Saturday, June 10, 2017

A file folder called "GASB"...

My last blog made it clear that over the last nine (9) years the Town of New Hartford has been experiencing declining Net Assets which may spell trouble for the town.

Putting it in general terms, how can the Town of New Hartford be considered "bankrupt" on paper?


There may be many explanations, but without having a look at the books, I would only be guessing.

One item in the 2016 "DRAFT" audit that might shed some light on the situation is Finding 2009-1:
2009-1 Fixed Assets

At the present time, a complete fixed asset inventory is not maintained by the Town. Our audit report has been qualified because we were unable to audit fixed assets. \Ve recommend that the Town maintain detailed fixed asset records and reconcile these records to the general ledger on a timely basis to ensure accurate accounting for fixed assets.
The 2016 "DRAFT" audit letter to the town board says:
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and recommendations as item 2009~l to be a material weakness.
The reason that the finding is referred to as 2009-1 is because the finding has been in every FINAL audit prepared by D'Arcangelo since 2009 and has been the reason given by D'Arcangleo for the Town of New Hartford receiving a qualified audit.

I find the fact that Finding 2009-1 has been a material weakness since 2009 is extremely puzzling because it does not match my records.

I'll explain with a brief outline of facts.
  • Prior to 2002 - Patrick Tyksinski was the Town of New Hartford Comptroller.

  • 2002 - Ralph Humphreys became the Town Supervisor and immediately abolished the Town Comptroller position but kept Tyksinski on as Financial Advisor until he finished out his appointed term (ask some of the old-timers for the reason)

  • Jan. 2, 2003 - according to town board minutes..."The Town Supervisor had talked with Patrick Tyksinski, contracted in 2002 as the Town’s Financial Advisor, and the Supervisor is not inclined to renew this contract. There are hours remaining to be work by Mr. Tyksinski under the 2002 contract and the Town Supervisor is looking into rolling over those hours; Mr. Tyksinski has expressed a willingness to work on the Fixed Assets program for the "rollover" hours."

  • At the August 13, 2008 town board meeting..."Frank Basile explained GASB 34, which requires a municipality to record the historical cost of vehicles, land and land improvements, easements, buildings and other infrastructure."

  • December 3, 2008 according to town board minutes, the report was finished and the Town of New Hartford was now in compliance with GASB 34 for fixed assets.

  • 2008 FINAL Financial Statement Management letter dated October 9, 2009 from BARONE, HOWARD & Co., CPAs, PC states:
    "Due to the fact that the Town now accounts for its infrastructure pursuant to GASB 34, each year beginning in 2009, the Town needs to update the depreciation schedule for new acquisitions and deletions. We suggest that the Town consult with the company that developed the depreciation schedule and inquire of them the process and cost of updating these records each year."
  • May 22, 2013 -  At my urging, Councilman Backman asked Tyksinski about the firm that had been retained under the Earle Reed administration and why the town was still receiving a qualified opinion due to the Finding 2009-1 Fixed Assets. According to the minute of the meeting, "Supervisor Tyksinski clarified that was an inventory for insurance purposes, not the historical information that the Town would need."
Now here is where I get confused...in a file folder called "GASB", I have a copy of the signed Appraisal Agreement "to provide an appraisal for the Town of New Hartford for fixed asset accounting control and insurance valuation purposes." The contract was signed by Earle C. Reed and Todd W. Sampsell, Regional Sales Manager for Industrial Appraisal Company, 222 Boulevard of the Allies, Pittsburgh, Pennsylvania 15222.

The signed contract clearly states that the appraisal was to:
  • Provide research necessary to include Land Data at $125.00 per parcel

  • Provide the recording and valuation of Infrastructure Assets at $3,450

  • A separate contract was included for inventory and appraisal services to include an on-site inspection and appraisal of the buildings, site improvements, fixed equipment, machinery and movable equipment associated with the property locations identified in Addendum No. 1 of the agreement for a total of $5,205.

That is close to $10,000 paid by taxpayers and Supervisor Tyksinski chooses to misrepresent the scope of the contract with Industrial Appraisal Company instead saying it was done for insurance purposes only! Why?

Each year, according to the FINAL audits, the town is supposedly working to update the fixed assets, but each year, the town receives a qualified opinion based on the fact that Finding 2009-1 has not been corrected. The last time that fixed assets were brought up at the town board table, Supervisor Tyksinski said the fixed assets haven't been done for the last 15-20 years. How can that be possible? Is he implying that it hasn't been done since he was paid to do it in 2002?

Here's my question, if the fixed assets could impact the Total Net Asset position of the town, why is Supervisor Tyksinski acting as if the data has not been updated for years?

Could it mean if he were to admit that the fixed assets were current up to the time he became the Town Supervisor in 2010, the town's net position might look far worse than it does now?

What's the game you're playing, Supervisor?



1 comment:

Clint Westwood said...

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