Hudson River-Black River Regulating District

Internal Controls Over Financial Operations

The Hudson River-Black River Regulating District regulates the flow of the Hudson River and the Black River to reduce flooding caused by excess run-off and to augment river flow at times of drought. The District funds its operations primarily through assessments levied on beneficiaries along the two watersheds. We examined the adequacy of the Districtís system of internal controls over its financial operations, and identified a significant number of serious weaknesses in these controls.

For example, even though the members of the Districtís Board of Directors are prohibited by law from receiving a salary or other compensation, the District routinely paid for health care benefits as well as vision and dental benefits for each Board member. We also determined that two part-time employees, who reported directly to the Board of Directors, inappropriately received full-time salaries and full-time retirement, health, vision and dental benefits. One of the employees (a secretary/treasurer), who worked an average of about four hours a week, received a salary of nearly $62,000 a year plus full-time benefits. The other employee (a legal counsel), who worked an average of about 18 hours a week, received a salary of $75,000 a year plus full-time benefits.

We further determined that the Board authorized increases in permit fees without providing sufficient public notice. We also identified serious weaknesses in controls over cash receipts and disbursements, investments, purchasing activities, equipment inventories, budgeting practices, and employee time and attendance practices. We made several recommendations aimed at strengthening the Districtís internal controls over its financial operations.

For a complete copy of Report 2004-S-58 click here.
For a copy of the 90-day response click here.