The Board did not adopt written policies and procedures for the District's cash receipts and disbursement processes. However, the Treasurer generally accounted for cash receipts and disbursements properly and the Board provided adequate oversight. Press-numbered duplicate receipts were issued for all money received by the District and deposits were typically made each week.

The District had instituted a compensating control of having the Superintendent review and certify the final payroll registers. However, the Superintendent's reviews are not extensive enough. The Superintendent does not trace payroll amounts to source documents (i.e., time records) to ensure that payments were based on the actual hours or days worked. In addition, he did not verify, at least on a sample basis, that payments were based on Board-authorized hourly rates or annual salaries. Although we did not find any discrepancies, the lack of adequate oversight of the payroll clerk's work increases the risk that errors or irregularities could occur and remain undetected.

BOCES had 161 employees who retired, resigned or otherwise left employment during our audit period. We reviewed the terms of separation for each employee to identify those eligible for a separation payment and to determine whether the payments were properly calculated per Board-approved contract terms. We found 28 of these employees were eligible for separation payments totaling $336,712. While these payments generally conformed to the terms of these written agreements, BOCES officials underpaid one former employee approximately $5,200. BOCES officials did not use an accurate daily pay rate to calculate this former employee's payment for 31 unused vacation leave days. The assistant used a prorated six-month salary instead of this employee's full base-year salary to calculate the daily rate. As a result, the assistant used a lower daily rate to calculate the separation payment.

The Board needs to improve the claims auditing process. The District paid some claims without the prior approval of the responsible claims auditor. In addition, the claims auditor approved payments for non-BOCES claims that did not have adequate supporting documentation, lacked sufficient evidence showing that the goods or services were received and exceeded the authorized purchase order amount.

District officials are generally managing fund balance effectively and the Board has adopted reasonable budgets. However, we identified improvement opportunities and areas the Board should continue to monitor. District officials have reduced unrestricted fund balance to within the statutory limit. However, the Board did not appropriately budget for certain expenditures totaling approximately $1.4 million (2.6 percent of 2015-16 appropriations) and did not properly monitor spending during the year. As a result, the District is at risk of incurring expenditures in excess of 2015-16 appropriations and depleting its remaining unrestricted fund balance. We reviewed the 2016-17 budget and found that the District is taking positive steps toward replenishing fund balance. The District's 2016-17 budgeted appropriations increased by about $2 million or 3.8 percent but estimated State aid revenues also increased by more than $4 million or 33 percent. Therefore, the Board did not appropriate fund balance and was able to lower the tax levy slightly (less than half of 1 percent). Finally, we reviewed the District's reserve funds and found that the District improperly used more than $330,000 from one reserve and overfunded two reserves with balances totaling $954,000.

Although the Board adopted a procurement policy that required obtaining competition for purchases not subject to bidding requirements, the purchasing agent and claims auditor did not always ensure that purchases were made in compliance with the requirements of this policy or require District officials to properly document compliance when they sought competition. Furthermore, the policy did not establish procedures for procuring professional services. We selected a sample of 20 vendors who were paid approximately $433,000 during the period July 1, 2014 through January 6, 2016. District officials could not demonstrate that they sought competition when procuring professional services from four vendors who were paid approximately $42,000. District officials also did not comply with the provisions of the procurement policy when purchasing goods from four other vendors who were paid approximately $30,000.

District officials have put controls in place to ensure that moneys are collected, recorded and deposited properly. During our audit period, the District recorded receipts totaling $349,093. We traced 30 receipts totaling $40,203 from the District's press-numbered receipt book to bank statements to determine if the deposits were intact and recorded accurately. We found all cash receipts were recorded accurately and deposited intact. Press-numbered triplicate receipts are generally issued at the District office for all moneys received. However, District officials told us that they do not issue a press-numbered triplicate receipt for moneys received in building locations other than the District office. In addition, the District's cash receipts policy indicates that funds are to be deposited without delay, but it does not specify a maximum limit for the time between receipt and deposit. Our audit test of 30 receipts included eight receipts that were held between 11 and 30 days before being deposited in the District's bank accounts. These discrepancies occurred because District officials had not adequately implemented procedures to ensure that money received was properly receipted at building locations or deposited in a timely manner. Additionally, the Board-adopted cash receipts policy did not clearly indicate a time limit for depositing receipts into the District's bank accounts.

District officials need to improve oversight of the after- and before-school elementary child care program operations. Specifically, District officials did not institute procedures governing program operations or ensure that existing procedures were consistently followed. Officials did not ensure that the Director maintained adequate records; the functions of collecting, recording and depositing cash were adequately segregated; or that deposits were made in a timely manner. Because District officials did not provide proper oversight, there is an increased risk that errors and irregularities could occur and remain undetected and uncorrected.

The Village is experiencing financial difficulties because of systemic and historical practices of not properly monitoring and accounting for water production and then borrowing from other funds to address water revenue shortfalls. Over the past decade, these practices resulted in the Village's annual unaccounted-for water averaging more than 40 percent, totaling approximately 673 million gallons. Because other funds have been subsidizing the water fund, the Village's cash is generally depleted by April of each fiscal year. Consequently, Village officials issued revenue anticipation notes, used bond anticipation note proceeds inappropriately and delayed payments to vendors to ease the cash shortfall, which led to a downgrade of the Village's bond rating. Village officials also did not properly monitor user charges or account for water production. As a result, the Village did not bill customers accurately, resulting in a revenue loss during our audit period of $85,000. Additionally, the Clerk-Treasurer did not maintain complete or accurate accounting records and reports. Consequently, the Board was not in a position to properly monitor the Village's financial operations.

The Board did not adopt budgets based on historical or known trends. The Board overestimated expenditures by approximately 5 percent from fiscal years 2012-13 through 2014-15, which generated more than $3.5 million in operating surpluses. As a result, approximately $1.7 million of appropriated fund balance was not used. To reduce the year-end fund balance to within the statutory limit, District officials made unbudgeted transfers to the capital projects fund and to the District's reserves. These practices compromised the transparency of the District's finances and, in effect, increased the District's unrestricted fund balance to more than the statutory limit in each year. Further, two of the District's six general fund reserves, with balances totaling $4 million as of June 30, 2015, are overfunded or potentially unnecessary. Additionally, the Board did not adopt an adequate procurement policy, in compliance with New York State General Municipal Law, to require and enforce competitive procedures for procuring goods and services that fell below the competitive bidding thresholds or for professional services. We found that, of 35 purchases reviewed totaling approximately $1.4 million, the District did not properly seek competition or adequately document the reasons for selecting particular service providers for 15 purchases (43 percent) totaling more than $780,000. Therefore, the District may not be receiving services of the desired quality at the lowest possible price.

The Board and Supervisor have not effectively assessed the impact of the health center on the Town's financial condition. As a result, the health center has required over $200,000 of Town resources over the last three completed fiscal years to sustain operations. Our audit results are based on financial information obtained from source documents and the restatement of the Town's financial records because the Town's reported annual financial information was not accurate. The Supervisor is not maintaining separate accounting records for the health center's activity and some costs are not allocated to the health center accordingly. The health center's activity is recorded in the general fund using a single line item for all revenues and a single line item for all expenditures. Furthermore, while the results show deficits for the health center for the last three years, additional expenditures of $29,480 have not been correctly recorded or allocated to the health center. Adding these expenditures to the recorded results of operations in 2015 increases the total health center operating deficit to $111,559. Furthermore, the Town ended 2015 with a fund balance deficiency of almost $10,000 after having operating deficits for two of the last three years. It is imperative that Town officials continue to monitor the health center's operations using accurate financial information to minimize the impact on the Town's financial condition.

We reviewed the procurement of 100 goods and services totaling $2,456,012 and the disposal of 25 assets and found that BOCES officials purchased goods and services and disposed of assets in accordance with policies and statutory requirements. We commend BOCES officials for designing a process that enables competitive methods for the procurement of goods and services and ensures the best possible prices for assets sold as surplus.

Although District officials have maintained accurate records of employees' leave accruals, no one reviews those records to ensure all leave accrued and used has been entered into the computerized system accurately. Furthermore, District officials have not developed written procedures documenting the type of records to be maintained or guidelines for using, approving, recording and reviewing leave accruals. We reviewed leave time accruals for 25 employees and found that the District was allowing 10-month employees to accrue five days of personal leave instead of the four days allowed by their CBA. We also found that two supervisory employees were responsible for approving their own absences. This increases the risk that absences will not be recorded accurately, resulting in employees using more leave than they are entitled to.

The Board did not ensure that the Town's data was protected against loss or that personal, private and sensitive information was secured. We also found no evidence that Town officials obtained alternative quotes for purchases below competitive bidding thresholds. We tested 13 purchases totaling $12,386, which included parts for snow plow trucks, computer, equipment and tires, and found that officials did not obtain additional quotes. In addition, the Town has not obtained alternative proposals for insurance coverages for at least the past five years. The Town spent approximately $62,000 for insurance coverage in 2015. In addition, the Board did not ensure that all money disbursed was for proper Town purposes. Finally, the Board performed an annual audit of the Town Justice. However, they did not audit the financial books and records of any other officers and employees who received or disbursed money on behalf of the Town. Specifically, the Board did not audit the Town Clerk/Tax Collector's or the Supervisor's records.

The Board did not adopt realistic budgets based on historical or known trends. The Board overestimated expenditures averaging nearly 7.9 percent from fiscal years 2012-13 through 2014-15, which generated approximately $2.1 million in operating surpluses. The Board also budgeted for operating deficits during this time by appropriating fund balance each year, although these funds were not needed due to the operating surpluses generated by the unrealistic budgets. District officials reduced the year-end fund balance, to stay within the 4 percent limit established by New York State Real Property Tax Law, by making unbudgeted transfers to the District's reserves. When adding back unused appropriated fund balance, the District's recalculated unrestricted fund balance exceeded the statutory limit each year by more than 7.4 percent of the ensuing year's budget. Three of the District's five general fund reserves, which had balances totaling approximately $10.1 million as of June 30, 2015, were excessive or potentially unnecessary. Further, we found that the District incorrectly recorded money in the special aid fund that should be recorded in either the general fund or a miscellaneous special revenue fund. In addition, District officials have not developed written policies and/or procedures to formalize the separation payment process. The District does not maintain adequate supporting documentation for each separation payment. In addition, there is no review of each separation payment by any other employee or supervisor before it is paid through payroll or deposited into an employee's deferred compensation account. Furthermore, we found that the District has multiple contracts that have ambiguous terms in regards to leave accruals.

BOCES officials have not implemented appropriate access controls and did not implement procedures to delete inactive employees from the active directory and the accounting system on a timely basis. As a result of these weaknesses, BOCES' computerized data is at an increased risk of loss or misuse due to unauthorized access. In addition, BOCES officials have not implemented access controls to ensure proper segregation of duties in the computer system or limited access to users based on their job descriptions and responsibilities. Vendors doing business with BOCES must be entered into the financial software prior to creating a requisition. Access to these vendor files should be limited to an employee in the purchasing department who does not authorize purchases or approve claims for payment. However, all 83 users have access to the vendor module and can add, delete and update vendors' files, and nine of those users can finalize the changes. As a result, duplicates existed in the system because users created new vendor files when entering purchases for existing vendors.

The District finances its capital projects through borrowings, general fund budget appropriations, State aid and other sources of revenue. During the audit period, the District reported 20 open capital projects and a balance of $5.1 million in its capital fund. District officials did not properly manage and account for the District's capital projects. We reviewed four projects with authorizations totaling $144 million and expenditures of $142.6 million as of June 30, 2015. The Board did not authorize an appropriation for one project and did not effectively monitor the four projects. As a result, the District has more than $1.3 million from completed projects that has not been returned to its source and over $107,000 in expenditures that did not have an authorized budget appropriation.

The District procured goods and services in accordance with its policy and the statutory requirements. We reviewed 25 purchases totaling $109,213 that were subject to competitive quotes in accordance with the District's procurement policy. We found that 16 of these purchases were purchased using State and county contracts, which is an allowable exception to obtaining bids and quotes. Of the remaining purchases, five contained appropriate documentation indicating they were purchased from a sole source vendor and four were made after officials obtained the required number of quotes. Except for minor discrepancies that we discussed with District officials, purchases were made in accordance with the District's policy. We commend District officials for establishing and implementing an effective system to ensure goods and services were procured in accordance with their procurement policy and applicable statutes.

We found that District officials did not consistently document that they obtained materials, supplies and services at the lowest cost in the best interests of the District's residents. According to the Business Administrator, the District follows an informal price quote procedure. We tested 43 claims totaling $96,409 to determine if they contained documentation indicating that District officials sought quotes from various sources before making the purchase. Of these, 26 claims (60 percent) totaling $47,288 lacked evidence that the purchaser sought a sufficient number of price quotes from various sources. For example, claims for projection equipment and installation ($11,000), tablet computers ($9,380), District calendars ($2,476) and student agendas ($1,590) did not include the requisite number of price quotes. Furthermore, the claims auditor was unaware of the District's informal policy for securing price quotes for purchases under the competitive bidding thresholds. The lack of an adequate procurement policy could result in the District paying more than necessary for goods and services.

The Board did not audit and approve claims prior to payment or adopt a claims audit policy. The Library's senior clerk reviewed claims and prepared checks, which the Director and Treasurer reviewed, approved for payment and signed. The Board minutes did not indicate whether the Board reviewed or approved the claims. While the Director provides a financial report to the Board, which is documented in the minutes, the report does not provide sufficient detail of disbursements for the Board to adequately monitor financial activity. Internal controls are compromised when the same individuals who review and approve claims for payment also sign the checks to pay those same claims. This control weakness could be corrected if the Board audited the claims prior to payment.