CBI, but only received reimbursements totaling $348,398. According to the report, “because the Board did not monitor operations and labor costs, Town taxpayers paid $125,736 to provide services to customers in three other towns and a village benefitting from the agreement.”

The Town was also not reimbursed for 55 payments totaling $78,998 for purchases made on behalf of CBI, including multiple vehicle purchases without invoices presented to the Town Clerk or to the Board for approval. The report stated that the Town’s former Supervisor, Walker, said it was the Town Clerk’s responsibility to bill CBI for expenditures. However, the Town Clerk, Schafer, claimed she was never advised of that responsibility.

The report also states, “The former Supervisor and all four Council members acknowledged that the Town was to be reimbursed for all expenditures paid for by the Town on behalf of CBI in accordance with the intermunicipal agreement. However, the former Supervisor did not maintain a clear record of CBI expenditures and did not seek reimbursement for all such expenditures.”

Officials also did not collect approximately $21,000 from CBI for Town office space the group utilized.

“The Town has and will continue to pursue proper adjustments with the other participating municipalities for rent and employment items,” Wik stated in response to the Comptroller’s reports.

But it wasn’t just office space that the report cited as improperly handled by the Board.

The Board and former Supervisor donated 6.2 acres of Town land to Chautauqua County without conducting a cost-benefit analysis or evaluating whether the conveyance was in the Town taxpayers’ best financial interest. As stated in the report, “While legally permissible, we question the Board’s decision to convey real property to the County without receiving quotes for the fair market value, conducting a cost-benefit analysis and demonstrating to its taxpayers that the conveyance was fiscally prudent.”

The county installed a water storage tank on the land and installed water lines, but with no existing water district or documented plans to establish a water district near these improvements, the Comptroller’s Office deemed no benefit to Town taxpayers.

“Although apparently not reflected in meeting minutes, the Town Board considered the matter carefully and over a period of months,” Wik said in response to the report. He also stated the land was not in use by the Town and there were no plans to do so.

“With the water tank comes water lines to Route 20, which will be useful for fire protection and potential economic development uses requiring water. A water district formation is already being discussed,” Wik added.

To conclude the Town’s response to the audits conducted by the Comptroller’s Office, Wik stated, “The Town of Sheridan has recently made changes to our policies and procedures to address the key recommendations in the report of examination. We would like to express our gratitude to the state auditors for the extensive time invested and the thoroughness of their review of the Town records. We greatly benefited from the services provided by the comptroller’s office. The help is much appreciated and has enhanced the Town’s management of the taxpayer’s money.”