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Feb 25, 2009 11:57 AMPublication: The Southampton Press

Federal auditors will examine Southampton Town's 2007 financial books

Feb 25, 2009 11:57 AM

Auditors from the Internal Revenue Service will set up shop in Southampton Town Hall on Tuesday to begin analyzing the town’s finances, though their piqued interest has nothing to do with the discrepancy with the town’s capital budget, according to Town Supervisor Linda Kabot.

Ms. Kabot said the federal audit, which is expected to require that auditors spend at least a week at Town Hall, will analyze the town’s 2007 finances. The supervisor said the audit will most likely turn up instances of employees filing both W-2 and 1099 tax return forms—which would violate federal law. In other words, some independent contractors may have also been getting paid as town employees.

According to a U.S. Department of Treasury letter sent to the town, dated February 5, some of the records and books the town must have available for review are: all payroll journals and records, charts of accounts, general ledgers, cash disbursement journals, W-2 forms and an explanation for the issuing of the 1099s, and copies of contracts with each independent contractor used in 2007. Additionally, the auditors want a list of all vehicles owned by the town with a list of all employees assigned to those vehicles, a list of fringe benefits to all employees and a vendor listing file with a summary of payments received by those vendors in 2007.

“We’re getting what they call a random audit, but I believe the 1099 scrutiny is linked back to the town vehicle policy,” Ms. Kabot said. “But, let them look.”

Though she was told the town was “selected at random” for the audit, Ms. Kabot said she suspected that the extra scrutiny was prompted by the Town Board’s decision in December 2007 to tighten its controls over the utilization of town-owned vehicles after allegations of abuse surfaced. Under the revised policy, some two dozen town officials are no longer permitted to take home their town-issued vehicles after work.

In another auditing matter, the Town Board on Tuesday unanimously adopted a resolution first proposed by Town Councilwoman Sally Pope calling for a state audit of the municipality’s financial books. Auditors from the New York State Comptroller’s office will now be brought in to conduct a “risk analysis” of the town’s finances, which is the first step in the state’s auditing process.

“I want them to look into the $7.5 million deficit in our operational budget, and the $19 million discrepancy in the capital budget,” Ms. Pope said this week.

Ms. Kabot has insisted there is only a $250,000 discrepancy in the capital budget, though Town Board members have said they are still waiting for the results of an internal review of town records to prove that.

According to Ms. Pope, the state will first perform a risk analysis to determine if the municipality is eligible for a complete state accounting, which is a free service for the taxpayers of the town being audited. The first-term councilwoman said she began calling for a state audit during her campaign and wants officials in Albany to look at the town’s operational and capital books.

The state usually conducts an audit of a town’s financial records when the risk analysis uncovers fraud, mismanagement, or inadequate record keeping, Ms. Pope said.

“You can certainly make the case for mismanagement and bad record keeping,” she said.

Ms. Pope said she chose to go ahead with her resolution after speaking with representatives from the state comptroller’s office during the annual Association of Towns of the State of New York Conference last week in Manhattan. During the two-day event, Ms. Pope attended budget and auditing workshops, she said.

“I was able to listen to the governor and Senator [Charles] Schumer, and I had the chance to speak with elected officials from other towns,” Ms. Pope said. “It was a great learning experience.”

The board also adopted another resolution introduced by Ms. Pope that directs the supervisor’s office to provide department heads with monthly budget reports that show actual spending for a given month versus what is allocated in the budget.

“If someone wants to know what we are spending on roads that month, I want them to be able to walk in and see that report,” she said. She added that the town’s current fiscal condition is having a negative effect on the public’s trust. “I want the auditors to come in and question the numbers, not just accept them,” she said.

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An audit couldn't happen soon enough.
By eastquogueguy (22), East Quogue on Feb 20, 09 11:30 AM
Well, it should certainly get to the bottom of whether the Town is either fiscally irresponsible, or just sloppy in it's paperwork.

I'm surprised that someone on the Town Board didn't get on this approach well before this -- or perhaps they know the answer and don't want it aired in public!

I know... they'll blame it all on Skip Heaney and Dan Russo!
By Frank Wheeler (1826), Northampton on Feb 20, 09 1:15 PM
The inept Republicans on the town board looking for new jobs after the next election may find work with the paving contractors who donate money to the Town GOP. The contractors should have the extra money since they did not have to honor the terms of the contracts they signed with the Town.

By CommonSense (71), Southampton on Feb 20, 09 2:54 PM
CommonSense--Those donations are made to all parties.
While Sally is at it, maybe she can reel in all the PDDS that have been approved in the 13 months that Linda has been in office. There has been more large subdivisions, change of zones, and PDDs approved in the last year then there was in the past four or five years combined.
By Hampton (50), Westhampton on Feb 20, 09 3:36 PM
Hampton (Westhampton)--Those donations DO NOT go to all parties. The Southampton (SH) Dems have not received any money from paving companies. In addition, here are some important numbers from the last three years (06-08). The SH Republicans made 487,904 in campaign contributions. Most of it is from businesses and a much from sources outside of SH Town. With all of the boards made up of Republicans, business needs to give to the GOP to get what they want. The SH Dems made 162,155 in campaign contributions. ...more
By SHNative (554), Southampton on Feb 21, 09 8:01 AM
Finally, the Board is going in the right direction both with a objective budget review and an appropriate use of the ethics review board. We hear, and have heard, a substantial amount of lip service given to transparency in government. These two steps are examples of what can be done to achieve that transparency. One can only hope that both actions are implemented expeditiously. Bureaucratic delays will only serve to foul this initial breathe of fresh air.
By Viewpoint (26), Southampton on Feb 21, 09 2:56 PM
Why did it take the newest member of the Town Board to propose something so obviously appropriate that all the other members co-sponsored it? There hasn't been such unanimity in a long time. Like Frank Wheeler, I'm puzzled that this wasn't adopted sooner. At any rate, Sally Pope has scored a home run.
By Turkey Bridge (1979), Quiogue on Feb 24, 09 11:03 PM
Thank you Sally Pope. Linda Kabot flings numbers around like a frisbie. It's time for some independent analysis. Anyone who has attended a Town Board meeting cannot help but wonder what the truth is....thank you Ms. Pope you are an example of a responsible elected official.
By JVB (7), Westhampton on Feb 27, 09 9:07 AM