Audit finds Lancaster finances were mismanaged by outside firm

Former Supervisor Ron Ruffino “failed to perform his financial duties and failed to oversee the work performed by the company with which he improperly contracted to act as chief financial officer,” according to the audit conducted by the office of New York State Comptroller Thomas P. DiNapoli.

The position of finance director is a public position that must be held by an individual, and city code requires that person to live in Lancaster, the report said.

The audit covered the town’s finances from Jan. 3 to Oct. 12, 2023, when Ruffino was supervisor. He did not run for re-election and was replaced earlier this year by Robert Leary.

• Monthly financial reports were not generated and provided to Lancaster City Council, and bank reconciliations were not completed promptly.

• 86 budget lines were exceeded by nearly $9.2 million and 21 budget transfers totaling $483,122 were made without council approval.

• 76% of non-recurring journal entries were made 70 days after the transaction.

• 60% of journal entries were recorded and approved by the company without supervisor review or oversight.

Additionally, Ruffino “compromised the security of city resources” by granting the company — which was not named in the audit report — unrestricted access to the city’s financial system and online banking. The company was allowed to spend $2.5 million in city funds without approval from any official.

According to the comptroller’s report, Ruffino and board members were unaware of the breaches and continued to pay the company even though the terms of the contract were not met. The company failed to monitor the city’s financial activity, and Ruffino failed to monitor the company.

The city paid the company $77,719 from January to July last year, the report said.

The comptroller’s office outlined 16 steps the city should take to correct the deficiencies found in the audit, including requiring all budget transfers to be presented to the board for approval and hiring a chief financial officer.

One of Leary’s first actions as supervisor was to hire Nicholas Swanson as director of administration and finance. As of June 26, the city said it had implemented 14 of the 16 recommendations in the report.

“…the City believes that it has taken and will continue to take the necessary steps to address and correct the major findings and recommendations outlined in the report,” Leary and Swanson wrote in a letter responding to the audit.

In an effort to increase financial transparency, the city created a finance and management committee, which met for the first time on July 15. During that meeting, the committee reviewed the audit, which Leary called “pretty damning.”

“It was pretty bad,” he said. “There’s no other way around it. It was a bad audit. Things weren’t done properly under the last administration.”

Leary, who was a board member at the time of the audit, said he brought to Ruffino’s attention the fact that the CFO position could not be filled by a company, but “unfortunately, nothing was done at that time.”

Leary said the city is considering taking legal action against the company for failing to fulfill its contract obligations.