Although the District has written procedures regarding the tuition reimbursements process, they were inadequate. Specifically, the Superintendent approves the courses that an employee has applied for and the Administrative Assistant tracks employees and the courses that have been approved for reimbursement. Once the employee completes the course and is eligible for tuition reimbursement, the Administrative Assistant submits a requisition form to the accounts payable clerk for payment. However, there is an inadequate segregation of duties because no other employee makes a final review of the tuition reimbursement before payment is made to the employee. Additionally, the District's written employment separation process procedures do not contain steps to verify that employees have fulfilled any post-reimbursement employment obligations. As a result, District officials made two payments totaling $4,932 that we confirmed to be overpayments because the employees failed to meet the credit hour or grade level requirements necessary for reimbursement.

The Board did not adopt realistic budgets based on historical or known trends. It consistently overestimated operating expenditures by 6 to 7 percent from fiscal years 2012-13 through 2014-15, which generated $6.3 million in operating surpluses. The Board also budgeted for operating deficits during this time by appropriating fund balance averaging $4.1 million each year, although these funds were never used due to the surpluses generated by the unrealistic budgets. To reduce the year-end fund balance to stay within the 4 percent limit established by New York State Real Property Tax Law, District officials also made unbudgeted transfers to the capital projects fund and to the District's reserves. When adding back unused appropriated fund balance, the District's recalculated unrestricted fund balance has ranged from 6 to 7.5 percent of the ensuing year's budget, exceeding the statutory limit in each year.

We found that the Board did not provide proper oversight to ensure appropriate corrective action was implemented to address significant issues identified by auditors. As a result, the Town's financial records remain inaccurate, incomplete and unreliable, and the Board is not in a position to properly monitor the Town's financial condition. Furthermore, significant interfund advances remain unpaid, which could negatively impact the town-wide general fund's financial condition. The Board hired an accounting firm to assist the Board in preparing a written response to our 2012 audit and develop a corrective action plan (CAP), but the Board did not ensure that the CAP was implemented. The Board also did not respond to material weaknesses and significant deficiencies identified by the Town's external auditor for the past three fiscal years. The Town has spent more than $281,000 for various accounting and audit services, but many significant audit findings and accounting deficiencies remain unaddressed. The Board's failure to implement audit recommendations in a timely manner has resulted in the continuation of extremely poor accounting recordkeeping and a lack of reports. This fosters an environment where the Board cannot effectively assess or monitor the Town's financial condition. We found that the Board did not provide proper oversight to ensure appropriate corrective action was implemented to address significant issues identified by auditors. As a result, the Town's financial records remain inaccurate, incomplete and unreliable, and the Board is not in a position to properly monitor the Town's financial condition. Furthermore, significant interfund advances remain unpaid, which could negatively impact the town-wide general fund's financial condition. The Board hired an accounting firm to assist the Board in preparing a written response to our 2012 audit and develop a corrective action plan (CAP), but the Board did not ensure that the CAP was implemented. The Board also did not respond to material weaknesses and significant deficiencies identified by the Town's external auditor for the past three fiscal years. The Town has spent more than $281,000 for various accounting and audit services, but many significant audit findings and accounting deficiencies remain unaddressed. The Board’s failure to implement audit recommendations in a timely manner has resulted in the continuation of extremely poor accounting recordkeeping and a lack of reports. This fosters an environment where the Board cannot effectively assess or monitor the Town’s financial condition.

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 2016-17 proposed budget, the Village will have exhausted 94.4 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. In addition, the Village's proposed budget for the 2016-17 fiscal year includes $500,000 from the tax stabilization reserve that will be use to lessen the real property tax levy. Because the Board has not yet adopted a resolution to use the reserve, it must do so before it adopts the proposed budget. The Village's proposed budget complies with the property tax levy limit.

District officials achieved health insurance cost savings by changing health insurance carriers and offering employees a buyout incentive. During the scope period, the health insurance and buyout incentive cost savings totaled $826,000. We commend District officials for implementing these cost savings measures.

The BOCES procured goods and services in accordance with its policy and statutory requirements. The Board adopted a purchasing policy in 2006, and updated it in 2011, that identifies procedures for using competitive bidding when required and obtaining quotes when competitive bidding is not required. The Board appointed a purchasing agent who is responsible for ensuring that BOCES purchases comply with the policy and procedures. We commend BOCES officials for establishing and implementing effective purchasing procedures.

We found that Officials obtained food pricing for participating school districts at the lowest reasonable cost available. Officials also attempted to acquire milk and bread at the lowest reasonable cost, but faced a lack of bidders to provide milk or bread to all school districts participating in the cooperative bid. Officials have also taken steps to ensure that the bid process is not influenced by favoritism, extravagance, fraud or corruption.

The Board has not governed and operated the Library in accordance with its charter, bylaws and the City code. The Board is unfamiliar with the Library's charter and bylaws and the City code pertaining to the Library. As a result, the Board and Director have not assumed all duties required by the Library's governing documents, leaving City officials with primary control over the Library's operations and finances. In addition, because the Treasurer does not submit complete and adequate monthly financial reports to the Board, it does not have a complete understanding of the Library's financial position and cannot effectively monitor the budget and actual results of operations. Furthermore, the Board has not undertaken its obligations related to determining the Library's budget. For example, the Library did not receive $107,539 in funding from the City during 2012 and 2013 in accordance with the Library's budgets, as adopted by the Common Council, which could have been used for Library activities. Also, the Board does not audit and approve claims prior to them being processed for payment by the City.

BOCES officials established adequate payroll processing procedures to ensure employees were accurately paid their approved salaries and wages. Establishing and adhering to a good system for processing and verifying payroll payments ensures the employees will be accurately paid the salaries and wages to which they are entitled. We commend BOCES officials for designing an effective system that ensures the accuracy of compensation paid to employees.

District officials have effectively managed the District's financial condition. District officials are using sound practices when planning, monitoring and controlling budgets, and they have developed and monitored long-term capital and financial plans. We encourage District officials to continue to update and monitor these plans and take appropriate actions when necessary, as their current long-term financial plan projects a deficit unrestricted fund balance of $935,226 by 2018-19.

The Board did not establish an adequate claims auditing process. The Board adopted a claims auditing policy which contains provisions related to the appointment and duties of the claims auditor if the Board chooses to have a claims auditor assume its responsibility for auditing claims. However, the Board did not appoint a claims auditor, nor did the Board perform the claims auditing function. Instead, the Board reviewed and approved warrants, which is not an acceptable substitute for the requirement to audit each claim. Further, while the Board's approval of the warrant was generally performed prior to the disbursement of funds to pay the claims, in some instances, checks were prepared and distributed prior to the Board's approval of the warrant. As part of the District's claims process, the account clerk received deliveries and reviewed invoices and the business manager prepared warrants and signed checks. While this process does provide for the review of claim documentation, by law, neither of these positions are eligible to perform the duties of a claims auditor.

The Board has not demonstrated a positive control environment because it did not appropriately comply with all requirements of the Five Point Plan. While all Board members have completed the required fiscal oversight training, the Board did not ensure that the claims auditor reported directly to the Board or that all claims were audited and approved before they are paid. The Board improperly appointed an individual as both the Treasurer and internal auditor, creating incompatible duties between these two positions. It also has not established an audit committee, because it was unaware of the requirement to do so. In addition, the District did not use a competitive request for proposal process when selecting its external audit firm, and the Board did not prepare a corrective action plan in response to audit reports.

The Board and District officials have established many controls over the claims processing function to ensure that claims are audited adequately and properly supported. We selected and reviewed 45 claims, totaling $225,049, to determine whether the claims were adequately audited and approved. The Board generally ensured that claims were audited and approved before payment. However, the claims auditor did not properly identify and report all confirming purchase orders to the Board, and the Treasurer did not supervise an account clerk typist's use of her electronic signature to sign the District's checks.

District officials are generally managing the District's financial operations effectively. Although the District has generated surpluses totaling $2.5 million in two of the last three years, budgets have been within 2 percent of actuals for expenditures and 3 percent for revenues. District officials have used these surpluses to fund reserves and minimized the need for significant real property tax increases. Although the unemployment insurance and retirement contribution reserves were overfunded by $1.6 million, District officials stated they plan to transfer the excess to the capital reserve to help fund their ongoing capital project. Furthermore, the last significant increase in the real property tax levy, approximately $563,000 (an increase of 3 percent), occurred with the 2013-14 budget. From 2014-15 through 2015-16, the real property tax increase was less than $50,000 (an increase of .3 percent) and Board members told us they would like to continue this practice.

The Board approved pay rates for District employees through the District's two collective bargaining agreements and five individual employment contracts. Additionally, each school year the Board approves a salary statement for each full- or part-time employee that is then acknowledged by each employee and maintained on file. The administrative aide enters all approved pay rates into the payroll software. In addition, time records are submitted to the administrative aide who verifies that they were properly approved, inputs hours worked into the payroll system and processes the payroll. The Superintendent is responsible for reviewing and certifying each biweekly payroll register, after which the Business Manager reviews the processed payroll and prepares the paychecks and direct deposits. Both the Superintendent's review/certification and the Business Manager's review include reviewing the payroll register, timekeeping documents and payroll change reports. We commend District officials for implementing appropriate procedures for processing payroll to ensure that employee salaries and wages were accurately calculated and paid.

Overall, we found that purchases of goods and services not subject to competitive bidding were done in compliance with the District's policy. We reviewed 92 purchases, of which 82 required that District staff obtain quotes. All 82 had quotes as required by District policy. The remaining 10 purchases were not subject to quotes or competitive bidding. We identified only minor issues regarding purchases orders, which we discussed with District officials.

The Board did not adopt realistic budgets and effectively manage the District's fund balance. The 2012-13, 2013-14 and 2014-15 adopted budgets overestimated appropriations by a total of $3.2 million (5 percent) over these years. Additionally, the District's retirement contribution reserve was overfunded by more than $445,000 (33 percent) as of June 30, 2015. The District's unrestricted fund balance has been in excess of the limits established by New York State Real Property Tax Law, ranging from 6.9 percent to 8.3 percent of the ensuing year's appropriations. However, when adding back the excess reserves, the District's recalculated unrestricted fund balance for these three years was in excess of the statutory limit, ranging from approximately 10 to 13 percent. As a result, District officials missed the opportunity to use its reserves to finance operations and the tax levy was higher than necessary. District officials need to improve their process to effectively account for extra-classroom activity fund collections and disbursements. District officials did not maintain adequate records to document 22 extra-classroom activity fund collections totaling $11,990. Student treasurers did not prepare and retain adequate records to document all collections. Duplicate press-numbered receipts or sales reports were not remitted to the central treasurer and adequate profit and loss statements showing fundraising profitability were not completed. Additionally, District officials did not collect and remit $1,382 of sales tax to the New York State Department of Taxation and Finance as required. Finally, student treasurers did not maintain independent ledgers documenting collections and disbursements.

The Board and Executive Director did not manage FURA operations within the authority provided by law. The FURA's governance structure was highly inappropriate and not consistent with applicable legislation for URAs. The Board manages the FURA as if it is a department of OCED − an overarching umbrella in name only − which includes the separate and distinct corporate entities of the FURA, FIDA and FLDC. Each of these entities has its own distinct statutory purposes, responsibilities, powers and duties. This governance structure inappropriately gives the appearance that the three entities are legally affiliated with each other or subsidiaries of the OCED. This intertwined governance structure has caused the FURA to act outside its statutory authority. Specifically, the FURA inappropriately gifted $250,000 in assets to the FLDC. The FURA also made an annual contribution to the Village totaling $10,560 for the 2014 fiscal year without a basis for the budgeted amount and contract stipulating services to be covered by this contribution. Furthermore, the FURA inappropriately received subsidies from FIDA totaling $250,000 from 2010 through 2014 and incorrectly recorded $350,000 as due from FIDA instead of cash in the accounting records. Management's improper governance practices have led to inappropriately commingled bank accounts and combined and inaccurate accounting records for the three OCED entities, as well as significantly misstated annual financial statements.

The Board and Executive Director did not manage FIDA operations within the authority provided by law. The FIDA's governance structure was highly inappropriate and not consistent with applicable legislation for IDAs. The Board manages the FIDA as if it is a department of the Office of Community and Economic Development (OCED), which includes the separate and distinct corporate entities of the FIDA, Village of Fairport Urban Renewal Agency (FURA) and Village of Fairport Local Development Corporation (FLDC). Each of these entities has its own distinct statutory purposes, responsibilities, powers and duties. This governance structure inappropriately gives the appearance that the three entities are affiliates of each other or subsidiaries of OCED. This intertwined governance structure has caused the FIDA to act outside its statutory authority. At the end of 2014, FIDA's unrestricted net assets totaled approximately $2.2 million, which was more than six times its 2014 budget of approximately $343,000. FIDA accumulated this large balance by retaining additional rent payments from long-term lease agreements that were executed prior to statutory amendments that require IDAs to return such funds to the affected taxing jurisdictions. In 2014, the FIDA made an annual contribution to the Village totaling $42,240 but had no basis for the budgeted amount or contract stipulating services to be covered by this contribution. The FIDA inappropriately gifted assets and made advances for commercial loans to the FLDC totaling approximately $824,000. The FIDA also made commercial loans of its own moneys without statutory authority; it had two questionable outstanding loans with balances totaling $187,000 as of November 30, 2014. In addition, the FIDA inappropriately subsidized the FURA by a total of $250,000 from 2010 through 2014 and inappropriately recorded $350,000 as due to FURA to make it appear that it had outstanding debt. Furthermore, these improper governance practices have led to inappropriately commingled bank accounts and combined and inaccurate accounting records for the three OCED entities, as well as significantly misstated annual financial statements.

We found that County did not always obtain the desired quantity of materials and supplies at the lowest possible cost in accordance with the adopted policies. The Legislature did not award highway material and supply bids to the lowest responsible bidder as required and the Highway Department did not always make purchases from the vendor with the lowest bid price. If the County purchased asphalt and stone products from the low bidders, it may have saved $10,000. County officials and employees who were provided with purchase cards did not always comply with the purchase card policy. Card holders did not sign a cardholder agreement and the Treasurer's office did not periodically audit purchasing card transactions for compliance with the County's policies. As a result, the County cannot ensure that all purchases were made at the lowest cost and in compliance with the purchase card policy.