An audit by the office of State Comptroller Thomas P. DiNapoli released Tuesday faulted the library for using an accounting system that did not give officials a full picture of how much was owed in unpaid fines.
In addition, auditors found, the library could not account for $6,967 in fines collected during a two-year period.
“Because of the poor internal controls and lack of accountability,” auditors wrote, “library officials do not have assurance that all cash collected by library employees is appropriately accounted for.”
Auditors, who reviewed library finances and policies for the period between Jan. 1, 2007, and March 19, 2009, also faulted library board members for failing to “exercise proper stewardship practices” or set an appropriate “tone at the top” by not holding the number of meetings each year required by the board’s bylaws.
In response to the audit, which officials reviewed late last year before it was made public, the library has taken several steps to address the comptroller’s concerns, including:
Instituting a modified accrual basis accounting system used by most governmental entities that recognizes money owed to the library. The library previously used a cash basis accounting system that only tracked transactions that took place.
As a result of the previous accounting system, auditors said, library officials did not have an accurate picture of how much was owed in unpaid fines. The accounting system also led to discrepancies between library and city reports of spending at the library.
The library hired a collection agency late last year to pursue the payment of unpaid fines.
Auditors found the library did enforce its policy of revoking borrowing privileges for patrons who owed more than $4. However, a large amount of unpaid fines was racked up by patrons who failed to return materials to the library.
The comptroller’s office, based on a report from the NIOGA Library System, found that 12,814 patrons at the Niagara Falls library owed a total of $464,494 as of December 2008.
“Because library officials did not monitor the receivable balances, they were not aware of the magnitude of missing library property and did not enforce collection,” auditors found.
Library officials have disputed that $464,494 is owed by patrons. The library’s executive director told state auditors that the NIOGA report was incorrect.
A letter to DiNapoli from Board President Dolores Marino said officials are monitoring the effectiveness of using the collection agency and said “preliminary indications are not favorable.” The agency has collected $194 in unpaid fines. The library pays $224 a month for the service.
Two members of the library’s board of trustees who failed to meet attendence requirements in the library’s bylaws and state education law resigned in October 2009 and have been replaced by new board members. In addition, the board is reviewing its bylaws and has assigned additional duties for its treasurer and secretary.
The audit cited frequent absenteeism among some board members for the fact that the board sometimes failed to have a quorum for meetings and held fewer meetings than required by its bylaws.
“The Trustees’ lack of commitment to their responsibilities of governance, together with some Trustees’ failure to perform their official duties,” auditors wrote, “resulted in unscheduled or frequently canceled meetings, insufficient records, inaccurate financial reporting and significant uncollected fines.”
Auditors also faulted the board for leaving some duties— including preparing financial reports and meeting minutes — up to the library’s executive director. That practice, they said, put the library at “an increased risk of errors or irregularities occurring and not being detected or corrected in a timely matter.”
The library has had an interim director, Daniel Killian, since Dec. 1 after former library Executive Director Betty Babanoury retired in November.
Babanoury has said she requested the state audit to explore discrepancies between financial expenditure reports from the library and the city for 2007 and 2008.
By Denise Jewell Gee
Originally published: Buffalo News