An accounts payable audit of Newfane, New York-based Olcott Fire Company identified an absence of checks and balances that resulted in nearly $68,000 of unsubstantiated disbursements in fiscal year 2010, according to the North Country Gazette.
The AP audit – which was conducted by the state – found that the company's board did not audit bills or approve disbursements. Additionally, use of the company's charge card was neither monitored nor restricted, bank reconciliations were not performed by the treasurer, and records of earnings, deposits, and expenditures were not kept for fundraising events.
The lack of supporting documentation hampered auditors' efforts to gain a comprehensive, accurate picture of the company's finances. However, by analyzing bank statements and existing records, they determined that its cash disbursements exceeded the amount deposited in its accounts by $67,744, the news source reports.
Despite its haphazard financial management, auditors did not uncover any proof of fund misappropriation within the company, the Buffalo News notes. However, not having an adequate system of checks and balances in place increases the likelihood that embezzlement or good faith mistakes will occur, and a lack of regular internal AP audits will prevent them from being identified.