Town of Hempstead

Sanitary District Number One: Internal Controls Over Financial Operations

The Town of Hempstead is located on Long Island. The Town’s Sanitary District Number One is responsible for collecting and disposing of residential and commercial trash for about 16,500 customers. The District, which has an annual budget of more than $15 million, is funded primarily by local tax levies (about $14.4 million annually) and fees charged to private firms dumping waste at District facilities (about $900,000 annually). The District is governed by an elected five-member Board of Commissioners.

We audited the District’s internal controls over financial operations and identified a number of significant weaknesses. In particular, the District lacked experienced full-time fiscal staff, frequently awarded contracts in a non-competitive manner, and had taken little or no action to implement prior audit recommendations. We also determined that the District had inaccurate financial records, had potential conflicts of interest in purchasing and contracting, and paid health insurance premiums for deceased retirees. We further determined that the District paid significantly higher prices than were necessary for diesel fuel and provided extravagant fringe benefits for Board members, executives and retirees. In total, we identified about $462,000 in excess costs over the 40 months covered by our audit. We also examined the practices used by the District in reporting retirement service credits to the New York State and Local Employees’ Retirement System, and found that certain improvements were needed.

For a complete copy of Report 2005-S-69 click here.
For a copy of the 90-day response click here.