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.

District officials need to improve the purchasing process to ensure that competitive methods are used when procuring goods and services. Although the Board adopted a purchasing policy that indicated it should set dollar limits for obtaining written and verbal quotes for purchases that fall below competitive bidding thresholds, the policy did not establish dollar limits, specify the number or type of quotes to be obtained or the required documentation to be maintained. As a result, we found no indication that District officials solicited competition for 20 purchases totaling approximately $257,100. Therefore, there is no assurance that these purchases were made in the most prudent and economical manner. While we did not find any prohibited conflicts of interest, District officials did not follow the Board's policy for soliciting and obtaining disclosures of interests from officers and employees to avoid any potential conflicts.

Based on our limited procedures, the Town has not made sufficient progress implementing corrective action. Of the 10 audit recommendations, one recommendation was implemented, one recommendation was partially implemented and eight recommendations were not implemented. As a result, residents of the town, outside of the village, continue to bear an inequitable share of the cost of providing Town services.

The Board does not have a policy on cash receipts. While District officials presented us with a copy of written procedures on handling cash receipts and deposits, the procedures do not address issuing triplicate receipts, recording the date and form of payment, or conducting an independent review of amounts collected and deposited. In addition, the written procedures have not been distributed to the finance clerks or athletic office secretary. As a result, they have developed their own procedures and each one accounts for the cash receipts differently. While the athletic office secretary did not issue receipts, cash from driver education fees was generally accurately recorded and deposited intact and in a timely manner. Although none of the finance clerks issue triplicate receipts, three finance clerks do issue receipts, but only for cash payments. Four of the finance clerks had no record of the date money was collected or the form of payment. As a result, District officials lack assurance that cash receipts were deposited intact and in a timely manner.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget appear reasonable. However, City officials should assess what is a reasonable amount of fund balance for each fund considering various factors such as the timing of receipts and disbursements and the volatility of revenues and expenditures. In addition, the Common Council should consider increasing the contingency appropriations in the adopted budget. The Common Council should also include a tax overlay in the adopted budget. Finally, the Common Council will have to adopt the proposed local law to override the tax levy limit in 2017.