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Audit finds Lancaster finances mismanaged by outside firm
A state audit has found that a former Lancaster city supervisor improperly hired an outside firm to manage the city’s finances, leading to excessive spending and poor record-keeping.
Former supervisor Ron Ruffino “failed to fulfill his financial obligations and failed to monitor the work performed by the company he improperly contracted with to serve as chief financial officer,” according to the audit conducted by the office of New York State Comptroller Thomas P. DiNapoli.
The CFO position is a public office that must be filled by an individual, and city code requires that person to live in Lancaster, according to the report.
The audit reviewed the city’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.
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- Monthly financial reports were not generated and provided to Lancaster City Council, and bank reconciliations were not completed promptly.
- 86 budget lines were overspent by nearly $9.2 million, and 21 budget transfers totaling $483,122 were completed without board approval.
- 76% of non-recurring accounting entries were made within 70 days of the transaction occurring.
- 60% of accounting entries were recorded and approved by the company without supervisor review or supervision.
Additionally, Ruffino “compromised the security of city funds” 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 authorized to spend $2.5 million of city funds without approval from any authority.
According to the comptroller’s report, Ruffino and the council members were unaware of these deficiencies and continued to pay the company even though the terms of the contract were not being 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 through July of last year, the report states.
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The comptroller’s office outlined 16 steps the city must take to correct the deficiencies found in the audit, such as requiring all budget transfers to be presented to the council for approval and hiring a chief financial officer.
One of Leary’s first acts as supervisor was to hire Nicholas Swanson as director of administration and finance. On June 26, the city reported that it had corrected 14 of the 16 recommendations made in the report.
“…the City believes it has taken and will continue to take the necessary steps to address and correct the key 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 way around it. It was a bad audit. Things weren’t being done right under the last administration.”
Leary, who was a board member during the audit period, said he brought to Ruffino’s attention that the CFO role could not be filled by one company, but “unfortunately, nothing was done at that time.”
Leary said the city is considering legal action against the company for failing to fulfill its contract obligations.
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