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State audit faults Dering Harbor Boards

The office of New York State Comptroller Thomas P. DiNapoli recently completed an audit of the Village of Dering Harbor’s Board oversight of financial operations. The audit period was June 1, 2017 through August 31, 2018, but the audit was extended back to June 1, 2013 to review past financial records and budgets, and forward to review the 2019-20 budget.

The key findings were that the various Boards — those in office during the years reviewed — failed to comply with statutory requirements when presenting and adopting budgets for 2013-14 through 2018-19. They also underestimated revenues in 2013-2018, and did not pass a local law in 2018 to exceed the tax levy limit as required.

The village, led by a mayor, deputy mayor and three trustees, prepared a response to the points identified in the audit report. Signed by Mayor Betsy Morgan, the response states that the current board has served since June 2018. A different mayor, John Colby, served for one year before that. Prior to that time, the previous mayor, Tim Hogue, served for 26 years and appointed all trustees.

With the exception of one section of findings on budget preparation, the board accepted the report’s findings and recommendations. Its response stated that of 10 recommendations, seven had already been implemented.

The comptroller’s office corrected the report, in response to the village statement, to clarify that the 2019-20 budget hearing was held by the date prescribed by law.

“Among the reasons we ran for election was a concern about the village’s financial condition and financial management,” Mayor Morgan told the Reporter. “We welcomed the audit as it gave us expert guidance as we embarked on our own efforts to make sense of what had been going on and to get our financial house in order.”

The Board in 2018 formed an audit committee and directed it to contact the state comptroller’s office to request an audit. The Board also engaged a CPA firm to improve financial operations.

Normally, Ms. Morgan said, the state performs routine audits on municipalities every few years and only looks at the previous year’s financials. “But the auditors discovered that the village hadn’t been audited for 23 years, and upon examining the financials for the previous fiscal year, they discovered enough irregularities that they determined that it was necessary to expand the audit to cover the previous five years,” Ms. Morgan said. “With their help we corrected many legacy issues and now our financial condition and records are in great shape.”

With regard to the failure to pass a law to exceed the tax cap in 2018, she said then-mayor John Colby was responsible for developing the budget and ensuring that all state comptroller processes and procedures for budget preparation were observed — including the requirement to pass a local law overriding the 2% budget cap mandated by the state.

“Happily, we haven’t needed to exceed the tax cap since then,” Ms. Morgan said, “as we’ve significantly lowered our budget and reduced property taxes, while at the same time, putting aside a large amount for reserves, all under the stewardship of Patrick Parcells, our current budget officer.”