The Board has adopted a purchasing policy for the procurement of goods and services. However, they do not have written guidelines or procedures for seeking competition for purchases that are not subject to competitive bidding requirements. During the 2014-15 fiscal year, the District made purchases totaling $685,193 from 67 vendors that were between $5,000 and $19,999. We judgmentally selected for review the purchases made from the 23 highest paid vendors totaling $226,353. District officials did not obtain competitive quotations for purchases made from 10 vendors totaling $106,952. For example, the District did not obtain competitive quotations when purchasing musical equipment totaling $16,698 including a piano for approximately $15,000. District officials provided us with a sole source letter from the music equipment vendor when we inquired about competition. Although the Music Department may choose to purchase a particular brand, there are many brands of piano and possibly other suppliers of that specific brand. The remaining 13 purchases in our sample included six made under a State or County contract, six in which the District solicited at least three quotations and one in which they obtained two quotes.

Claims were not properly itemized, supported and audited by the Board prior to payment. We reviewed all 181 check disbursements totaling $92,220 issued from January 1, 2014 through January 31, 2015 and found that 63 claims totaling $31,823 (35 percent) did not contain sufficient itemization or documentation to determine they were proper Authority expenditures. The Board did not audit these claims prior to payment. In addition, Authority officials could not provide evidence that they conducted an annual income recertification for eight of the 10 tenants we reviewed. The two remaining tenants had rented apartments for less than one year and, therefore, were not yet subject to the annual recertification. Further, the tenant files did not contain any documentation indicating how the Authority calculated the rental amount it charged the tenants.

The Library uses an integrated electronic timekeeping and payroll system that also accounts for employees' leave accruals. Employees record their daily work hours and leave time on an electronic time sheet. At the end of the payroll period, the employees' supervisors review and approve the time sheet for payroll processing. During the biweekly payroll processing, the employees' leave accrual balance records are automatically updated based on time worked and leave time taken as recorded on their electronic time sheets. However, there is no procedure in place to verify that leave credits earned are in accordance with provisions in the collective bargaining agreement. Also, the Board has not established a standard leave request form or other formal procedure for employees to request leave time and for supervisors to document, track and compare leave requests to the electronic time sheet. As a result, the process for monitoring, requesting and approving leave is not consistent across Library departments. Six of the seven supervisors we interviewed maintained an employee work schedule and tracked leave requests for their employees. However, five of these supervisors told us that they did not always record when leave was used and relied on memory when approving time sheets.

Department officials need to improve their monitoring of contracts with community-based agencies to ensure that services were provided and payments were made in accordance with contractual agreements. Department personnel did not follow-up with agencies to ensure that all service and performance reports required by contract were provided by the agencies. In addition, Department managers did not implement procedures to review contractual performance measures to ensure performance outcomes were being met. Our review of 10 contracts totaling $6.5 million showed that agencies did not submit any performance reports for seven contracts totaling $2.5 million (70 percent of reviewed contracts). In addition, although all vouchers that we reviewed were signed by the Deputy Commissioner and audited and approved by staff in the County Comptroller's Office, 29 payments totaling $801,393 lacked supporting documentation. Finally, contracts were not always renegotiated in a timely manner. As a result, County officials do not have adequate assurance they are receiving the agreed-upon services and may be overpaying for services or paying for services not received.

During the 2014-15 school year, the District paid Dutchess BOCES $852,129 for 1,404 computers obtained through BOCES CoSer agreements, which consisted of 874 desktops, 508 laptops and 22 tablets. Overall, we found that District officials have established adequate controls over the computer inventory that allows computer equipment to be tracked efficiently. Except for minor issues which we discussed with District officials, we found that the District's computer inventory is reliable. We commend District officials for establishing and implementing an effective system of controls over computer equipment.

The District had 24 employees who retired or resigned from the District during our audit period. We reviewed the separation terms for each employee to determine those eligible for a payment and whether the payments were properly calculated according to applicable Board-approved contract terms. We found that five teachers and nine nonteaching staff were eligible for separation payments totaling $111,336. These payments conformed to the terms of the written agreements. In addition, of the nine payments made to nonteaching staff, we found that the Assistant Superintendent for Business did not approve seven payments totaling $11,757, or 10.6 percent of all payments, because it was not standard procedure for the payroll clerk to provide them to her. Although all of the vacation payout payments were correctly calculated, a review process provides additional assurance that any errors would be detected and corrected before the payments are processed.

The Board did not provide adequate oversight to ensure that the Commission's financial activity was properly recorded and reported or that program money was safeguarded. Duties within the cash receipts and cash disbursement processes were inadequately segregated and compensating controls were not implemented. The Director collected, counted and deposited fees for each program but did not provide the Treasurer with adequate supporting documentation to accurately record the program receipts that were deposited. Therefore, the Treasurer was unable to accurately record revenues in the accounting records and the Board did not have adequate information to monitor the Commission's financial operations. The lack of adequate records made it impossible to ensure all money collected was deposited. Furthermore, the Director did not deposit any soccer concession stand money during the 2014 program year. The Board also failed to ensure its bylaws were followed by requiring that all checks be signed by the Chairman and Treasurer. Instead, checks were prepared by the Town of Milton Comptroller and signed by the Town of Milton Supervisor. As a result, the Board failed to oversee the disbursement process. Lastly, the Commission has not filed the required annual financial report with the Office of the State Comptroller since 2004.

The District has consistently overestimated appropriations in the adopted budget. This budgeting practice generated almost $3.1 million in operating surpluses from fiscal years 2010-11 through 2014-15. The District used the operating surpluses to fund various reserves. The District also appropriated approximately $1.9 million of fund balance annually as a financing source in the annual budget but more than 99 percent of this amount was not needed due to the operating surpluses. This practice allowed the District to appear that it was within the 4 percent statutory limit imposed on the level of unrestricted fund balance. However, when adding back the unused appropriated fund balance, the District's recalculated unrestricted fund balance for each year was approximately 8 percent of the ensuing year's appropriations, exceeding the limit. During 2014-15, the District appropriated $1.9 million for the 2015-16 budget; however, we project that it will not be needed. As such, we expect the District's unrestricted fund balance will continue to exceed the statutory limit. In addition, from 2010-11 through 2015-16, District officials increased the tax levy by 17 percent while fund balance and reserves were building. Furthermore, the District maintained an inappropriate liability reserve of approximately $942,000 and overfunded the employee benefit accrued liability reserve by $820,000 (15 percent). Finally, the District has not used its debt reserve to fund debt payments, as required. These practices all contributed to taxes being higher than necessary to fund operations.

We reviewed the Library's policies and procedures over the investment of cash. We also reviewed all the bank statements during our audit period to determine the amount of interest earned and the service fees charged. Except for minor discrepancies which we discussed with Library officials, officials generally managed cash effectively, monitored the interest earned and service fees charged to achieve optimal return, maintained a minimum number accounts required for operations and periodically sought competition for banking services.

District officials did not always comply with the District's non-bid purchasing policy and procedures when procuring professional services. Therefore, the Board does not have adequate assurance that services were procured in the most economical way and in the best interests of the District. We reviewed the procurement of all professional service providers contracts (nine), totaling $194,500 in payments during the audit period. The District awarded two professional service contracts after issuing RFPs for energy performance services and auditing services, with payments totaling more than $75,000. However, District officials did not seek competition for seven professional services or insurance contracts with payments totaling more than $119,000. The Board also did not formally approve professional services contracts for three of these seven providers, including general liability/casualty insurance, architectural service and financial advisor services. In addition, there were no written agreements that stipulated the contract period, the services to be provided and the basis for compensation to three professional service providers, including architectural services, Clerk of the Works and legal services.

The Authority monitors the amount of water produced and compares the production to the amount of water sold to customers on a monthly basis. The Authority also monitors additional water used for other municipal purposes and has implemented a leak detection program to identify and reduce water loss. Although the Authority is proactive in identifying and addressing unaccounted-for water, 43 percent of the water produced in 2014 was unaccounted-for. The variable costs of the water loss in excess of the 10 percent goal is $339,000.

When the Village of Keeseville dissolved, the Town of Ausable (Town) and the Town of Chesterfield entered into a verbal agreement to provide for the continuation of water and sewer services to residents who previously received these services from the Village. We commend the Town for engaging in inter-municipal cooperation to ensure the continuation of water and sewer services in an efficient manner. However, the verbal agreement entered into by the Town was not sufficient to ensure Ausable Water District 2 (AWD2), Ausable Water District 3 (AWD3) and Ausable Sewer District 1 (ASD1) were properly managed. The Board did not develop individual budgets and the Supervisor did not maintain separate accounting records for these districts. As a result, Town officials could not monitor each respective district's financial operations or determine if each district was self-sufficient. In addition, the Town designated the responsibility of billing, collecting and enforcing water and sewer charges for AWD2, AWD3 and ASD1 to the Town of Chesterfield, but did not enter into a written inter-municipal agreement with the Town of Chesterfield or request or receive adequate supporting documentation from the Town of Chesterfield to allow Town officials to provide proper oversight of the districts' operations. Consequently, the Board did not receive or approve the water and sewer billing registers. Further, the Town of Chesterfield did not assess penalties to delinquent accounts. As a result, the Town did not properly enforce all delinquent accounts. In addition, Town officials were unaware that $14,914 in collections that were recorded as being received by the Town of Chesterfield had not been remitted to the Town.

The Board needs to improve its budget development practices. The Board consistently budgeted to appropriate more fund balance in the town-wide general fund than was actually available to finance operations. These practices caused deficits of $15,192 in 2014 and a projected deficit of $8,437 in 2015. The Board also appropriated substantial fund balance in the town-wide highway fund to finance operations, which caused this fund's unrestricted fund balance to decrease by $98,592, or 52 percent, from 2013 through 2015. The Board must be careful when appropriating fund balance in future budgets to ensure that it does not get depleted. Additionally, the Board has not developed a multiyear financial and capital plan to address the Town's long-term priorities. Lack of this plan diminishes the Board's ability to manage Town finances.

The District's purchasing policy does not require District officials to use competitive bidding for any purchases. As a result, District officials did not adhere to General Municipal Law bidding requirements for purchases of goods and services. Also, District officials did not always comply with the District's purchasing policy by obtaining written quotes for purchases. Consequently, the District paid $27,411 more than necessary when procuring goods and services.

District officials do not require the use of purchase orders when purchasing goods and services. Additionally, District officials did not always seek competition for goods and services that fell below the bidding thresholds and when selecting professional service providers. Therefore, the Board does not have adequate assurance that services were procured in the most economical manner and in the best interest of the taxpayers.

We found that District officials properly billed and collected for tuition. For the past three fiscal years, the District billed an average of $7.5 million in tuition, and due to the timely collections, funds were sufficient to cover the District's cash-flow needs. The District's billing and collection process expedites the collection of tuition, which allows the District to remain financially solvent. We commend District Officials for developing and implementing a good system of controls over tuition billing.

We identified significant internal control weaknesses over the Authority's billing and collection of tenant rents. There were no comprehensive written policies and procedures, billing and collection duties were not properly segregated and no one internally reviewed the rent and additional charges posted to tenants' accounts by the housing assistant supervisor and the account clerk/typist. Further, we found collections were not always deposited intact because eight personal checks totaling $1,980 were cashed using Authority funds. We also found that users' access rights within the tenant accounts module of the computerized financial system were not properly restricted, and Authority management did not generate and review adjustment or voided-payment reports from the system. As a result, unauthorized changes could be made to the financial data or inappropriate transactions could be initiated to conceal the misappropriation of funds.

The Board adopted budgets for 2011-12 through 2014-15 that appropriated a total of $16.7 million in fund balance to finance operations. Because the District consistently overestimated expenditures over the four year period, most of the appropriated fund balance was not used. Furthermore, District officials did not have resolutions establishing two reserves totaling $1.7 million or resolutions that included the intent and/or funding levels for three reserves totaling $4.1 million. In addition, District officials have overfunded the unemployment reserve.

The Parks and Recreation Maintenance Supervisor did not ensure the accuracy of the hours worked by golf course employees, which resulted in improper payments. Two golf course employees were compensated over $16,000 in a three-year period for hours paid that were unsupported by time records. Furthermore, the Supervisor did not adequately segregate payroll duties or establish sufficient compensating controls, which increases the risk that funds could be misused without being detected.

District officials have established adequate procedures over the claims processing function to ensure that claims were for appropriate purposes, adequately supported, and audited and approved prior to payment. The Board has delegated its claims auditing responsibility to a claims auditor. We commend District officials for establishing and implementing effective procedures over the District's claims processing function.