Members of the governing board are responsible for developing and overseeing the municipality’s fiscal policies and operations. This article provides an overview of the fiscal responsibilities of board members, as outlined in the Local Government Management Guide by the Office of the New York State Comptroller.

1. Developing Fiscal Policies

Board members are responsible for developing, adopting, and reviewing fiscal policies. These policies must be communicated clearly to all relevant members of management and staff. Local governments should review their fiscal policies annually and update them as needed. Below are the fiscal policies required by general municipal law, as well as policies that, while not required by general municipal law, are recommended to prevent fraud and abuse within the municipality. Descriptions of each of these policies can be found in the OSC’s guide.

Policies Required by General Municipal Law:

Code of Ethics, Investment Policy, Procurement Policy.

Recommended Policies:

Wire Transfer and Online Banking Policy, Travel and Conference Policy, Credit Card Policy, Computer Use Policy, Cell Phone Use Policy, Capital Asset Control Policy.

Additional policies may be developed for other aspects of financial operations, including budgeting, cash receipts and disbursements, managing fund reserves, retirement reporting, billing procedures, claims processing, financial reporting and network security.

2. Monitoring Fiscal Operations

Interim Reports:

Applicable adopted policies should include instructions regarding the timing and content of periodic or “interim” reports. Board members are responsible for reviewing regular financial reports from senior management and department heads. Interim reports contain information related to financial position, results of operations, budget status, policy compliance, service or project costs, performance measures, and legal compliance matters.

Budgetary Status Reports:

The governing board is responsible for adopting and monitoring the budget. The CFO, designated budget officer, and department heads should monitor actual revenues and expenditures, reporting these numbers to the board. These numbers can then be compared to budget estimates to identify any variances or need for corrective action. It is the duty of the board to review budgetary status reports, question any unfavorable variances, and ensure the necessary corrective action is taken.

Correcting Budgetary Problems:

When the budgetary status report indicates unfavorable variances or issues, the governing board is obligated to implement corrective action in a timely manner. Corrective actions may include restricting additional expenditures in that particular area or making a budgetary amendment. A budgetary amendment can be accomplished by:

• • transferring between appropriations within the same fund
  • appropriating available fund balance
  • appropriating aid, grants, gifts, or insurance proceeds
  • issuing budget notes

Special Purpose Reports:

Local officials may prepare special purpose reports for certain categories to be reviewed such as construction projects, procurement, personnel, receivables, and particular revenues or expenditures.

3. Conducting Audits

Lastly, the governing board is responsible for conducting audits. Audits are used to assess the municipality’s financial operations, identify issues, and ensure the proper management of public funds.

Claims Auditing:

The role of the board in auditing claims serves as an important internal control because it separates the purchase of goods/services and the authorization of payments for those goods/services.

Annual Audits:

The board is required to conduct an annual audit—or to arrange an annual external audit (depending on specific audit requirements)—of the municipality’s financial records, books, and documents.

Board-Directed Annual Audits:

Annual audits conducted by the governing board should ensure that all financial records are complete and up-to-date, that all transactions are recorded properly, that accountability is computed monthly, and that all required reporting is done accurately and timely.

Corrective Action Plans:

Any municipality that receives an audit report or management letter with recommendations should prepare a corrective action plan. A corrective action plan is a written document detailing the corrections planned in response to each recommendation. The governing board is responsible for reviewing and approving the corrective action plan.

Additional Resources and Guidance

The governing board’s oversight is integral to the financial health of a municipality. As such, it is crucial that board members are aware of their responsibilities regarding fiscal operations. Additional resources and reference information for board members, including specific audit and recordkeeping requirements, can be found in the appendices at the end of the OSC’s guide. The OSC’s “Academy for New York State’s Local Officials” also provides training, resources, and webinars on various financial topics designed specifically for local government officials. And as always, RBT CPAs is here to support your municipality’s accounting, tax, audit, and advisory needs. Contact us to learn more.