Audit: Freeport fund was handled poorly

Freeport's previous administration provided inadequate financial oversight and failed to properly safeguard village assets, according to a state comptroller's audit report.

Auditors found that the board of trustees adopted "unrealistic" general fund budgets, causing an operating deficit of more than $10.8 million. The former board included in the budgets about $4.9 million in reserve funds that did not exist and relied on bonds of $9.67 million to help subsidize the budget, the audit indicated.

Without the bonds, the village would have had a deficit of more than $6 million from the end of the 2009 fiscal year, auditors found. For four fiscal years, the board also overestimated revenues by $6.21 million and underestimated expenditures by $4.65 million, auditors said in the report released Friday.

Former Mayor William F. Glacken, who was in office from 1997 to 2009, disputed the findings, saying he had 12 years of balanced budgets. "If we had a problem, I am sure we would have been told by our budgeting people, our auditors or our bond council, but that was not the case," he said.

The audit was requested by Mayor Andrew Harwick, who succeeded Glacken and said in a statement that "troubling irregularities" prompted the request to the New York State Comptroller's Office.

The audit examined the village's financial operations and internal controls from March 1, 2008, to Aug. 31, 2009. It also looked at financial operations and capital projects for fiscal years 2006, 2007 and from Sept. 1, 2009, through Feb. 28, 2010.

Three of five capital projects, costing a total of $7.65 million, exceeded the board's authorized amounts by $1.28 million, the audit found. The board also illegally used bond proceeds for projects for which the bonds were not issued, the audit said.

Village officials also failed to adequately monitor lease agreements, which cost the municipality additional revenue, the audit found. They also paid 83 professional service providers a total of $5.5 million without soliciting competition, the audit said.

Nine of 23 recommendations contained in the report have been completed, and the remaining 14 are being addressed, Hardwick said.

His administration has stopped overestimating revenue and underestimating expenditures, which resulted in the nearly $11 million operating deficit between fiscal years 2006 and 2010, he said.