The Supervisor's clerk did not maintain complete, accurate and timely accounting records and the Supervisor did not provide sufficient oversight of his clerk's accounting duties or appropriate training for the clerk. Consequently, the Town's accounting records contained errors in several of the Town's funds and did not agree with amounts reported to the Office of the State Comptroller on both the 2013 and 2014 Annual Update Documents (AUDs). Further, monthly bank reconciliations were not properly performed in a timely manner and were not consistently accurate. As a result, Town officials do not have assurance that all financial transactions are recorded. Further, the Board does not have complete and accurate information to monitor the Town's financial operations and assess the Town's financial condition.

The Board appropriated fund balance to finance operations each year, from 2012-13 through 2014-15. The Board's revenue and expenditure budget estimates were generally reasonable. However, the District's fund balance has exceeded the 4 percent legal limit all three fiscal years that we reviewed. During this same period the District's real property tax levy increased by approximately $91,000 or 2 percent. Rather than apply a portion of its annual surplus to reduce or stabilize the tax levy the Board chose to transfer surplus money to its reserve funds at the end of 2013-14 and 2014-15. District officials have not developed a reserve fund policy or multiyear financial and capital plans to help determine how the reserve funds fit into the District's overall financial management strategy. Finally, the District has not used the more than $115,000 in debt service fund to pay down debt.

The Board and District officials have not adequately managed the District's financial condition. The Board adopted budgets for fiscal years 2012-13 through 2014-15 that appropriated a total of $49.6 million in fund balance to finance operations. Because the District consistently overestimated expenditures by a total of $29.4 million over the three-year period, it used only $11 million (22 percent) of the appropriated fund balance. In addition, the District's fund balance policy is not in compliance with statutory requirements. As a result, the District's unrestricted fund balance has exceeded statutory limits; it ranged between 5 and 6 percent of the ensuing year's appropriations in each of the last three fiscal years. When adding back unused appropriated fund balance, the District's recalculated unrestricted funds were 12 percent of the ensuing year's appropriations. Furthermore, District officials did not have resolutions establishing eight reserve funds totaling $17.6 million and overfunded the workers' compensation and unemployment insurance reserves. As of June 30, 2015, the workers' compensation reserve fund's $2.8 million balance was sufficient to pay for associated costs for six years. The unemployment insurance reserve fund's balance of $1.3 million was sufficient to pay for associated costs for 24 years.

District officials did not adequately monitor the District's financial condition. The District reported fund balance deficits for four consecutive fiscal years, in part, due to shortfalls in budgeted tuition revenue resulting from SED's tuition rate methodology. Further, the District's student population has declined and collections of billed tuition are not timely. This has led to a decline in the District's cash position from 2011-12 through 2014-15 from $1.2 million to $531,992, a decrease of 57 percent. Over the same period, the District's current liabilities have increased from $3.2 million to $4 million, an increase of 27 percent. To alleviate the cash flow difficulties, District officials issued revenue anticipation notes (RANs) each of the past four fiscal years, including a total of $2.2 million for 2014-15. In 2014, the District only found one bidder for a $1.7 million RAN and the terms were undesirable, requiring the RAN to be payable within two months. The lack of bidders places District operations at risk.

County officials did not establish accountability over Golf Course sales. Consequently, Golf Course sales were not all recorded in the point of sale (POS) system, cash receipts were not always deposited in a timely manner and cash on hand was not properly safeguarded. Furthermore, the Director set the rates for various fees, recorded transactions in the POS system, made deposits and prepared the monthly report to the Treasurer with virtually no oversight by the Legislature or any other County official. The Treasurer used the monthly report for recording Golf Course revenues but did not verify the accuracy of the reported revenues. The Legislature did not adopt written policies governing Golf Course financial operations, develop oversight responsibilities for the Director and County officials or approve rates charged at the Golf Course. As a result, there is an increased risk that Golf Course assets, including cash, could be misused.

BOCES officials have established effective controls over cash disbursements and payroll, including segregating duties so that no individual controls all phases of a transaction, to safeguard component districts' assets. They also provide increased oversight by having independent staff review transactions for key business processes. We commend BOCES officials for establishing and implementing an effective system of internal controls over cash disbursements and payroll.

District officials provided cost effective special education services to its students and saved the District approximately $1.7 million in program and related services costs during 2014-15. Further, we estimate that the District also saved 13 other districts approximately $1.3 million during the same year as their authorized service provider. We commend District officials for providing cost effective special education services to its students and those from other districts.

At the end of fiscal year 2010-11, the District's unrestricted fund balance was $7.3 million or 7 percent of the ensuing year's appropriations. The District had to rely on fund balance to fund budget gaps when it began to experience financial challenges. Beginning in fiscal year 2011-12, expenditures began to outpace revenues and the District increased its use of fund balance to support operating expenditures. Total fund balance was significantly reduced by $13.1 million or 54 percent from fiscal years 2010-11 through 2014-15. The District did achieve some cost savings which removed certain operating expenditures from its budget. To avoid potential fiscal stress, for the 2014-15 fiscal year, the Board adopted a budget funded with a 9 percent increase in the real property tax levy. The voters approved the budget and the District's operations generated a small surplus of less than 1 percent of its expenditures. This real property tax increase helped align the District's operating expenditures with a recurring revenue source. We also reviewed the District's 2015-16 adopted budget and determined that revenue and expenditure estimates were reasonable.

The former Treasurer (Treasurer) did not properly account for or process Department financial transactions. Because the Treasurer performed all of the Department's financial responsibilities without any oversight, the Board was unaware that the Department's records were inaccurate and/or incomplete and the Treasurer was using Department funds for personal use. The Treasurer used the Department's credit card to make personal purchases totaling $5,042 and paid for them with Department funds. Also, the Treasurer withdrew $16,325 in cash from the Department's bank accounts. However, we could not determine if these funds were used for a legitimate Department purpose. In addition, the Treasurer did not provide adequate information to the Board regarding how much the Department collected during its fund-raising events, which likely resulted in funds being diverted for non-Department purposes. Furthermore, the Board did not establish adequate controls, such as establishing effective financial procedures to oversee the Department's financial operations, to ensure that the Treasurer properly recorded financial activities and that Department moneys were safeguarded. Although the Treasurer performed virtually every aspect of the Department's financial business, the Board did not review or monitor the Treasurer's work. The Board also did not adequately oversee Department purchases, audit claims or monitor the use of Department credit cards.

District officials have not effectively managed fund balance and have allowed unrestricted fund balance to exceed statutory limits for the past three fiscal years. As of June 30, 2015, the District's unrestricted fund balance totaled $2.7 million and was 12 percent of the 2015-16 budgeted appropriations, exceeding the statutory limit by more than $1.7 million. Although District officials annually appropriated fund balance to reduce the tax levy, these funds were not used as budgeted because District officials consistently overestimated appropriations by an average of $1.5 million or 7 percent each year. Furthermore, the District significantly overfunded two reserves by approximately $784,000. Despite the significant amount of accumulated fund balance, District officials have continued to increase the tax levy each year.

From 2010-11 through 2014-15, District officials adopted budgets for expenditures that resulted in operating surpluses each year. They also appropriated fund balance of between $2 and $3.8 million each year that they did not use because of those operating surpluses. As a result, total fund balance increased to $18 million by June 30, 2015. Furthermore, District officials overfunded reserves by $12.8 million as of June 30, 2015. With the inclusion of the unused appropriated fund balance and overfunded reserves, the total fund balance actually ranged from $9.0 million to $17.3 million, or between 14 and 24 percent of the ensuing year's budget, in excess of the 4 percent allowed. District officials funded reserves by transferring surplus funds at year-end rather than through the budget process.

In recent years, the District has struggled with financial challenges and a deteriorating financial condition. We reviewed budget-to-actual results for fiscal years 2011-12 through 2014-15 and found that the Board adopted budgets with realistic revenue and expenditure estimates. However, the Board has relied on appropriated fund balance as a financing source in the annual budgets, causing the District to incur planned operating deficits in the general fund. As a result, the District's total general fund balance declined by more than $3.3 million (57 percent) over the past four years. Although the District had a $279,448 operating deficit in 2014-15, it ended the year with unassigned fund balance of $393,629, or 1.5 percent of 2015-16 appropriations. This increase in the unassigned fund balance was largely due to a $500,000 decrease in the amount of fund balance the Board appropriated at the end of 2014-15 compared to the prior year. District officials stated that due to decreases in State aid revenues and the property tax cap, it was necessary to appropriate fund balance and use reserves in order to avoid making significant cuts to educational programs and staffing levels. District officials have also begun exploring cost-saving measures to reduce the dependence on using fund balance. The District has reduced staffing through attrition and elimination of positions. District officials also hope to generate additional cost savings through improved energy efficiency as a result of a capital project which includes replacing windows and a boiler for the heating system.

District officials need to improve the budget process to ensure general fund budget estimates, reserves and fund balance are maintained at reasonable levels. From 2012-13 through 2014-15, District officials appropriated $4.4 million of fund balance, which should have resulted in planned operating deficits each year. However, because officials consistently overestimated expenditures in the adopted budgets, the District experienced operating surpluses totaling more than $2.5 million over these years and did not use the any of amounts appropriated to finance operations. The District's 2012-13 year-end unrestricted fund balance was 6.5 percent of the ensuing year's appropriations, exceeding the 4 percent statutory limit imposed on unrestricted fund balance. In June 2014, District officials used $604,500 of unrestricted fund balance and another $715,500 in June 2015. These practices allowed the District to appear that it was within the 4 percent fund balance limit for 2013-14 and 2014-15. However, when adding back the unused appropriated fund balance, the District's recalculated unrestricted fund balance for these two years ranged between 8.4 and 9.5 percent of the ensuing year's appropriations, exceeding the limit. As a result, taxpayers have paid more than necessary to fund District operations.

The Board did not adopt realistic budgets or ensure that reserves were reasonably funded. District officials consistently overestimated appropriations during the last five fiscal years (2010-11 through 2014-15). These budgeting practices generated approximately $2.4 million in operating surpluses. The District also appropriated an average of approximately $670,000 in fund balance annually, which was not needed to fund operations due to 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 unused appropriated fund balance, the District's recalculated unrestricted fund balance ranged between 5 and 7.4 percent of the ensuing year's appropriations, exceeding the limit. From 2010-11 to 2015-16, District officials increased the tax levy by 10 percent. District officials also used approximately $2.5 million of fund balance to fund seven reserves that, as of June 30, 2015, totaled approximately $5 million. Three of these reserve funds are overfunded. As a result of these practices, District officials have levied real property taxes that were higher than necessary to fund District operations.

The financial condition of the general and water funds declined over the last three fiscal years because the Council adopted budgets for the general fund that were not structurally balanced and for the water fund that were not realistic and contained increasing amounts of interfund transfers to the general fund to subsidize the general fund's operations. The general fund's financial condition will likely decline further during 2015, because the adopted budget for 2015 is again not structurally balanced. In addition, the adopted budget for the water fund does not include funding to finance water improvements that were included in the City's capital plan. The Council adopted budgets for the sewer fund that were not realistic during the last three fiscal years. However, the City realized operating surpluses during 2013 and 2014 because revenue shortfalls were offset by the City not expending the amount of budgeted appropriations in 2013 and 2014 and because the City received a significant unbudgeted revenue in 2014. As a result, the financial condition of the sewer fund improved over the last three fiscal years. However, the sewer fund's cash balances at the end of the last three fiscal years were not sufficient to repay the amounts owed to the general and water funds. As a result, the sewer fund is still not fiscally healthy. We also found that the Comptroller failed to maintain individual accounting records for each capital project and the Council did not monitor the financial activity of projects. As a result, one project we reviewed was overspent, project expenditures were funded through the use of other projects' funds, debt proceeds have been improperly commingled with other City funds and $85,334 in debt proceeds were used for an unauthorized purpose. Finally, the Council did not receive adequate financial reports, the City's annual financial reports were not filed with Office of the State Comptroller in a timely manner and the independent audits of the City's financial statements were not completed in a timely manner and did not include a finding related to the lack of appropriate accounting for capital projects.

We selected a sample of 23 vendors who were paid approximately $571,300 during the audit period and found that the District officials did not use competitive bidding to procure goods from two vendors who were paid a total of $72,759. In addition, District officials did not use other competitive methods to procure goods and services from seven vendors who were paid a total of $163,970. These procurements were for professional services and items that fell under bidding thresholds. Although the District has a procurement policy, the Board has not adopted policies and procedures governing the procurement of goods and services when competitive bidding is not required.

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.