An audit report released last week by the New York State Comptroller’s Office confirmed that the treasurer of the Hannibal Fire Company stole at least $850,000 from the company. The treasurer, George Parry Jr., committed suicide last year as investigators were accessing the fire company’s financial records that were stored at his home.
Parry, 77, had been a volunteer firefighter for 60 years, and served as treasurer for at least 40 of those years. The report explains how the theft was initially uncovered:
- The former Treasurer was a member of the Company for about 60 years and was first elected to the position of Treasurer about 40 years ago.
- This was a position he served in until March 2022 when the membership elected a new Treasurer.
- Although a new Treasurer was elected, the former Treasurer’s duties did not change and he continued to maintain custody and control of Company funds.
- Company officials became concerned when they learned that the former Treasurer was in control of a Company credit card that they were not aware existed.
- Officials obtained and reviewed a credit card statement which contained several unauthorized cash advances.
- The President and Chief met with the former Treasurer, who admitted using the credit card for his personal benefit.
- The former Treasurer was immediately suspended in May 2022 and the Chief contacted the Office of the New York State Comptroller (OSC) to request an audit.
- The former Treasurer subsequently passed away on May 26, 2022.
Quoting from the key findings of the report:
- The Board did not establish basic internal controls over cash disbursements. As a result, the former Treasurer was able to misappropriate over $850,000 in Company funds during an eight-and-a-half-year period. For example, he was able to:
- Disburse over $451,000 in unauthorized checks to himself from January 2014 through May 2022.
- Use a Company credit card to make 794 personal cash advances totaling approximately $334,900 and personal purchases totaling over $62,300 from April 2016 through May 2022.
- These improper disbursements went unnoticed for years because the Board did not review bills (claims) paid by the former Treasurer, receive written financial reports or review bank and investment statements and canceled check images.
- The Board also did not obtain an annual independent audit of Company records, as required.
- At the onset of the audit, we learned the former Treasurer was deceased. As a result, we did not refer this matter to law enforcement.
The auditor’s report only covers what was stolen between 2016 and 2022, meaning it is possible even more funds were stolen in the 30+ years Parry served as treater prior to 2016. The comptroller’s report includes 12 recommendations, 9 for the board and 3 for the treasurer. They are:
The Board should:
- Continue to work with the insurance provider to seek recovery of the misappropriated funds to the extent coverage is available and consult with legal counsel regarding other available remedies to recoup the misappropriated or missing funds.
- Ensure Company credit cards include restrictions prohibiting cash advances.
- Review and amend Company bylaws and/or adopt written policies and procedures to provide guidance over key aspects of financial operations including cash disbursements, credit card usage, recordkeeping requirements and the claims auditing process.
- Audit and approve claims before payment by the Treasurer and ensure the authorization to pay claims is documented on the abstracts and in Board meeting minutes.
- Ensure that all claims have adequate supporting documentation (e.g., itemized invoices or receipts) to demonstrate they are valid Company expenses before approving them for payment.
- Routinely monitor the Treasurer’s work by reviewing the Company’s bank and investment statements and reconciliations, canceled check images, any withdrawals and ATM activity, and financial records and reports. Evidence of the reviews should be documented in Board meeting minutes and/or in the records.
- Ensure periodic financial reports are prepared and presented to the Board showing funds received and disbursed during the month, reconciled cash balances and budget-to-actual results.
- Obtain an annual audit by an independent public accountant, as required by law.
- Enter into a written agreement for accounting services to document the accounting firm’s responsibilities, duties and compensation.
The Treasurer should:
- Maintain all Company financial documents (e.g., bank statements, canceled check images, invoices, receipts) at the fire hall.
- Make payments only after a proper audit and approval of claims by the Board and retain all supporting documentation for payments.
- Work with the accounting firm to maintain accurate, completed and up-to-date accounting records and provide monthly financial reports to the Board to assist with monitoring financial operations.
Here is a copy of the report: