Leaders of a Town of Tonawanda fire district approved tens of thousands of dollars in inappropriate credit card and travel expenses over a period of several years, according to an audit performed by the State Comptroller's Office.
State auditors criticized commissioners of Brighton Fire District No. 5 for approving more than $200,000 in questionable or inflated reimbursements for hotel rooms, car rentals, meals and other expenses without following proper procedure or requiring sufficient documentation to prove their necessity.
The audit blamed the overpayments on "a persistent culture, fostered by the board, of entitlement and abuse of taxpayer money."
The district's treasurer at the time covered by the audit was allowed to resign and the district may pursue repayment for some of the expenses flagged by the Comptroller's Office. Fire district commissioners also agreed to tighten their financial controls and accepted a number of recommendations made by the auditors.
"We need to watch this better," said Louis Arnow, chairman of the district's board of fire commissioners.
The audit was released in September but was not previously reported upon. It covers a period between January 2011 and August 2016 for Brighton Fire District No. 5, which has a main station at 50 Jamaica Road and substations on McConkey Drive and Ellicott Creek Road.
An elected five-member board of fire commissioners oversees the district. The board appoints a treasurer as the district's chief financial officer, responsible for handling district money, and a secretary responsible for board record-keeping. Those are part-time paid positions, Arnow said.
The fire district is funded with taxpayer dollars and had a budget of about $1.1 million in 2018.
The audit found serious flaws in the fire district's processing of travel and credit card expenses.
Its main conclusions include:
- Commissioners and fire district officials couldn't show that payments of nearly $169,000 approved by the board were a proper use of district money.
- The board did not approve in advance travel and car-rental costs of about $58,000 and commissioners did not authorize per diem payments of around $9,000 that may have been unneeded or an inappropriate use of district funds.
- The fire district could have saved as much as $17,000 if commissioners had mandated stays at hotels that accepted rates set by the federal government for travelers on official business.
Auditors say the district in 2008 adopted a travel policy requiring receipts for all expenses – except those covered by the organization's per diem rate – and mandating pre-approval for all travel and car rentals. The policy also barred reimbursement for spouses' expenses, alcohol and unauthorized entertainment.
However, district officials and fire commissioners did not follow the district's own policy for much of the period covered by the audit, which looked at $274,000 in expenses, the audit states.
For example, auditors looked at $169,000 in spending and found itemized invoices or receipts for less than $3,000, or 2%, of the total, meaning the rest couldn't be justified. This included $7,000 charged by the then-treasurer at online retail, technology and office supply stores, the audit said.
And fire commissioners failed to pre-approve $58,000 in travel and car rental costs, as required by board policy. This meant, according to auditors, that the board had no advance control over those costs and may have made reimbursement for inappropriate expenses.
The disparity in those costs raised the eyebrows of auditors. They noted, for example, that one board member in November 2013 charged $187 for a car rental, while another commissioner charged $663 for a comparable car from a different rental agency for the same period of time at the same conference.
And both the secretary and treasurer on separate occasions billed the fire district for hundreds of dollars in travel expenses for their spouses, payments that were approved by the board of fire commissioners even though this violated the district's travel policy.
"These questionable, unnecessary and improper payments occurred because board members did not uphold their responsibilities to the district and did not ensure a strong control environment existed," the audit said.
The Comptroller's Office also said fire commissioners didn't put a credit card policy in place until the summer of 2016, one month before the audit began. And it said the board didn't ensure an independent agency conducted annual audits of the district's finances, as required by statute.
The audit made several recommendations, primarily urging the fire commissioners to pursue repayment of inappropriate or questionable spending, to ensure all payment claims are audited and to set and adhere to proper per diem rates.
In an Aug. 30 response to the auditors, the fire commissioners agreed to review any past questionable payments to see if reimbursement to the district is warranted and to strengthen internal financial controls.
The commissioners said they already had taken steps in this direction by completing and turning in overdue annual audits and changing procedures. The letter states the commissioners had trusted the treasurer at the time and believed he had received the training required to properly manage the district's finances.
That treasurer resigned in February 2016 at the board's request. He is not named in the report and Arnow declined in an interview to identify him.
It's not clear whether the State Comptroller's Office referred its findings to prosecutors for review, although Arnow said there was no ill intent.
"Our procedures were lax," he said.
The audit may have electoral ramifications for the fire district. Arnow's seat on the board of fire commissioners is on the ballot for the Dec. 10 election.
He is seeking re-election and facing a challenge from Paul Murdie, a former Brighton firefighter and fire company president.
Murdie said he was motivated to run for the commissioner's position after reading the audit.
The report highlights "a culture of abuse and misuse of taxpayer funds, and I think that should concern any taxpayer," he said.
Arnow emphasized the steps commissioners have made to improve district operations and take responsibility for what happened.
"It all falls on us in the end. We can't get away from that," Arnow said.