Press Releases
Press Office
(518) 474-4015


June 26, 2012


DiNapoli: Chautauqua County Internal Controls Reviewed

Audit Finds IDA Investment Failing to Produce Expected Returns

Chautauqua County has lost nearly $600,000 in revenue and stands to lose another $3.6 million because of risky investments and questionable management decisions, according to an audit released today by State Comptroller Thomas P. DiNapoli.

After two Chautauqua County Industrial Development Agency (CCIDA) bonds failed to meet expected returns, the county lost out on $500,000 in interest revenue and $94,000 in property taxes through October 2011. Another $3.6 million in direct payments is still owed to the county.

“Encouraging economic development in our upstate communities has never been more important. In today’s fiscal climate, however, imprudent investments can have a devastating impact on local taxpayers,” said DiNapoli. “Financial risk should not be shifted from businesses and an IDA to the county and its taxpayers.”

In 2000 and 2001, the Chautauqua County Legislature purchased CCIDA bonds to fund the construction of speculation (spec) buildings in the Towns of Sheridan and Busti. Auditors, however, found that payments from the businesses in these spec buildings did not cover the required annual IDA debt payments.

As a result, the first bond defaulted causing the county’s general fund balance to be reduced by $1.8 million. The county also lost $94,500 in outstanding property taxes.

Further, the county stopped receiving principal payments from the second IDA project in February 2010. The county is still owed $1.8 million on this bond. Auditors said there is no guarantee the county will recoup its investment even with reinstatement of principal and interest payments.

The audit also examined the county’s internal controls relating to real property tax services and the county-owned nursing home. The additional audit findings included:

  • The county does not have written policies and procedures governing the tax collection process;
  • County officials could not provide a reasonable explanation for 31 missing tax collection receipts;
  • County officials failed to reconcile the Real Property Tax Services’ accounts receivable account in a timely manner, which resulted in an adjustment totaling $290,992 to balance the general ledger control account as of December 2010;
  • A lack of management oversight regarding the billing and collection of payments in lieu of taxes;
  • Internal controls over the Chautauqua County nursing home’s prescription drug inventory were not operating effectively; and
  • County officials have not solicited requests for proposals for a consulting pharmacist at the nursing home since 2002 and did not monitor the terms and conditions of the consulting pharmacist contract.

Auditors made a series of recommendations, including:

  • The county Legislature should ensure that all investments of county funds are safeguarded and backed by reliable revenue streams.
  • County legislators should review and approve any changes made to bond agreements, including alterations in security, repayment schedules, and interest rates.
  • The Real Property Tax Services Director should establish and monitor policies and procedures over the administration of the county’s electronic tax collection system.
  • County officials should routinely solicit proposals for consulting pharmacy services to help ensure the prudent and economical use of public moneys.

A copy of the Comptroller’s audit and the county’s response can be found online at:



Albany Phone: (518) 474-4015 Fax: (518) 473-8940
NYC Phone: (212) 383-1388 Fax: (212) 681-7677
Follow us on Twitter: @NYSComptroller
Like us on Facebook: