A follow-up review by the New York State Office of the State Comptroller found the South Butler Fire District failed to implement most of the financial oversight reforms recommended after a 2021 audit uncovered widespread weaknesses in the district’s financial controls and recordkeeping.
The state review, released in May, found the district fully implemented only five of 14 recommendations made by auditors, partially implemented one and failed to implement eight others tied to budgeting, banking oversight, claims auditing, reserve management, annual audits and tax reporting. Auditors warned district assets could remain vulnerable until all recommendations are addressed.
The findings build on a broader 2021 audit of the affiliated South Butler Fire Department that documented years of inadequate oversight, missing records, unsupported disbursements and weak internal controls.
Earlier audit uncovered extensive financial control failures
The original comptroller’s audit, covering January 2018 through March 2020, concluded department officers and members “did not provide adequate financial oversight” and were not in a position to properly monitor the organization’s financial condition.
Auditors found the department lacked adequate bylaws and financial policies, failed to enforce existing bylaw provisions, did not maintain adequate accounting records and failed to properly oversee fundraising operations and petty cash funds.
Among the most alarming findings was that $65,658 in disbursements during 2018 and 2019 were made without any review or approval by the membership, while the department president routinely signed blank checks for the treasurer to use later.
Auditors reviewed all 195 disbursements during the audit period and found 112 transactions totaling $27,638 lacked sufficient supporting documentation.
The report also found:
- 77 poorly documented fundraising-related disbursements totaling $20,444 where auditors could not determine whether purchases were reasonable or necessary.
- Fuel purchases totaling $5,040 made with gas cards that lacked itemized receipts or reconciliations.
- Debit card purchases made without policies governing card use or approval procedures.
- Sales tax charges on purchases despite the department’s tax-exempt status.
Auditors also found the department failed to file required annual reports with both the state and IRS, including annual foreign fire insurance reporting and IRS Form 990 filings.
Fundraising and petty cash records lacked oversight
The 2021 audit devoted significant attention to fundraising operations, which auditors said lacked even basic tracking mechanisms.
The department did not maintain detailed records for fundraising events including turkey raffles, chicken barbecues, pizza sales and concessions. Auditors found no reliable records documenting ticket sales, startup cash, deposits or event-by-event profit and loss statements.
In some cases, money collected during events was reportedly used directly to buy supplies without ever being recorded or deposited. Auditors said the department had “no way to monitor the financial operations and success of individual fundraising events.”
The treasurer also maintained a petty cash fund with little or no oversight. According to the report, the treasurer sometimes deposited department revenues directly into petty cash instead of the department bank account, meaning some revenues and expenses were never formally recorded.
State auditors warned those practices created “significant risk” that department money could be used for unauthorized purposes.
Follow-up review finds many problems unresolved
Despite corrective action plans submitted after the 2021 audit, state officials found many core issues remained unresolved during their November 2025 follow-up review.
Among the unresolved findings:
- The district still had not adopted comprehensive financial policies or procedures governing receipts, deposits, budgeting, online banking and claims approval.
- Annual audits of the treasurer’s records were not conducted for fiscal years 2021 through 2024.
- The district still failed to retain canceled check images required under state records retention laws.
- Required IRS 1099 forms were not issued for service providers paid for snow removal and lawn mowing in 2024.
- The district failed to adopt fund balance and reserve policies despite reserve balances increasing substantially over several years.
Auditors found total fund balance increased from about $235,500 at the end of 2019 to more than $314,000 by the end of 2025, including nearly $275,000 held in reserves.
The district did make progress in several areas, according to the follow-up report. Auditors found procurement policies had been improved, claims were now reviewed and approved before payment, and board meeting minutes included more detailed documentation of financial actions.
Still, auditors concluded the district’s leadership had not taken enough steps to fully address the systemic oversight weaknesses first identified four years earlier.
FingerLakes1.com is the region’s leading all-digital news publication. The company was founded in 1998 and has been keeping residents informed for more than two decades. Have a lead? Send it to news@fingerlakes1.com.