City of Fulton Provides Public Update on Clerk-Chamberlain’s Records and Reports Audit

FULTON – Good evening.  I would like to take a few moments to provide an update regarding the Office of the New York State Comptroller’s audit of the City of Fulton Clerk-Chamberlain’s Records and Reports.

The City of Fulton appreciates the Office of the State Comptroller’s review and examination of our financial records and reporting practices.  The findings in the report are serious, and the City accepts the need to address the deficiencies identified.

At the same time, I believe it is important that the public understand exactly what the audit found – and what it did not find.

The basic objective of the audit was to determine whether the City of Fulton Clerk-Chamberlain maintained accurate and up-to-date financial records.

There was no finding in the audit of fraud or missing City funds.  The issue identified by the Comptroller is that certain financial balances were not properly recorded in the appropriate accounts, and that the City’s bank account balances did not always agree with the general ledger.

That distinction is important.

The audit found that interfund transfers involving the water, sewer, and other City funds were not always completed or properly recorded.  Routine transfers between City bank accounts were not completed, and bank reconciliations were not consistently performed.

These are serious accounting and internal-control deficiencies, and I do not intend to minimize them.  But they are fundamentally different from an allegation that money was stolen or that City funds are missing.

The findings also point to a systemic breakdown in financial processes that extends back several years.  The audit references a separate follow-up review of the City’s 2022 Capital Projects audit, and the current findings demonstrate that some of these problems were not corrected or adequately addressed over time.

One contributing factor was the lack of continuity in the Clerk-Chamberlain’s office.  The audit documents chronic staffing issues and shortages during the period under review.  As a result, there was a need to prioritize day-to-day transactions and responsibilities, while important reconciliation and reporting functions fell behind.

The audit also found that the process used to reconcile the City’s bank accounts was not understood after a predecessor left the position.  In other words, there was a breakdown in the transition of financial processes and institutional knowledge.

The Comptroller specifically described the effect of cash advances between City funds.  These transactions made it more difficult and time-consuming to reconcile the City’s bank accounts with its accounting records and resulted in some funds temporarily subsidizing other funds until the appropriate transfers were made.

It is also important to recognize that some corrective steps have already occurred.

The Comptroller’s report notes that during the audit, the Clerk-Chamberlain changed the process for depositing cash collections in that those collections are deposited directly into the bank accounts associated with the appropriate fund.  The process for disbursements was also changed so that weekly bank transfers are made from the appropriate funds to the General Fund checking account for amounts paid on behalf of other funds.

The Comptroller concluded that these changes are a good step toward improving the accuracy of the City’s records, while also making clear that the City still needs to take action to correct past activities.

That is exactly where we are today.

We have work to do, and that work is already underway.

Prior to the release of the Comptroller’s audit, the City took steps to bring in additional professional assistance.

At its August 4 Common Council meeting, the City awarded a contract to Tronconi, Segarra & Associates, with offices in Williamsville and Lockport.  We expect their representatives to be on site in Fulton in mid-October.  One of their primary responsibilities will be assisting the City with correcting and completing past bank reconciliations and addressing the historical accounting issues identified in the audit.

On September 8, the Common Council also awarded a contract to BST Gallagher & Flynn of Latham, New York, for single-audit services.  Their work will include completion of the City’s 2024, 2025, and 2026 single audits so that the City’s Annual Financial Reports can be brought current and filed.

BST has already begun communicating with the City’s previous audit firm, and we have a meeting scheduled for early November.

Our newly appointed Clerk-Chamberlain, Nicholas Zarzecki, also has an established professional working relationship with BST.  I was not aware of that relationship at the time of his appointment, but I am hopeful that the familiarity between them will help us move this process forward as efficiently as possible.

I also want to be candid with the public about the frustrations surrounding the City’s delinquent Annual Financial Reports.

The slow progress has been personally frustrating to me, and I believe the public deserves to know why.

The CPA firm retained by my predecessor and the Common Council did not complete the City’s 2021 single audit until May 2, 2024.  The 2022 single audit was not completed until May 6, 2025.  The 2023 single audit was not completed until May 20, 2026.

That means that, at one point, the City was working approximately three years behind in its annual audit process.

Bank reconciliations are certainly part of the problem identified by the Comptroller.  However, the audit also indicates that reconciliations were being performed in 2022.  The delays in completing the City’s annual single audits have also contributed to the City’s delinquent Annual Financial Report filings.

During this period, I personally made several attempts to communicate with EFPR regarding the urgency of completing the City’s 2023 audit.  We were repeatedly told to expect a draft in late fall of 2025, but that draft never arrived.

Because the City was under contract with that firm, our ability to simply abandon that relationship was limited.  Nevertheless, I believe it is fair to say that the City of Fulton did not receive the level of timely service we needed, and the delays have had consequences for the City’s financial reporting.

Again, none of this excuses the deficiencies identified by the Comptroller.  It does, however, provide important context for the public.

The Comptroller’s report contains ten recommendations, and each recommendation must be addressed through a formal corrective action plan.  That plan will need to clearly identify what has already been completed, what remains to be done, what actions will be taken, and the timeline for completing those actions.

Tronconi, Segarra & Associates and BST Gallagher & Flynn will both play important roles in helping the City develop the appropriate responses and timelines.

I want the public to know that we take this report seriously.

We are not dismissing the findings.  We are not suggesting that the City’s financial processes were acceptable.  They were not.

But neither should the findings be characterized in a way that the report itself does not support.

The Comptroller’s audit identified significant deficiencies in financial recordkeeping, reconciliation, internal controls and reporting.  It did not identify fraud or missing City funds.

Our responsibility now is to correct the historical problems, strengthen our financial procedures, bring our reporting current, and make sure these deficiencies are not repeated.

As Mayor, I accept responsibility for making sure the City moves forward on this work.  The public deserves accurate financial records, timely reporting and confidence in the City’s financial management.

That is the standard we intend to meet.

Thank you.

James A. Rice

Mayor/City of Fulton