Village officials did not adequately monitor financial operations to ensure fiscal stability. The Village has experienced extraordinarily high legal costs in fiscal years 2013-14 and 2014-15, resulting in unplanned operating deficits of approximately $1 million each year. As a result, we estimate the Village will have a fund balance deficit of approximately $933,000 at the end of fiscal year 2014-15. Village officials have not developed a multiyear plan to address these deficits. In addition, the Board allowed budget line items to be routinely overexpended and budget transfers to be made after the end of the fiscal year rather than throughout the year when needed. Further, the Board does not receive audited financial statements in a timely manner. As a result, the Board does not have a clear picture of the Village's true financial condition so that it can make informed decisions.

Authority officials need to improve controls over payroll and employee benefits to ensure that employees are paid the salaries and wages and receive the benefits to which they are entitled. We reviewed compensation paid to Authority employees totaling approximately $315,500 during our audit period and did not find any discrepancies. However, because the Director did not verify the accuracy of work hours the Accounts Manager reported to the Authority's payroll service provider, errors and irregularities could occur and remain undetected. The Authority's process for maintaining leave accrual records also needs improvement. We found that 73 percent of employee leave balances were inaccurate. Authority officials have not entered into contractual agreements with the officers providing Authority security, who were paid more than $166,900 in wages during our audit period, stipulating the terms of services to be provided. In addition, Authority officials have not established procedures to determine how the hours these officers work are to be submitted for payroll processing. Finally, Authority officials need to improve internal controls over debit card transactions to adequately safeguard Authority assets.

District officials have established adequate procedures to ensure employees are accurately compensated and deductions made from the employees' pay are authorized and correct. We commend District officials for designing an effective system that ensures the accuracy of compensation paid to employees and the deductions made from their pay.

We commend District officials for establishing effective procedures to ensure claims are adequately documented and supported, for legitimate District purposes and approved prior to payment, in accordance with District policy and Education Law. The Board adopted a claims audit policy, which required the claims auditor to examine all claims and ensure funds were available and the claims are substantiated. The policy states that claims shall be paid by the Treasurer only upon the approval of the claims auditor. Additionally, the Otsego Northern Catskills Board of Cooperative Educational Services developed written guidelines for the claims auditor to follow. These guidelines required the claims auditor to ensure the claims were mathematically accurate, not for goods or services already paid for, itemized and contained evidence the District received the goods and services. The claims auditor was also required to provide a standardized monthly report to the Board. These procedures ensured the claims auditor followed the Board's policy.

The Board did not adopt realistic, structurally balanced budgets in the town-wide general and part-town highway funds. It did not accurately estimate revenues and expenditures, relied too heavily on appropriating fund balance as a financing source and planned to appropriate more fund balance than it had available. As of December 31, 2014, the town-wide general fund had a deficit of $438,470 and the part-town highway fund had a deficit of $74,046. Consequently, in 2014, the Town had to issue a $310,000 tax anticipation note (TAN) to pay general fund operating expenditures. In addition, the Town's budget format lacked necessary information to allow the Board to make informed decisions when estimating revenues and expenditures and determining how much fund balance it could appropriate to finance the ensuing year's operations.

The Board did not ensure that goods and services were procured in an economical manner. We reviewed 68 purchases totaling $335,122 and found that aggregated purchases for heating oil and diesel fuel were not competitively bid as required by General Municipal Law. Had Town officials purchased this oil and fuel using a county contract, they could have saved more than $5,300 (5 percent) during our audit period. Town officials also made 19 purchases totaling $42,558 without obtaining the necessary verbal or written quotes as required by the Town's purchasing policy. This occurred because the Board did not monitor and enforce compliance with statutory requirements and the Town's purchasing policy. Additionally, the Board did not provide adequate oversight of the use of Town credit cards. In addition, the Clerk did not properly account for the sale and inventory of transfer station tickets and permits. Finally, we identified significant internal control weaknesses in the Justice Court's financial operations. The Justices did not perform monthly accountabilities or bank reconciliations.

District officials need to improve their record keeping for fuel inventory to ensure that all fuel is accounted for and records are accurate. District officials have not adopted a policy for fuel inventory accountability and there were no written procedures to provide guidance to employees. Fuel records maintained by the Department were incomplete and did not provide sufficient accountability over fuel use and inventory. Officials did not reconcile fuel pump readings to physical inventory or require all employees to account for the fuel pumped.

The District's overtime costs have risen from approximately $428,000 to $591,400, or 38 percent, over the last three fiscal years due a lack of effective controls and oversight. District officials do not require pre-approval of overtime or the use of alternate work schedules to reduce the need for overtime. In addition, the Board is not given accurate information regarding overtime to make informed decisions. For example, one of the reports provided to the Board underreported overtime for buildings and grounds employees by $42,000 for 2014-15. In addition, the Board does not properly analyze and question the information it receives, such as an overtime report for July/August 2015 that presented snow removal and salting of road ways as some of the reasons for the overtime incurred. Additionally, District officials did not provide the payroll clerk with written procedures for processing the payroll. As a result, the District incurred payroll costs that were unnecessary including overpayments to employees.

Although SCIDA officials developed a Uniform Tax Exemption Policy for project evaluation and approval, the method of determining the benefits to be provided is not well-defined or required to be documented. Therefore, it is possible that not all project applications of the same type were evaluated using the same criteria. SCIDA officials also do not verify the information provided by businesses on project applications for accuracy and completeness. As a result, a definitive determination cannot be made whether or not the Board evaluated and provided financial assistance to projects in accordance with SCIDA's mission. The Board also did not develop and implement adequate procedures to monitor approved projects. SCIDA officials have implemented procedures for monitoring projects, including obtaining sufficient information annually to support project jobs and sales tax exemptions, but the analysis of the information obtained from the companies was not sufficient. Without adequate documented procedures for evaluating, awarding and monitoring projects, the Board has limited assurance that SCIDA projects have met their performance goals and benefited taxpayers. In addition, without an adequate recapture provision, SCIDA limits its ability to take recourse in the event that a project is underperforming.

The Director of Finance (Director) did not always invest funds in accordance with the County's adopted investment policy or General Municipal Law (GML). The Director also invested funds in securities that were not permitted by the investment policy or GML. The County also incurred losses on the sale of certain investments. We question whether it was prudent or consistent with GML and the County's policy, as an investment strategy, to have purchased and then sold obligations which exposed the County to market risk, rather than holding them until maturity. Salary payments to elected officials and management employees were not accurately calculated. We found that the County overpaid 23 elected officials and 94 management employees approximately $26,400 in 2015. Absent corrective action, the County will likely overpay them an estimated $27,000 in the 2016 fiscal year. These overpayments occurred because County officials did not properly calculate biweekly gross wages and compensated these officials and employees for one extra day of pay in excess of their approved salary amount. In addition, three elected officials should not have been paid for vacation leave totaling $14,875. Because elected officials are not required to adhere to fixed work hours set by formal attendance rules and are not limited to the period and amount of time spent away from work, there is no basis for elected officials to accrue and be paid for vacation leave.

The Owners and Board are not economically providing services to their customers. We surveyed 59 plants within New York State with the same combined collection system as the Binghamton plant. We selected eight of these plants with similar preliminary and primary treatment processes, flows or experienced similar disaster events as the Binghamton plant. We compared the total cost per million gallons daily (MGD) of treated sewage flow of these eight selected plants to the Binghamton plant. We found that the Binghamton plant had the third highest annual average costs per MGD from 2012 through 2014. The main costs attributable to the high costs at the Binghamton plant were chemicals, equipment, capital-related costs and professional services including legal and engineering fees. These three cost components represented 41 percent of the total costs at the Binghamton plant, while these costs averaged 14 percent of the total costs at the other plants. In addition, the quality of the discharged treated flow currently does not meet DEC's regular permitted thresholds. As a result, the DEC issued a consent order requiring the Owners to construct a new facility with a completion deadline of April 2017. If the new facility is not completed by the deadline, the Board and Owners could be fined $50,000 plus a maximum of $1,000 per day until the construction is completed. These potential fines would add significant cost to operations that would be passed on to the users.

City officials need to improve pursuing collection of all parking violations issued. The Council has not established sufficient policies for pursuing collection of parking violations after a violation is more than 10 days past due or set a benchmark for collection rates. As a result, fines are not being collected as efficiently and effectively as possible. In addition, Department officials do not periodically reconcile the issued violations with the paid violations or generate and provide receivable aging reports to the Commissioner, Mayor or the Council. The City's parking violation collection rate is approximately 69 percent. We project that if City officials improve collection efforts and raise the collection percentage to 85 percent, it could collect an additional $78,800 in parking violation revenue annually. In addition, the City has over 18,000 unpaid parking violations totaling approximately $2.25 million. If officials were able to increase its collection efforts and collect 10 percent of outstanding violations, they could increase revenues by as much as $225,000. Finally, City officials need to improve internal controls over collecting, recording and reporting parking violations. Officials have not effectively segregated parking violation duties in the Department or implemented compensating controls such as requiring an independent review of dismissed, reduced or adjusted parking violations.

The Board has not established an effective system of controls over the Department and Drill Team cash receipt and disbursement activity, and has not provided the necessary oversight to mitigate the risk associated with the inadequate segregation of duties performed by the Treasurer and Drill Team's chief financial officer (CFO). The Board had not adopted policies or procedures addressing cash receipts, disbursements functions performed by the Treasurer and Drill Team CFO, nor does it require the review and approval of claims prior to or after payment has been made. Although the Department bylaws state that an auditing committee consisting of three members shall examine the accounts of the Treasurer and the Drill Team immediately prior to the annual meeting, and additionally, at least once a year, no such audit was conducted during our audit period.

During our audit period, the District made purchases between $1,500 and $19,999 from 148 vendors totaling $824,117. We randomly selected purchases made from 24 vendors totaling $119,741 and found that District officials did not obtain competitive quotations for purchases made from nine vendors totaling $35,214. In addition, five purchase orders totaling $30,191 were dated after the date of the invoices, resulting in confirming purchase orders. For example, one purchase order for heating, ventilation and air conditioning repair was dated June 30, 2014, but had corresponding invoices from February 2014, March 2014, April 2014, May 2014 and June 2014. By placing orders for goods or services without a valid purchase order, District officials are committing the District's funds without proper authorization. The remaining 15 vendors in our sample included nine purchases made under a State or County contract and six purchases in which the District took adequate measures to solicit quotations. Because District officials did not consistently adhere to established policies and procedures and ensure that goods and services were acquired through a competitive process, they do not have assurance that the District is receiving the best price for items purchased.

The Treasurer did not properly account for all collections or deposit all of them timely and intact. The Treasurer also did not issue receipts for collections as required by the bylaws or maintain other adequate documentation of collections remitted to him. Furthermore, the Company did not institute controls over collections associated with its craft fair fundraising events. As a result, Company officials lack assurance that all collections were properly remitted to the Company.

Library officials have not adequately segregated duties related to the preparation and review of bank reconciliations. The Board has not designated a Board member or Library official who is independent of the accounting functions to review bank reconciliations. In addition, although the Treasurer provides the book balance for each bank account to the Board as part of the Treasurer's monthly report, the Treasurer does not provide the bank reconciliations and supporting documentation, including the bank statements, to the Board for review.

The Board needs to improve the Library's procurement process. The Board did not adopt a procurement policy as required by General Municipal Law and no written procedures were in place to provide guidance to Library staff when procuring Library goods and services. As a result, Library officials and staff developed informal practices to seek competition when procuring goods and services. However, these practices were not consistently applied for all Library purchases. Further, the purchasing approval process was ineffective because most claims were paid before the Board's review and approval.

We found that Board oversight of Department financial operations was not adequate. There was no evidence that nearly $64,000 in payments were authorized by the Department's membership. The Treasurer did not perform and retain monthly bank reconciliations and did not retain custody of all Department funds as required in its bylaws. The audit committee did not properly perform an audit of the Treasurer's records. Further, the Board did not properly assign the Treasury duties or monitor the financial activities and documentation for the daily lottery account. Consequently, there is a risk that Department funds could be misspent or misappropriated.

We found that District officials maintained accurate records of the accrual and use of employee leave time. We also found that District officials granted leave time in accordance with the applicable employment contracts or collective bargaining agreements. We commend District officials for maintaining accurate records of its employees' accrual and usage of leave time.

The Business Manager did not maintain complete, accurate and up-to-date accounting records, provide the Board with adequate monthly financial reports or provide sufficient oversight of work performed by the District's clerks. In addition, while the Board engaged a certified public accountant (CPA) to annually audit the District's records, we question the CPA's independence to perform the audits because he also provided the District with numerous substantial adjusting journal entries that totaled nearly $3.1 million or 58 percent of the District's 2014 budget. Had the Business Manager properly maintained the accounting records, the CPA would not have needed to prepare so many adjusting entries, which would have effectively reduced or eliminated our independence concern. As a result of these deficiencies, the Board's ability to effectively monitor District operations was significantly diminished.