Report finds widespread financial accountability issues in New York State villages

A recent report by the New York State Office of the Comptroller reveals significant issues with financial transparency and accountability among the state’s 532 villages. The findings show widespread delays in filing required financial reports, incomplete financial records, and a lack of annual audits, raising concerns about fiscal oversight and taxpayer confidence.

The report highlights that only 46% of villages submitted their Annual Financial Reports (AFRs) on time for the fiscal year 2023, while 40% filed late and 14% failed to file at all. This marks an increase in non-filers from just six villages in 2019 to 76 in 2023, despite modest improvements in timely filings over the same period​.

In a sample review of 30 villages, the Comptroller’s Office found that 25 failed to file their AFRs. Reasons cited included incomplete financial records, turnover in Chief Fiscal Officer (CFO) positions, lack of training, and delays by external accounting firms. In one instance, a village had not properly closed its accounting system since 2018, rendering its financial reports unreliable​.

The absence of timely financial reporting has downstream effects on governance. Without accurate fiscal data, village boards struggle to develop realistic budgets, set appropriate tax levies, and plan for long-term financial stability. The report also revealed that 26 of the 30 villages reviewed had increased property taxes, with five exceeding a 10% hike. These increases may not have been necessary, as they were based on incomplete financial data​.

Equally concerning is the failure of most village boards to perform annual audits of their financial records, a key requirement under New York State law. Of the 30 villages examined, only two had evidence of a completed audit, and both were delivered months late. Reasons for this oversight included lack of awareness about audit requirements, poor accounting records, and delays by hired CPA firms​.

The financial consequences of this lack of oversight can be severe. The report cited a case where a CFO used village funds to make improper payments to herself and pay personal bills, resulting in over $58,000 in theft. Such incidents could have been prevented or detected earlier with proper audits​.

The report emphasizes that transparency and accountability are essential for good governance, especially in municipalities that rely heavily on property taxes to fund operations. Village boards are urged to address these issues by ensuring timely AFR filings, maintaining accurate financial records, and performing annual audits. Training opportunities and resources provided by the Office of the State Comptroller are highlighted as tools to support local officials in fulfilling these responsibilities​.