By RICK MILLER
Olean Star
OLEAN — A six-year audit of the City of Olean by the New York State Comptroller’s Office found city officials did not manage the city’s fund balance or ensure that financial activity was accurately recorded and reported.
As a result, the report by Comptroller Thomas DiNapoli’s office states, city accounting records and financial reports regarding unrestricted fund balances were inaccurate and city officials “did not have reliable financial information to effectively monitor the city’s financial condition and make informed financial decisions.”
The 11-page report, released earlier this month by Mayor Amy B. Sherburne’s office, along with a reply from the mayor, is critical of city auditors and elected officials.
Here’s a link to the report: https://www.osc.ny.gov/local-government/audits/city/2026/09/04/city-olean-financial-management-2026m-40
“City officials did not properly manage the City’s fund balance or ensure that financial activity was accurately recorded and reported,” the audit report states. “As a result, City officials did not always consistently maintain unrestricted fund balance in accordance with the City’s fund balance policy (Policy), and the City’s accounting records and financial reports were inaccurate. As a result, officials did not have reliable financial information to effectively monitor the City’s financial condition and make informed financial decisions.”
The combined general, water and sewer budgets total about $29 million.
Former auditor Lens Martial, who was appointed in December 2021 until he resigned earlier this year, noted in remarks to state auditors that the audit timeline goes back six years, nearly three years longer than his term. His predecessor was former auditor Frank Caputo, who retired in late 2021.
Martial told state auditors that he relied on external auditors to correct any mistakes he made and that the council had a history of using fund balance accounts for operational costs.
Under current city policy, a 15% fund balance is required in the general, water and sewer funds. The 15% rule crumbled with the 2021-22 city budget, and has not recovered. “ If not corrected, the city’s fund balance levels could be depleted,” the report states.
For example, the audit report cited a nearly $1.1 million difference in the original general fund fund balance in July 2024 and the corrected fund balance in May 2025. At the same time, there was a $385,000 difference in the water fund and a $1.1 million difference in the sewer fund.
Due to the use of improper accounting practices, the report said the auditor “made it difficult for officials to manage fund balance. City officials did not have reliable financial information with which to monitor the city’s financial condition and fund balance.”
The audit report states: “City officials also did not develop comprehensive multiyear financial and capital plans to assess the long-term effects of budgeting practices, capital needs and fund balance levels. Without these plans, officials did not have important tools for maintaining reasonable fund balance levels and planning for current and future financial needs.”
The report also states the auditor “did not ensure that required financial reports were accurate or filed in a timely manner. The Auditor filed the City’s Annual Financial Reports (AFRs) for the 2020-21 through 2022-23 fiscal years between 27 and 187 days late. Although the Auditor filed the 2023-24 and 2024-25 AFRs on time, he knowingly submitted them with inaccuracies.”
The report includes 10 recommendations that, if implemented, will strengthen the City’s management of fund balance, improve the accuracy and reliability of accounting records and financial reporting, enhance long-term financial planning and promote informed decision making, transparency and accountability, the report states.
Corrective action is the responsibility of the council, the report concludes. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to OSC within 90 days,” the report states.
The council is encouraged to make the CAP available for public review in the City Clerk’s office.
In a statement accompanying the state comptroller’s audit, the mayor said, “My administration has already begun making improvements to procedures, documentation, internal controls and administrative practices, and we are committed to addressing each of the Comptroller’s recommendations in a deliberate and sustainable manner.
“This is about more than one budget. It is about changing the culture of financial management in the City of Olean. We owe it to our residents, our employees, our businesses and future generations to put our City on solid financial ground.
“I will continue to be transparent with you throughout this process, even when the answers are difficult. We cannot fix what we are unwilling to acknowledge. And we cannot build a stronger Olean without first getting our financial house in order,” Sherburne stated.
In an Aug. 21, response to the Municipal Audits Division of the comptroller’s office, Sherburne said the city “acknowledges and agrees with the findings and recommendations outlined in the Audit Report.”
The mayor said, “The City takes the findings seriously and is committed to strengthening its internal procedures, controls, and oversight to ensure that identified deficiencies are addressed and that appropriate safeguards are in place going forward. Since the period reviewed, the City has already identified and implemented improvements in several areas, including enhancements to procedures, documentation, internal controls, and administrative practices.”
The mayor said, “The City is also reviewing each finding and recommendation to determine the most appropriate corrective action and to ensure that any remaining issues are addressed in a thorough and sustainable manner. The City appreciates the Audit Report and the opportunity to use its findings as a tool to strengthen municipal operations. We are committed to addressing the recommendations in a responsible and deliberate manner and will be prepared to provide additional information and documentation regarding the City’s corrective actions and progress as those efforts are further implemented.”
The mayor also published a separate letter in which she said the comptroller’s report justified her approach to budgeting. “That is why producing a responsible, realistic and sustainable budget became my first priority.”
She said, “Significant inaccuracies and that previous budgeting practices did not always provide a true picture of the City’s recurring operating costs. The report specifically states that inaccurate financial information made it difficult for City officials to effectively monitor the City’s financial condition and make informed financial decisions.
“The report also found that the City had not consistently maintained its unrestricted fund balance according to its own policy, and that budgets did not always include sufficient appropriations for recurring expenditures. In some cases, money was transferred from fund balance to cover costs that should have been properly reflected in the annual operating budget,” Sherburne said.
“This is exactly why I believed we needed to change the way we budget. A responsible budget cannot simply make the numbers balance on paper. It has to reflect the actual cost of running our City. It must account for recurring expenses, protect our reserves, provide reliable information to taxpayers and allow us to plan for the future,” she said.
“The Comptroller’s report recommends that the City adopt realistic and structurally balanced budgets, properly account for recurring expenditures, stop relying on unrestricted fund balance to finance recurring operating costs, and develop multiyear financial and capital plans. That is the direction I intend to take,” Sherburne said.
“I did not run for Mayor to avoid difficult financial decisions. I ran because Olean deserves responsible leadership, transparency and accountability. That means being honest about where we are, even when the truth is uncomfortable. It means correcting the problems we inherit rather than passing them on. And it means making decisions today that protect the financial stability of Olean tomorrow,” she said.
“I understand that responsible budgeting can sometimes require difficult choices,” the mayor said. “But I also believe taxpayers deserve to know the truth about their City’s finances and deserve a government that makes decisions based on accurate information, not assumptions, temporary fixes or unrealistic revenue projections.”
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