The Clerk-Treasurer performed all the financial duties with limited Board oversight. The Board did not require an annual audit of the Clerk-Treasurer's records and reports. The Village paid claims totaling $91,247 that did not have proper detail and support.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. However, based on the 2017-18 proposed budget, the Village will have exhausted 91.2 percent of its taxing authority. The Village's ability to rely on real property taxes as an increased revenue source in the future is limited. If the Village exceeds its tax limit, the State Comptroller is required to withhold State aid in an amount equal to the tax limit exceeded. We caution the Village that if property values do not increase, the ability to increase taxes may be reduced in the future. The Village's proposed budget includes a tax levy which does not increase the tax levy over the 2016-17 fiscal year.

District officials accurately paid employees' salaries and wages. We reviewed all gross pay calculations totaling approximately $2.5 million for 30 employees during our audit period to determine whether the information entered into the system agreed with the time records, pay rates agreed with Board resolutions, individual employee contracts or collective bargaining agreements and gross pay was accurately calculated. Except for some minor discrepancies, which we discussed with District officials, the employee salaries and wages reviewed were accurately paid. We commend District officials for establishing a well-designed system for processing payroll to ensure employees are accurately paid the salaries and wages to which they are entitled.

Salaries and wages, including overtime, totaled approximately $303.6 million (38 percent) of the District's expenditures of $800.4 million for the 2015-16 fiscal year. The significance of the District's payroll costs highlights the importance of having effective procedures to accurately calculate salaries and wages. District employees' payroll-related payments that we tested were often incorrect or unsupported. The District did not have written policies or procedures for the processing or monitoring of payroll payments. The process that was in place was disjointed, decentralized and not well documented. Due to the large quantity and variety of contracted miscellaneous payments and salary adjustments across four collective bargaining agreements, numerous staff are necessarily involved in processing different types of payments. However, this makes it virtually impossible for payroll staff to identify all of the payments due, changes required and data entry or calculation errors made in the time available to process the payroll. Although the errors we found did not involve significant amounts of money, they were pervasive within the payroll system and were not detected timely by District staff in their regular course of business. The Board and District officials did not implement adequate monitoring procedures to ensure staff consistently complied with General Municipal Law or District purchasing policies and procedures when making purchases on the District's behalf. Hundreds of staff routinely made purchases outside the normal requisition and purchase order process, through the use of District procurement cards, significantly increasing the risk of unauthorized or overpriced purchases.

Village officials have established effective procedures that ensure claims are adequately documented and properly supported, for legitimate Village purposes and presented and approved by the Board before payment. We commend Village officials for establishing effective procedures for processing claims. Establishing and adhering to effective claims auditing procedures decreases the risk that errors or irregularities in processing and paying claims could occur and not be detected in a timely manner.

The Chenango Valley Central School District is located in Broome County. Chapter 260 of the Laws of 2008 authorizes the District to issue debt totaling $3.5 million to liquidate the accumulated deficit in the District’s general fund and food service fund as of June 30, 2008. New York State Local Finance Law Section 10.10 requires municipalities and school districts that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the municipality or school district is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their proposed budget for the next succeeding fiscal year. •We found that the significant revenue and expenditure projections in the proposed budget are reasonable.

While Village officials have developed a plan (with multiple scenarios) for the wastewater treatment facility's bio-digester capital project, it raises many significant questions about the cost effectiveness. The plan presented to the public included new revenues that would essentially pay for the cost of construction and operation of the bio-digester. According to the Village's engineers, a bio-digester is not a necessity for the wastewater treatment facility's operations. It would operate in addition to the Village's wastewater treatment process. However, by adding it, the facility could potentially reduce its operating costs. In addition, Village officials told us they believe that adding a bio-digester to the wastewater treatment facility would entice businesses to stay in the Village and attract others to the area. However, adding the bio-digester subjects the Village to significant risks because if the potential users discontinue operations or opt not to use the bio-digester, the Village will continue to incur substantial costs. We reviewed the plans presented to the public, including the costs, potential revenues and any alterations that might impact the sewer users. Our review found that these plans were based on revenue estimates that may not be attainable and could result in significant costs to sewer users.

We found that Village officials have not enforced compliance with the Village's procurement policy. Village officials allowed goods and services to be purchased before authorization from the Clerk-Treasurer, which resulted in “confirming” POs (prepared after a purchase had been made). Also, Village officials did not obtain sufficient quotes for purchases not subject to bidding requirements. As a result, the Board does not have adequate assurance that goods and services are purchased at the best price.

The District Clerk enters certain information for new employees into the payroll system (system) and the Director enters the Board-approved salaries and pay rates for each new employee. Then, on an ongoing basis, the payroll clerk updates salaries and wage rates for existing employees, and enters any subsequent job titles, salary increases and stipends into the system, as needed. All employees, except the Director and Superintendent, complete timesheets that are gathered, reviewed and approved by the supervisor of each building and department. Once approved, time sheets are sent to the payroll clerk who enters time and attendance information into the system and then processes the payroll. The Director then reviews the payroll check register, which includes each payroll check number, date, employee name and total payment for each employee. However, the Director told us during fieldwork that he focuses mainly on verifying the check totals. As a result, the Director does not adequately review the accuracy of payroll, in particular in situations where wages or pay rates change, or when there are additional payments.

The Board and District officials did not develop reasonable budgets or effectively manage the District's financial condition to ensure that the general fund's unrestricted fund balance was within the statutory limit. District officials overestimated operating expenditures in each of the last three fiscal years totaling about $7.6 million (9 percent) and appropriated nearly $5 million in fund balance, 97 percent of which was not needed to fund operations. Further, District officials incorrectly reported the District's current liability for compensated absences on its balance sheet. This understated the District's unrestricted fund balance by an average of about $355,000 in each of the last three fiscal years. After adding back the unused appropriated fund balance and incorrectly reported compensated absences liability, the District's recalculated unrestricted fund balance annually averaged about 12.4 percent of the ensuing years' budgetary appropriations, which is 8.6 percentage points more than the statutory limit. Finally, the Board has not adopted a long-term financial or capital plan evaluating and addressing the District's financial and capital needs.

Authority officials control gate entry to the treatment plant but do not adequately monitor trucked in waste and ensure that all waste discharged is properly billed and complies with discharge limitations. IWS personnel do not measure or verify the amount of liquid and/or slush waste trucked in for treatment and disposal; instead, they allow haulers to self-report on the volume in their loads. As a result, the Authority could be losing out on as much as $300,000 in annual revenues. In addition, the IWS Administrator has not periodically sampled and conducted all required analytical data tests to ensure waste discharge complies with discharge limitations. From July 2014 through November 2016, the Authority conducted 65 (32 percent) of the minimum 204 waste sample analysis tests. While the Authority paid $15,800 for these 65 tests, the permits provide that the Authority could instead require the haulers to conduct these tests. This would reduce Authority costs. We estimate these costs would be over $35,000 if the Authority conducted, at a minimum, the required three sample tests during the year for each hauler. Further, because sampling activity is not in accordance with Authority requirements there is an increased risk that haulers will not be charged enough to treat their waste and that their discharge could have an adverse effect on Authority personnel and equipment.

The Board did not always authorize disbursements prior to payments being made and the Treasurer did not always accurately calculate disbursements. We reviewed all 567 withdrawals and disbursements made by checks, and their supporting documentation, totaling approximately $1.5 million during our audit period. We found all withdrawals were appropriate and made for the purpose of transferring money between District bank accounts. Additionally, except for immaterial discrepancies that we discussed with District officials, disbursements were properly supported and made for appropriate purposes. However, we found disbursements made to pay bills were not always authorized prior to payment. We found 107 disbursements totaling $57,670 were made prior to Board authorization. For example, a disbursement for fire truck repairs in the amount of $16,000 was made 47 days prior to the Board's authorization. Another disbursement for testing fire hoses in the amount of $5,200 was made 22 days prior to the Board's authorization.

The Board adopted written cash receipts and disbursements policies in January 2017, but no written policies or procedures were in place during our audit period. The Board adopted an annual resolution granting the Treasurer the authority to pay specific recurring claims. However, the Board did not perform an audit or review District claims. The Board's insufficient oversight of the disbursements process creates a risk that payments may not be for appropriate purposes.

Each year at the annual organizational meeting, the Board reviews and readopts the procurement policy. The policy provides specific guidelines for Village officials to follow when soliciting competitive bids and quotes for the purchase of goods and services. The Village spent approximately $644,000 in 2014-15 and $588,000 in 2015-16 for goods and services. We reviewed 21 purchases totaling $784,364. Village officials generally followed the procurement policy and General Municipal Law for 15 of these purchases. However, Village officials did not competitively bid the purchase of a truck for $23,682 and did not obtain quotes, as required by the procurement policy, for five purchases totaling $75,334. Also, while not required by the procurement policy, Village officials did not use competitive methods to procure professional services from four service providers who were paid a total of $411,818.

Village officials have not implemented appropriate policies and procedures for monitoring acceptable use as defined by Village policy, breach notification or disaster recovery, and have not entered into a formal contract with the Village's IT service provider. Consequently, there is an increased risk that productivity will be reduced, IT assets and information could be compromised and that affected individuals may not be notified. In addition, the Village could suffer interruption of operations and there could be a lack of individual accountability for various aspects of the IT environment.

Land Bank officials monitor the number of homes rehabilitated and sold by the Subcontractor and all 10 projects we reviewed were awarded to the lowest bidders. However, Land Bank officials do not adequately monitor other aspects of performance, such as the selection of construction managers, awarding of contracts for projects or subcontractor performance. As a result, there is an increased risk that managers will not be assigned for sound reasons and without favoritism and that projects will not be completed in a timely manner or for the best value. Land Bank officials also do not adequately monitor cash disbursements or profits from the sale of rehabilitated homes to ensure they do not exceed the grant maximum of 15 percent of the project's cost. Although the profits for all 10 properties we reviewed were appropriate, there is an increased risk that profits will exceed the grant maximum. There is also an increased risk that the Land Bank could pay for costs already subsidized by other funding sources or for goods and services that are inappropriate or not received.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable.

While we found that the District's financial activity is properly recorded and reported and money is safeguarded, we also found that the Board does not provide sufficient oversight over the Treasurer, whose duties are not adequately segregated. The Treasurer is responsible for all aspects of the District's cash transactions including receipting, disbursing and recording, as well as preparing bank reconciliations. The Board reviews the check register that the Treasurer provides monthly and performs a proper claims audit. However, the Board does not review the bank reconciliations or canceled check images. Further, while the Board annually contracts with a certified public accounting firm to perform an annual audit, the Treasurer does not provide monthly financial reports to the Board during the year. These budget to actual revenue and expenditure status reports could serve as a tool for the Board to perform its oversight duties.

District officials have established an inventory policy that requires all equipment with a cost of $500 or more to be accounted for and entered into the District's inventory system. However, the asset policy does not ensure that inventory records are managed by someone independent from purchasing assets, maintaining their custody or disposing of them. While the Superintendent approves all purchases and she or the School Business Official approves disposals, the IT Specialist can initiate a purchase and the disposal of an asset. As a result, District procedures do not adequately protect the assets from the risk of being lost, stolen or misused without being detected.

District officials made 38 credit card purchases during our audit period that required prior approval because they were in excess of $500. Of those purchases, 22 (58 percent) totaling $22,224 were not approved in advance by either Board approval or purchase order. Of these, nine totaling almost $11,500 had purchase orders dated after the purchase was made. In addition, we identified inconsistencies related to purchase approval documentation for the 16 purchases that were approved. The District paid 24 claims totaling $87,233 during the audit period. However, one paid claim totaling $9,026 was missing. District officials provided this claim to the District's external auditors, but it had not been returned. As a result, we could not determine the number or purpose of credit card purchases paid by that claim. The remaining claims totaling $78,207 were for 316 credit card purchases of which 169 (53 percent) totaling $38,478 did not have adequate supporting documentation. Specifically, these claims did not have purchase receipts or related documentation. Although we were able to obtain reasonable assurance that the purchases were made for legitimate District purposes, the Board should not have approved payment for the 169 purchases without receipts or other supporting documentation.