District officials used competitive methods when procuring goods and services, in accordance with the District's purchasing policy and applicable laws. We reviewed a sample of 20 purchases totaling $149,853 that were subject to the District's procurement policy. We found that except for one minor issue, which we discussed with District officials, these purchases were obtained using competitive methods. We commend District officials for complying with the statutory requirements and designing a purchasing process that enables competitive methods for procurement of goods and services.

Over the five-year period 2011-12 through 2015-16, the District's reported unrestricted fund balance ranged from 12 to 17 percent of the ensuing year's budget. Although the Board appropriated fund balance annually to fund operations, it was not used because annual budgets resulted in operating surpluses. In addition, the District's tax certiorari reserve was overfunded by $793,000 and the workers' compensation reserve was not used to fund expenditures totaling approximately $1.5 million. When overfunded reserve amounts were added back into unrestricted fund balance, the recalculated unrestricted fund balance exceeded the statutory limit by 13.9 to 24.6 percentage points over the five-year period.

The Board and District officials did not adequately manage the District's financial condition. We found that the Board and District officials regularly prepared and adopted unrealistic budgets. The last four fiscal years' budgets were comprised of overestimated appropriations and underestimated revenues, resulting in aggregate operating surpluses totaling $719,000. Therefore, $2.06 million in appropriated fund balance was not used to financial operations. In addition, the District ended 2015-16 with another operating surplus totaling $268,000 further adding to their total fund balance. Overall, District officials improved their budgeting practices with the adoption of the 2016-17 budget, by budgeting based on historical trends. District officials also established reserve funds to prepare for future contingencies. However, they did not always include the funding of reserves in the budgets voted on by taxpayers. Instead, the Board allocated amounts to reserves at the end of each fiscal year to reduce unrestricted fund balance to the statutory limit. Four of the District's seven general fund reserves, which have balances totaling $8 million as of June 30, 2016, are overfunded and potentially unnecessary. When adding back the unused appropriated fund balance and overfunded reserves, the District's recalculated unrestricted fund balance ranged from 21 to 24 percent of the ensuing year's appropriations. As a result, the District's tax levy was higher than necessary to fund District operations. Finally, District officials have not implemented adequate internal controls over the claims and accounts payable processes, as incompatible duties are not adequately segregated and mitigating controls have not been implemented.

The Board consistently overestimated general fund appropriations by an annual average of $3.2 million, or 10.8 percent, from fiscal years 2012-13 through 2014-15. This resulted in most of the fund balance appropriated in the general fund not being used to finance operations. The District's reported unrestricted fund balance has exceeded the 4 percent statutory limit in two out of the last three fiscal years. When the unused appropriated fund balance is added back, the recalculated unrestricted fund balance has averaged over 16 percent of the ensuing year's appropriations, or about four times the statutory limit, for fiscal years 2012-13 through 2014-15. Also, fund balances reported in the school lunch fund exceeded the maximum amount allowed by federal regulations by an average of 43 percent in 2013-14 and 2014-15. Lastly, the Board did not develop a formal multiyear financial or capital plan to help identify developing revenue and expenditure trends and set long-term priorities and goals.

The purpose of our audit was to determine whether housing authorities were adequately controlling and monitoring administrative costs for the period January 1, 2012 through November 25, 2015.

The Board and District officials did not adequately monitor the District's financial condition and take appropriate action to maintain the District's fund balance. The Board adopted budgets for fiscal years 2012-13 through 2014-15 that appropriated a total of $17.4 million in fund balance and $7 million in reserve funds, or a total of $24.4 million in funds, to finance operations. However, because the District overestimated expenditures by $21.3 million over the three-year period, most of the appropriated fund balance was not used. As a result, the District's unrestricted fund balance has exceeded statutory limits. When adding back unused appropriated fund balance, the District's recalculated unrestricted funds averaged almost 8 percent of the subsequent year's appropriations. Additionally, District officials did not have proper documentation for establishing and using two of four reserve funds totaling $1.1 million and for the audit period, the District used only $632,640 of the almost $7 million of appropriated reserve funds. The District also overfunded its workers' compensation and unemployment insurance reserve funds by $308,210 for the audit period. As a result, the Board may have levied more taxes than necessary to maintain operations.

Based on the results of our review, we found that the proposed budget does not include provisions for paying down the County's outstanding projected $10 million deficit. The budget also does not include any provisions for the potential financial impact of the settlement of 10 collective bargaining agreements. The County's proposed budget complies with the property tax levy limit.

District officials could minimize risk by better managing network user accounts and security settings. They should monitor network user accounts to ensure that unnecessary accounts are disabled or removed in a timely manner. In addition, the District should configure a logon banner to inform users of the potential consequences of unauthorized access.

The Board's purchasing policy, adopted in August 2014 and revised in January 2015, provides guidance for the procurement of goods and services and public works which require competitive bidding. In addition, although the Board adopted a policy in August 1995 and revised it in January 2015 describing its responsibilities and the need to develop further guidance for procuring goods and services not required to be competitively bid, the policy was deficient since the Board developed no further guidance. Therefore, officials do not have guidance for the procurement of professional services or purchases under the competitive bidding thresholds. During our audit period, District officials did not use competition when procuring five professional service contracts costing $605,947 including a $57,999 overpayment of one of these contracts. In addition, officials did not use competition or enter into a written agreement for two attorney service contracts totaling $203,866. The District made two purchases totaling $81,834 without using competitive bidding as required. Finally, officials did not seek competition for 15 purchases under the competitive bidding thresholds totaling $63,916.

The Board and District officials need to improve controls over the District's information technology (IT) assets. The Board did not establish adequate IT policies and procedures. We also found that the service level agreement with the District's IT vendor is inadequate as it does not define all necessary aspects of the services provided to the District. As a result, the Board does not have adequate assurance that the District's IT assets are secure.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable, except for anticipated one-time revenue from the sale of real property, contingency appropriations and an allowance for uncollectible taxes. The City's proposed budget complies with the property tax levy limit.

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. Over the last 5 years, District officials underestimated revenues by $74.2 million and overestimated expenditures by $22.3 million. The District appropriated over $81 million in fund balance, but only needed about $4.7 million to finance operations. Further, officials increased the tax levy by almost $250,000 (or 8.2 percent) over the last four years. Overall, these budgeting practices generated approximately $15.2 million in operating surpluses. District officials also improperly reported about $862,000 of unrestricted fund balance in the debt service fund. As a result, the District's recalculated year-end unrestricted fund balance exceeded the 4 percent statutory limit by up to 27 percentage points. Finally, the District's long-range financial plan does not show detailed projections and its effect on fund balance levels.

The Board did not adequately oversee the Town's financial operations. The Supervisor did not provide the Board with adequate monthly financial reports. In addition, the Board did not have adequate procedures for auditing claims. Consequently, the Board did not audit and approve claims in accordance with Town Law for 20 of the 100 check disbursements totaling $9,625 that we reviewed. The Board also did not ensure that Town officials filed the required information with the New York State Office of General Services to receive State contract pricing for diesel and heating fuel purchases. We notified Town officials of this, who contacted the fuel vendor. The vendor subsequently agreed to reimburse the Town for the amounts paid in excess of State contract pricing. Otherwise, the Town would have incurred $11,132 more than necessary in expenditures for fuel purchases. Furthermore, the Board did not annually audit or cause an audit of the records and reports of any Town officers or employees who received or disbursed moneys on the Town's behalf.

Generally, Authority officials and staff are effectively managing the Housing Choice Voucher (HCV) programs. They appropriately established policies and informal procedures over the HCV and Family Self-Sufficiency (FSS) programs. Authority officials and staff ensured applicants were selected fairly and consistently and were initially and continually eligible for the program. Furthermore, Authority officials have hired an independent consultant to perform the necessary housing inspections to ensure participants are living in decent, safe and sanitary housing. Additionally, Authority staff generally ensured that disbursements to owners were supported, accurate and appropriate and that FSS program participants were generally meeting program requirements.

While the Board has not adopted written policies and District officials have not developed written procedures over the payroll function, we found no significant exceptions with the accuracy of the payment of salaries, wages or separation payments. Our testing did not identify exceptions. However, opportunities exist for the Board and District officials to improve internal controls over the payroll process. This would provide assurance that errors and irregularities do not occur and remain undetected and uncorrected.

We found that BOCES did not enter into intermunicipal cooperation agreement with its component districts for the operation of its adult education programs. The program experienced an operating deficit in 2013-14 totaling $66,762 and an operating surplus in 2014-15 totaling $145,539. We project that the program will experience an operating deficit in 2015-16 of approximately $210,000. However, fund balance has remained at more than $2.5 million for the three years in our audit period. The portion of the special aid fund attributable to adult education had a fund balance of more than $2.7 million as of June 30, 2015, which was likely attributable to prior years' financial activity. In addition, BOCES officials have established a comprehensive purchasing policy and procedures that provide thresholds for purchases that must be competitively bid and when proposals or quotes should be obtained for purchases under the threshold for competitive bid. However, officials did not always comply with the purchasing policy and procedures when procuring professional services and insurance. We reviewed the procurement of 18 professional service contracts totaling approximately $706,000 during the audit period. District officials did not seek competition for eight professional services and insurance totaling approximately $419,000.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. The Town's proposed budget complies with the property tax levy limit.

As of June 30, 2015, BOCES accumulated $5.6 million of surplus funds in its special aid fund primarily due to recurring operating surpluses realized in its special education summer school and adult education programs. However, BOCES officials did not provide timely refunds of the accumulated funds generated from the summer school program to participating school districts. BOCES also accumulated and retained operating surpluses from adult education programs in 2013-14 ($1.2 million) and 2014-15 ($1.4 million). BOCES officials did not provide us with any evidence to indicate that the established fees for the adult education services were reasonable or related to the cost of providing these services.

District officials did not always adhere to the Board-adopted procurement policy with regard to requesting proposals. We reviewed procurements from 15 professional service vendors who were paid a total of approximately $1.3 million during our audit period. The District awarded eight professional service contracts totaling $548,111 after issuing requests for proposals or seeking quotes for special education services, internal audit services, hazardous waste removal services, Affordable Care Act consulting services, school physician services and installation of casework cabinets. However, District officials did not seek competition for seven professional services with payments totaling $760,484 (58 percent of the professional services that we reviewed). These payments were for special education services ($413,118), claims auditor services ($27,500) and attorney services ($319,866).

We judgmentally selected and reviewed 10 purchases of various goods and services totaling $253,677 and paid in 2015 to assess if the District obtained multiple quotations or requests for proposal (RFPs). We reviewed five purchases contracts ($45,890), three public works contracts ($28,410) and two professional services contracts ($179,377). District officials could not provide evidence that they had obtained quotations or RFPs for eight purchases totaling $194,308. Of the remaining two purchases tested, one was for turnout gear (helmets, gloves, coats and pants costing $22,669) from a State contract vendor and the other purchase (20 pagers costing $6,700) included evidence that District officials obtained two written quotes. By not soliciting competition for goods and services, District officials do not have adequate assurance that they are obtaining services with the most favorable prices.