A state audit has revealed troubling financial mismanagement at the Wallace Volunteer Fire Department in Steuben County, citing lax oversight, missing reports, and improper handling of bank accounts as key concerns.
According to the report released this month by the New York State Comptroller’s Office, department officers and members failed to enforce their own bylaws or implement adequate internal controls. The result, auditors found, is an increased risk of theft, waste, and the misuse of public and donated funds.
Among the most serious issues identified, the audit found that the department did not elect a Board of Directors or appoint an auditing committee, both of which are required by the department’s own rules to ensure accountability. Meanwhile, the Treasurer—who is responsible for maintaining accurate financial records—failed to file required annual reports with the IRS and the state, did not prepare budgets, and maintained poorly organized records.
Auditors also discovered that the department’s President, not the Treasurer, maintained sole control of a key bank account containing foreign fire insurance funds—a violation of state law. The President, who is also the Treasurer for the Wallace Fire District, wrote 10 checks totaling over $3,600 from that account, including one for $400 made out to cash and others payable to herself and a district secretary. While the expenses were related to a banquet and supported by receipts, the lack of member approval and proper record-keeping raised red flags.
The audit reviewed financial activity from January 2023 through June 2024. It found that only $2,364 of $4,540 in cash receipts and 17 of 43 disbursements were documented in meeting minutes. The Treasurer’s failure to reconcile bank accounts, accurately track transactions, or provide written financial reports to the membership further weakened transparency and oversight.
In response, department officials acknowledged the deficiencies and agreed with all 11 recommendations laid out by the Comptroller’s Office. These include electing a full board, implementing monthly reconciliations, preparing annual budgets, and ensuring the Treasurer regains control of all department accounts.
The audit attributed many of the department’s issues to declining membership and a general lack of awareness around financial procedures and internal controls. With just 19 members and limited financial training, officers were reportedly unfamiliar with their responsibilities under state and federal law.
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