We found the records maintained by the Surrogate's Court and County Clerk were generally up-to-date and complete, and we noted no material discrepancies. We also found the County Treasurer established adequate procedures, maintained appropriate records and properly reported the condition of court and trust funds to the State Comptroller as prescribed by statute. However, we identified funds that improperly remained in the Treasurer's custody that should have been turned over to the State Comptroller as abandoned property. We identified funds from 71 actions totaling $251,392 that were not properly turned over to the State Comptroller. The Treasurer and his deputy stated they had not remitted the funds as required because they believed they needed a court order to do so. However, New York State Abandoned Property Law requires these moneys be transferred to the State Comptroller without any further action by the court. The Treasurer agreed to take corrective action and remit the funds as required.

The Board and Village officials did not develop policies or procedures to govern budgeting practices or a comprehensive multiyear financial plan. As a result, the Board did not adopt realistic annual budgets and did not receive sufficient financial information to effectively monitor the budget throughout the year. The Board approved unbudgeted expenditures during the year, rather than manage operations within the adopted budget. Furthermore, Village officials lacked guidance on maintaining reasonable levels of fund balance and reserves or identifying, prioritizing and strategically addressing current and future financial needs. This resulted in the Board being less able to identify revenue and expenditure trends and set long-term priorities and goals to avoid large fluctuations in financial condition and tax rates. Because of these ineffective budgeting practices, the Village's general fund had unplanned operating deficits totaling $712,683 and a sharp decline (80 percent) in unassigned fund balance from $377,000 on May 31, 2013 to $76,000 as of May 31, 2014. Although the Village's operating results improved in 2014-15, the Board must improve its budgeting and long-term planning to maintain reasonable fund balances and a sound financial position.

The Authority adopted a financial policy handbook (Handbook), which includes cash management policies and procedures, such as segregating key duties, making timely deposits, recording transactions in a timely manner, securing undeposited cash receipts and limiting the amount of cash kept on hand. While the Handbook contains sufficient policies, the Board did not ensure the policies were always followed. Cash receipts duties were not adequately segregated and compensating controls were insufficient. The Authority does not maintain daily cash collection records for each cash drawer to compare to cash on hand and does not follow the procedures for securing cash drawers within designated safes or for depositing cash that exceeds the policy's overnight cash level. Furthermore, cash receipts are not recorded in the accounting system in a timely manner, receipts are not issued for all cash collected, and cash receipts books and deposit records do not contain sufficient detail.

Except for minor discrepancies that were communicated to Town officials, the Board conducted a deliberate and thorough audit of claims, the claims contained adequate supporting documentation and evidence that the goods or services were received and the claims were for legitimate Town purposes. We commend Town officials for designing and implementing an effective system of controls over the Board's claims auditing process.

Our audit determined that Court money was not properly recorded, deposited or reported to the Justice Court Fund during the audit period. Court liabilities of $66,298 exceeded the Justices' total available cash of $31,855 as of October 16, 2014, resulting in a shortage of $34,443. This was allowed to occur because the Justices did not provide proper oversight of the Court's financial activity. They did not segregate the financial duties of the full-time Court clerk, who controlled all phases of cash collection, and did not ensure that monthly accountabilities were performed. Further, the Board did not consistently conduct, or retain anyone to conduct, the required annual audit of the Justices' records, and did not question the lack of monthly accountabilities. We also identified weaknesses in the internal controls over parking ticket operations. The Town has no procedures for controlling the inventory of unissued parking tickets, the collection and recording of fines or the periodic reconciliation of issued tickets to Court records. Our findings have been referred to the District Attorney's office and a criminal investigation is pending.

The District's internal controls over billing, collecting and enforcing water fees need to be improved. The water clerk manually enters readings from an electronic meter reader into the water billing system and generates bills without supervisory review. Additionally, the interest amount charged for late balances has not been approved by the Boards and was not charged in the billing quarter that unpaid balances were relevied. Further, the District did not reconcile the gallons of water purchased from NYC to the gallons it billed customers. For one billing quarter, the District was billed for approximately 1.1 million gallons more than it billed customers. As a result of these internal control weaknesses, the District may not be collecting all the revenue to which it is entitled.

We found that District officials employed budgeting practices that generated operating surpluses while simultaneously appropriating fund balance in the budgets. This caused fund balance appropriations to be unneeded. As a result, during the 2009-10 through 2013-14 fiscal years, the District's unassigned fund balance was 5.4 to 7.8 percent of the ensuing year's budgets, while the statutory limit for fund balance is 4 percent. In addition, District officials transferred moneys to the District's reserves without calculations or justifications for the funding levels in the reserves. Consequently, the amounts retained in two of the District's seven reserves were excessive, with balances that would pay related costs for several years. These ongoing budgeting practices resulted in taxpayers paying more than necessary to sustain District operations.

We reviewed the District's reported financial condition from 2010-11 through 2013-14 and found a steady decline in tuition revenue in each year. During this period, District officials managed to consistently decrease expenditures to offset the declines in revenues. However, we found that tuition accounts receivable records and the District's financial reports were inaccurate. For example, as of June 30, 2014, District officials reported accounts receivable of more than $5 million, which was not accurate because a $1.5 million tuition receivable payment collected in 2012-13 was incorrectly treated as a prior period revenue. In addition, in 2013-14 District officials inappropriately accrued $2.1 million in tuition revenue based on tuition rates that were not approved and tuition that was not actually billed until the 2014-15 fiscal year. As a result, the District reported a small operating surplus that year, instead of an operating deficit of approximately $2 million, which made the District's reported financial position appeared better than it actually was.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable, except for appropriations for retirement, contingency appropriations, an allowance for uncollectible taxes and the potential impact of settlements of expired collective bargaining agreements.

Based on the results of our review, generally we found that the significant revenue and expenditure projections in the proposed budget are reasonable. The County lacks a plan to reduce its outstanding general fund deficit, projected to be approximately $24.7 million at the end of the 2015 fiscal year. The 2016 proposed budget includes estimated revenues of $4 million from the sale of property, which is non-recurring revenue. The 2016 proposed budget includes estimated revenues of $1.8 million for chargebacks to other governments for costs associated with out-of-county community college costs, which is in dispute. The proposed budget also includes a separate line item of $2.5 million, which is the estimated salary savings expected for employees who participate in the early retirement incentive. Officials will have to monitor this closely and take necessary actions to reduce other appropriations if the early retirement savings are not achieved. The proposed budget also contains $30.4 million for payments due to the New York State and Local Retirement System; however, the minimum payment due for 2016 is $30.9 million. The possibility remains that the hospital and nursing home facility will not be fully closed by the end of 2015 as planned and the County will have to cover the associated operating costs which are not in the current budget. Finally, the County's proposed budget exceeds the property tax levy limit.

The City's proposed budget, while generally reasonable, needs improvement to make it a better tool for prudently managing the City's resources. For example, the City's proposed budget includes estimated revenues related to the sale of real property, franchise fees, sales tax, advanced life support charges and sewer rents which may not be realized. In addition, the City's proposed budget includes appropriations for retirement system contributions that may not be sufficient, does not appropriate enough money for contingencies to provide adequate flexibility to pay for unanticipated costs, provides only minimal funding for equipment and capital outlay and includes appropriations for debt service payments for debt that the City has not issued. Furthermore, we found that the City's proposed real property tax levy is not in compliance with the City's tax levy limit and the City has not adopted a local law to override the limit.

The Board generally did not provide adequate oversight of Company financial activities to ensure that the Company's resources are safeguarded. The Treasurer did not obtain Board and membership approval for all bills before paying them and did not retain adequate supporting documentation to demonstrate that all purchases were for a valid Company purpose. Also, the Treasurer's records were incomplete and inaccurate, and he did not always deposit all Company receipts and cash advances in a timely manner. Furthermore, the Treasurer's monthly reports did not provide sufficient information for the Board to adequately monitor the Company's operations and financial condition.

During fiscal years 2011-12 through 2014-15, the District annually appropriated an average of $9.1 million (65 percent) more in fund balance than what was actually needed to fund operations. This practice allowed the District to circumvent the 4 percent statutory limit imposed on the level of unrestricted fund balance by a range of 4.9 percent to 6.9 percent. For example, in 2013-14, the District appropriated $9.4 million more in fund balance than was needed to fund operations. Furthermore, the District overfunded three reserves by approximately $5.6 million (66 percent), incorrectly recognized certain liabilities by $1.2 million (92 percent) and accumulated $905,606 in the debt reserve as of June 30, 2014 from interest earnings on capital projects. Consequently, the District accumulated approximately $17 million in excess funds as of June 30, 2014. This amount is 11 percent of the 2014-15 budget.

The former Treasurer did not maintain appropriate, accurate, complete or timely financial records and reports. The Board did not perform an audit of the Treasurer's records for the 2011, 2012 and 2013 fiscal years until April 2014. Upon performing the audit in April 2014, the Board realized the accounting records were in poor condition and had to be reconstructed. The former Treasurer subsequently resigned on April 22, 2014 and the Board appointed a new acting Treasurer. Since this time, the current Treasurer and Board have been continually developing and improving the Department's financial processes and procedures. Although oversight and documentation procedures have improved over the course of our audit period, the Board still needs to formalize its improved procedures with written policies and procedures and make additional improvements to adequately safeguard the Department's assets.

The District is serving nutritious meals to its students. However, the meals cost more to prepare than the revenue generated by the meal sales. In addition, the District's productivity level for meals per labor hour (MPLH) is within the industry averages. Although the industry averages may not always be achievable given certain District conditions, District officials can use the industry averages to monitor operations and work towards increasing productivity, when necessary. The District reported deficits in its school lunch fund totaling more than $14,000 over the last three fiscal years. Although the fund had approximately $21,500 in assigned unappropriated fund balance at the end of the 2013-14 year, minimizing deficits in future years will be critical. Ultimately, if fund balance is no longer available, the fund will require a subsidy from the general fund. This subsidy could materially affect the tax levy growth allowed under the New York State Real Property Tax Cap Law.

Based on the results of our review, we found that revenue and expenditure projections in the proposed budget are reasonable. The amount of appropriated fund balance in the general and highway fund budgets represent 21 and 50 percent, respectively, of the projected year-end fund balance. The continued reliance on appropriated fund balance to fund Town operations will eventually deplete fund balance and adversely affect the Town's financial condition. The Town's preliminary budget complies with the property tax levy limit.

The Board has not adopted written computer-related policies to address user access, remote access, password security and management, or data backups. Additionally, Village officials improperly assigned administrative privileges, created generic user accounts and provided excessive access rights to the Village's financial and real property tax software. For example, there are six generic user accounts on the Village's computer network, including two with administrative access. In addition, the Treasurer has administrative rights to the financial software giving her the ability to add new users, create and change user access rights and make or delete evidence of payments without restriction. Further, the Clerk has supervisor level access to the real property tax software, giving her the ability to add, modify and delete property tax information, and add, modify and delete user accounts. Finally, the Board has not adopted a comprehensive disaster recovery plan. As a result of these control weaknesses, Village officials' ability to determine responsibility for system activities is limited and the Village's IT system and its data are subject to an increased risk of corruption, loss, or misuse.

The Board needs to improve its oversight and management of the Village's budgeting and financial operations. The Board did not conduct or provide for an annual audit of the Treasurer's records and reports, which places the Village at an increased risk for errors and irregularities to occur that could go undetected and remain uncorrected. In addition, the Board has not adopted policies and procedures governing the budget process or a fund balance policy establishing the level of fund balance to maintain. As a result, at the end of 2014-15 the general fund had unrestricted fund balance that exceeded a reasonable cushion for the next fiscal year. In fact, unrestricted fund balance was 56 percent of 2015-16 appropriations. Finally, the Board has not developed a comprehensive multiyear financial plan. As a result, Village officials are less able to assess various approaches to address financial issues, such as using surplus fund balance to finance operations or funding reserves for future capital expenditures to provide transparency to taxpayers.

The City's proposed budget includes contingency appropriations totaling $305,828, an amount that represents only 1 percent of total anticipated general and water fund expenditures. Other classes of local government are allowed by law to set the maximum dollar amount for contingency accounts at 10 percent of the fund budget, which can serve as a general guideline for the City. The City has three different contracts with employee union which have expired and has not included the potential financial impact of contract settlements in the proposed budget. The proposed budget also does not include a tax overlay, which could create a shortfall in 2016. The proposed budget includes overtime appropriations for police totaling $200,000, which is less than the $338,526 expended for the first nine months of the current year. Further, the water rent revenue estimate could be overstated by approximately $400,000. The Common Council will adopt a local law to override the tax levy limit in 2016.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The Town's 2016 tentative budget complies with the property tax cap levy limit.