The Board did not implement sufficient controls to safeguard Department money. Although the Treasurer maintained financial records, she did not keep adequate documentation to support all financial activity or prepare monthly bank reconciliations. Furthermore, the Treasurer performed all aspects of the cash receipt process with no oversight and did not maintain supporting documentation for cash receipts collected from fundraising activities. Because Department officials did not adhere to the bylaws and provided insufficient oversight of the Treasurer’s financial duties, officials cannot be sure that all money collected was deposited or that Department funds were appropriately spent.

The Board and District officials did not effectively manage the District's financial condition by ensuring budget estimates were reasonable and adopting realistic budgets based on historical costs and trends. Because the District overestimated expenditures by a total of $36.5 million (8 percent) from July 1, 2012 through June 30, 2015, an average of more than $12.1 million per fiscal year, the appropriated fund balance (an average of about $8.7 million each year) was not used. Additionally, the District reported year-end unrestricted fund balance at levels that did not comply with the 4 percent statutory limit for the past three fiscal years. When adding back unused appropriated fund balance, the District's recalculated unrestricted funds were about 11 percent of the appropriations in the 2015-16 budget. The District also maintained five reserve funds with balances totaling $35.6 million as of June 30, 2015, four of which were overfunded. District officials appropriated reserves totaling $10.3 million to fund budgeted expenditures without disclosing to residents which reserves would be used and how much was appropriated from each reserve. Furthermore, the District did not have Board resolutions establishing two of the five reserve funds.

District officials need to improve their monitoring of custodial employee overtime to ensure that the District is incurring only necessary overtime costs. The District does not have a comprehensive payroll policy or written overtime procedures. The Assistant Superintendent for Business told us that overtime is preapproved either verbally or by email. During our audit period, the District paid $166,271 for overtime. Of this amount, $152,140 (92 percent) was paid to custodial unit employees. We examined records relating to 346 overtime hours ($14,871) worked by the 10 custodial unit employees that worked 100 overtime hours or more in the fiscal year ending June 30, 2016. We found no documentation that 314.5 overtime hours, totaling $13,321 had been preapproved by a supervisor. For example, one cleaner worked 44 overtime hours and received overtime payments totaling $1,535 for 13 days of summer cleaning at the middle school without documented supervisory preapproval. Had overtime preapproval been required and documented, District officials may have been able to rearrange work shifts to incorporate summer cleaning into employees' regular workdays.

BOCES officials did not adequately use multiyear planning, which includes ensuring that reserves are appropriately established, maintained and supported. They did not develop formal, written multiyear financial plans, including a reserve plan that indicates their intentions for funding, using and accumulating reserve funds. BOCES officials also did not prepare a formal analysis of certain reserve funds to ensure amounts were appropriate for BOCES' needs or include reserve funding in the annual budgets. We also found that BOCES can manage its software more effectively and efficiently. The Board's acceptable use policies were inadequate because they do not include enforcement practices and specific penalties for noncompliance. The IT staff did not maintain a comprehensive inventory list of all software that BOCES currently owned and for which it purchased licenses. In addition, BOCES officials and IT staff did not regularly monitor or review computers to ensure that all software installed was appropriate and legally obtained. As a result, we found that eight of 86 computers had improper software applications that included noneducational gaming software, a coupon application and an Internet browser rewards bar. We also found that BOCES did not have sufficient documentation to provide evidence that it purchased licenses for six of 177 software programs that required licensing.

Although the treasurer properly accounted for receipts and disbursements for most of the clubs we reviewed, we found one club, the Middle School Student Association, with significant deficiencies. For example, no evidence was found that proceeds from at least five events were deposited. We estimate the proceeds should have been approximately $7,600, based on typical revenue collected at these events. For these same events, faculty advisors paid at least $3,300 to various event vendors without going through the proper disbursements process and approximately $4,300 remains unaccounted for. This occurred because the Board did not establish adequate policies and procedures to ensure receipts from all events are deposited, and the treasurer did not ensure the faculty advisors followed the established, informal procedures.

The Board and District officials did not always effectively manage the District's financial condition by ensuring budget estimates were reasonable and adopting realistic budgets based on historical costs and trends. As a result, the District overestimated expenditures by a total of $12 million (4 percent) from July 1, 2012 through June 30, 2016. Additionally, to stay within the year-end statutory limit for unrestricted fund balance, District officials appropriated a total of $9.4 million of fund balance. However, this appropriated fund balance was not needed to finance operations because the District had a total of $2.9 million in operating surpluses in three of the four fiscal years. When adding back unused appropriated fund balance, the District's recalculated unrestricted fund balance exceeded the statutory limit.

The Board should improve its oversight of financial activities. Although the Board has adopted a code of ethics and purchasing and investment policies as required by statute, they do not have any policies or procedures for credit card usage. Additionally, prior to the current Chairman’s election, they did not have policies or procedures for hall rental receipts. Furthermore, the Treasurer is responsible for performing virtually all of the District’s financial duties. While Board members did review some monthly reconciliations, they did not have adequate records to perform a comprehensive review.

Although the significant revenue and expenditure projections in the preliminary budget are reasonable, we identified several concerns with the preliminary budget that City officials should address. First, the proposed tax levy of $5,674,602 is projected to exhaust approximately 88.5 percent of the City's constitutional tax limit. Also, the budget provides for a limited contingency equal to only 0.21 percent of general fund appropriations, and does not provide for a tax overlay. In addition, the general fund budget relies on a significant amount of interfund revenues from both the water and sewer funds. With limited ability to levy additional property taxes, and the need to increase contingency amounts and provide for a tax overlay in the budget, City officials may need to reduce expenditures or find additional recurring revenues to ensure that the City has available funding for unexpected events and that the necessary amount of property taxes will be collected in the coming year.

We identified a cash shortage of $1,401 in the Clerk's office. Had the Board conducted the required annual audit of the Clerk's records, it may have been able to detect this shortage. Our audit determined that certain Clerk fees were not recorded in the Clerk's cash receipts journal. We identified numerous transcripts and licenses that were issued and not recorded in the cash receipts journal nor included on the Clerk's monthly report. The Clerk did not issue press-numbered duplicate receipts for all cash collected, accurately record all transactions or deposit cash receipts intact.

The District should manage its software more effectively and efficiently. The Board's acceptable-use policies are inadequate because they do not detail practices for enforcement, such as monitoring computer use and reviewing installed software, or include specific penalties for noncompliance. IT staff does not maintain a comprehensive inventory of all software that the District owns and for which it purchased licenses. In addition, District officials and IT staff do not regularly monitor or review District computers to ensure that all software installed by the user is up-to-date, appropriate and legally obtained and that virus protection and patches are installed and up-to-date. As a result, 21 of the 40 computers in our test sample had improper software applications that included software for a personal cell phone, Internet television services, a coupon application and an Internet parental monitoring application. In addition, we found five instances of malware, and significant personal use by 16 users. The installation of non-business, non-educational or unlicensed software may be exposing District computers and networks to unnecessary risks, such as copyright infringement, hacking or other malicious events. Because the Director did not develop a disaster recovery plan, as required by Board policy, there is an increased risk that the District's IT data and components will be lost or misused and that the District will not be able to resume critical operations in the event of a system failure or ransomware attack.

The Board and District officials did not prepare accurate budgets for the 2012-13 through the 2015-16 fiscal years. While they appropriated $21.7 million of unrestricted fund balance to help finance operations, it was not needed because the District's budgeting practices produced operating surpluses totaling $33.4 million. When unused appropriated fund balance was added back, the District's recalculated unrestricted fund balance exceeded the statutory limit by up to 3 percentage points. We also found that the District's reserves, totaling approximately $52 million as of June 30, 2015, were properly established and, with the exception of the insurance reserve, properly expended. However, the Board and District officials did not take appropriate action to address the reasonableness of reserves as the reserve fund policy did not adequately address how reserves would be funded and used. Furthermore, while the Board and District officials appropriated reserves in the budget and then recorded the use of reserves at the end of the fiscal year, District officials also replenished or increased the reserve balances at fiscal year-end.

The purpose of our audit was to determine if the New York State Department of Labor (NYSDOL) discontinued unemployment insurance (UI) benefit payments to county jail inmates in a timely manner for the period January 1, 2013 through May 19, 2014.

From January 1 through December 31, 2015, County employees recalculated 272 non-exempt transfers of property and made 10 corrections of errors on the town property tax rolls. County employees also inputted property tax exemption income limits in 98 instances based on information from taxing units such as towns, villages, cities, school districts and libraries. The Department's procedures for prorating property tax exemptions on transfers of property, correcting property tax exemption errors and inputting tax exemption income limits were effective. Appropriate documentation was obtained and retained and income thresholds were properly recorded. We commend County officials for designing and implementing effective controls over property tax exemptions.

Company controls were not adequate to ensure that financial activity was properly recorded and reported and that Company moneys were safeguarded. As a result, it appears the Treasurer was able to misappropriate approximately $8,500 from January 1, 2014 through May 31, 2015. In addition, there was a shortage of $490 in bell jar proceeds that were controlled by the President without detection by Company officials.

We found that Town officials have allocated sufficient resources to properly maintain the Town's roads. However, they have not allocated sufficient resources for future highway equipment needs. Without sufficiently addressing the Town's long-term capital needs, Town officials may be spending more than necessary on equipment repairs. The capital plan should incorporate the Board's decisions about when equipment should be replaced and whether to accumulate funds for replacement in reserves or take advantage of current low interest rates to finance acquisitions. Further, in the event of a catastrophic failure of equipment, the Town may not be able to provide necessary services to Town residents or will face a large uncertain and unfunded future expenditure.

The Board and District officials need to improve the budget process to help ensure fund balance is maintained in accordance with statutory requirements and reserves balances are reasonable. From 2010-11 through 2014-15, the Board appropriated an average of almost $2.2 million as a financing source in the District's annual budgets. However, because the District incurred operating surpluses in four years of these years, the District used only about 2 percent of the appropriated fund balance. The Board has also overfunded reserves by $4.7 million (88 percent of total reserves) as of June 30, 2015. When the unused appropriated fund balance and excess reserves were added back, the District's recalculated fund balance exceeded the statutory limit ranging from 19 to 21 percent for the five-year period.

The Board and District officials retained excessive levels of fund balance above the statutory limit. From 2012-13 through 2014-15, unrestricted fund balance at fiscal year-end exceeded the statutory limit by 12 to 13 percentage points. The District's external auditors recommended each year that the District reduce the fund balance levels to comply with the statutory limit, yet the District did not take corrective action. From 2013-14 through 2015-16, the District appropriated $1.4 million in fund balance as a financing source in the annual budgets. This appropriation of fund balance reduced the level of reported unrestricted fund balance at the end of each fiscal year. However, the District only spent approximately $309,000 of the appropriated fund balance to finance operations during 2013-14 and 2014-15. We estimate that the District will realize an operating surplus of approximately $337,000 for 2015-16 and will not use any of the $188,750 of fund balance it appropriated for the 2015-16 budget. Therefore, the District will only use approximately 21 percent of the total appropriated fund balance during these years. When the unused appropriated fund balance is added back to unrestricted fund balance in the year in which it was appropriated, the recalculated unrestricted fund balance exceeded the statutory limit by 15 to 17 percentage points.

The Board should improve its oversight of the Department's fiscal activities and the safeguarding of its resources. The bylaws do not adequately segregate the Treasurer's duties. They require the Treasurer to receive all Department moneys, pay all bills and report the Department's financial status at regular Department meetings; however, they do not provide for mitigating controls such as someone other than the Treasurer reviewing and reconciling the bank accounts. The bylaws also require the President to call for an annual audit of the Department's books and financial records by the Village Clerk/Treasurer or authorized alternate. The annual audit was ineffective since it consisted of a comparison of the bank statement balance to the check register and did not include other items such as disbursements or canceled checks. In addition, the Board has not adopted any written policies or procedures addressing cash receipts and disbursements, procurement or claims processing. As a result, the Treasurer did not issue duplicate receipts for donations; made all deposits and disbursed cash without the Board's prior approval; and performed all recordkeeping functions. Although the Treasurer provided a monthly report that listed paid disbursements and deposits for the Board's review, the report did not include a reconciled bank statement for the Board's review and verification.

The Board, as a whole, did not audit any claims during the audit period. Instead, each quarter, it designated a single trustee to audit all claims, after which the Board, as a whole, reviewed and approved the abstracts by resolution. Any Board member other than the trustee designated as claims auditor could request to review individual claims if there were questions about an unfamiliar vendors or unusual claim amounts on the abstracts; however, this did not often occur. Our review of 30 claims totaling $147,624 disclosed that the designated trustee did not perform a thorough audit of claims. As a result, eight claims totaling $1,791 did not contain sufficient supporting documentation. Although all eight claims were for Library programs, none of them had any support to show that the programs actually took place. While our review did not disclose any inappropriate purchases, when the Board, as a whole, does not audit and approve all claims, there is an increased risk that the Library could pay for goods and services that are unauthorized, excessive or unnecessary.

Although the claims auditing policy contains provisions related to the appointment and duties of the claims auditor, the Board did not ensure that the appointed claims auditor reported to the Board on a monthly basis. Instead, the claims auditor reported to the Business Manager, who is also the Board-appointed purchasing agent. District officials were aware that the claims auditor should be reporting to the Board and told us they were developing a report to provide to the Board. A previous audit report issued by the Office of the State Comptroller in 2007 included a recommendation that the claims auditor should report directly to the Board with respect to the results of claims audits. We reviewed a sample of 50 claims totaling approximately $2.3 million out of 1,394 claims totaling approximately $26.3 million. All payments tested were accurate, supporting invoices matched amounts charged, purchase orders for goods received were signed by the receiver, and there was evidence of the claims audit prior to payments being remitted to the vendor.