The Board has not developed adequate policies, procedures or financial plans to effectively monitor Town finances. Without established budgetary guidance and adequate financial training, the Board repeatedly adopted budgets that were not based on realistic revenue estimates and appropriated fund balance that was not used to fund operations. As a result at the end of 2014, the town-wide general and highway funds accumulated combined unassigned fund balance totaling more than $800,000. The Supervisor maintained accurate and up-to-date accounting records that were reconciled with the bank statements until June 2014. Since then the records have not been reconciled, which severely diminished the Board's ability to provide fiscal oversight. As a result, the Board was unaware of the Town's true financial position at the end of 2014 and increased the 2015 real property tax rate by 113 percent. In addition, the Board has not adopted a multiyear financial plan to address the use of fund balance to finance operations or formal plans for reserve funds already established. Finally, the Board did not perform an annual audit of the books and records of Town officials and employees who received or disbursed money in 2014.

On June 25, 2014, the County entered into a 17.5 year lease agreement for 28,000 square feet of office space known as the Wyoming County Agriculture Business Center of Excellence (Business Center). The Business Center is intended to house various County departments and functions for a lease payment of $389,480 per year. The Board did not demonstrate that it performed an appropriate cost analysis of the selected site, or considered alternative sites or options. At the end of the 17.5 years the County has the option to purchase the building for $1, totaling a potential cost of approximately $6.8 million. As a result, we estimate that the County may pay $1.8 million more than necessary over the next 17.5 years for this building. In addition, the County's procurement policy does not provide clear guidance for procuring and awarding professional service contracts or contracts for insurance coverage. We found that for seven of the eight sampled professional service contracts reviewed, totaling $2.8 million, the County did not provide any evidence that a competitive method, such as a request for proposal, was used when soliciting these services. Further, we found that the County has used the same insurance provider for over 20 years without soliciting quotes from any other providers. Finally, the Board has not adopted comprehensive written policies and procedures to safeguard cash collected at departments even after the apparent theft of approximately $90,000 of funds from the County Department of Motor Vehicles that went undetected for over a year due to lax controls and supervisory oversight.

The Town is currently experiencing severe fiscal stress. Cash on hand at December 31, 2014 was insufficient to meet the Town's ordinary operating demands and the Town's liability for income taxes withheld from Town employees was almost equal to the total cash assets of the Town. This cash flow crisis was caused by the sewer fund continually lacking sufficient revenues to finance operations. The sewer fund had an accumulated fund balance deficiency at the end of 2014 totaling $14,098 and owed the general fund more than $33,000 from current and previous years' interfund advances. These advances were not repaid at year-end, as required, and Town officials had no repayment plan in place. The Board also did not maintain fund balance at reasonable levels because it continually used fund balance to finance operations. As a result, fund balances were depleted requiring the Town to borrow money against future revenues and leaving the general and highway funds in a position where they can no longer support the sewer fund. To improve the financial condition of these funds, in 2015 the Board raised total real property taxes more than $50,000 (13 percent) from the prior year and increased sewer rates from $660 to $690 annually. However, these measures alone are not enough to return the Town to financial solvency because Town officials dramatically overestimated sewer revenue in the 2015 budget by including relevied sewer rents that were already recorded as receivable. To ensure the Town improves its fiscal health, the Board needs to develop a multiyear financial plan, adopt structurally balanced realistic budgets and develop a plan to repay advances to the sewer fund and resolve funding issues that meet the Town's needs and provide sufficient operating cash flow.

The District has contracts with 39 of 43 home school districts or counties stating the District will bill tuition monthly and payment is due within either 30 or 60 days. We reviewed all 82 invoices totaling $1,169,707 for September 2014 and March 2015 and determined that the District billed all of these amounts in a timely manner. In addition, 65 invoices (79 percent) totaling $1,051,780 were paid within 60 days; all but one of the invoices, totaling $9,325, had been paid by June 30. While the District has implemented procedures to ensure that nearly all current year invoices were collected within the fiscal year, it continues to record an accounts receivable balance of $859,227 consisting of amounts over 90 days past due as of June 30, 2015. Amounts due from Suffolk County totaling $847,663 for fiscal years 2000-01 through 2014-15 represent 99 percent of the accounts receivable. As part of the District's effort to collect the amounts due from Suffolk County, it issued a letter dated May 12, 2015 in which it reduced the amount due for years prior to 2007-08 by $275,522, leaving a past due balance of $572,141. The District continues to seek collection of the amounts owed by Suffolk County.

The Board did not adopt realistic and structurally balanced budgets and did not properly manage fund balance. The Board did not adopt a policy to determine the amount of fund balance to be maintained and adopted town-wide (TW) general fund budgets that relied too heavily on appropriated fund balance as a financing source. The Board did not require estimates of year-end fund balances to help determine the amount of fund balance to apply to the next year's budget. In addition, budget estimates for TW general fund expenditures were not reasonable and the fund relied on revenue anticipation notes to fund operations. As a result, the TW general fund balance declined from $358,728 at the beginning of 2012 to a deficit of $335,025 at the end of 2014. This deficit fund balance represents about 30 percent of the 2015 budgeted appropriations for this fund. In 2013, the Town suffered significant flood damage which contributed to the $258,758 deficit fund balance in the part-town highway fund at the end of 2013. The fund balance in this fund improved to $3,845 at the end of 2014, due largely in part to receiving federal funds. However, this fund balance represents less than 1 percent of the 2015 budget and it provides very little financial cushion for managing unforeseen events. Additionally, the Board has not developed a multiyear financial and capital plan to address the long-term priorities.

The Supervisor did not maintain complete, accurate and up-to-date accounting records and reports or provide adequate oversight of the bookkeeper during our audit period. The lack of oversight and the bookkeeper's failure to record all transactions in a timely manner and prepare monthly bank reconciliations caused the accounting records to be inaccurate and incomplete. As a result, the Supervisor could not provide the Board with sufficient monthly financial reports to allow it to adequately monitor and manage the Town's financial operations. The Supervisor also did not file the required 2013 and 2014 annual financial reports with the Office of the State Comptroller in a timely manner. In addition, the Board did not perform annual audits of the Supervisor's records.

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 is below the industry averages. Although the industry averages may not be achievable given certain District conditions, District officials can use the industry averages to monitor operations and work towards increasing productivity. In addition, the District reported deficits in its school lunch fund totaling almost $298,000 over the last three fiscal years. Although the fund had approximately $42,000 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.

The Board did not ensure that cash disbursements and receipts were properly accounted for and that Association assets were safeguarded and used for proper purposes because it did not include key internal controls in its adopted bylaws and other policies. The bylaws, last updated in May 2008, establish the Treasurer's financial responsibilities, but the Treasurer does not follow the minimal guidelines established. In addition, the bylaws do not require that an official review and approve Association invoices/bills prior to the Treasurer making payment. Further, the bylaws provide limited guidance on cash receipts procedures. The Board has not provided any guidance or adopted procedures for the Association's fundraising activities. The Board also did not provide adequate oversight of the Treasurer, who was responsible for receiving, recording and disbursing Association funds. The Treasurer does not maintain any accounting records and does not file required reports with the Board, the State Comptroller's Office or the Internal Revenue Service. Further, Association officials have not implemented necessary policies and procedures over the purchase and use of fuel, resulting in an apparent misuse of fuel by the Chief and an alleged theft of diesel fuel.

Adequate records and reports were not maintained to enable the Board to appropriately manage the District's finances. The Treasurer did not provide the Board with accurately completed bank reconciliations, monthly cash reports, up-to-date quarterly budget status reports and balance sheets in a timely manner. The Business Office did not always record revenues in a timely manner, and we found significant errors in the District's bank reconciliations, in addition to unsupported journal entries and uncorrected errors that perpetuated discrepancies in the accounting system. Additionally, the District did not repay interfund loans by year end, and certain funds were unable to repay interfund loans. Without accurate financial records and reports, the Board's ability to oversee the District's finances is diminished.

The District's main transportation contractor did not reimburse the District for all fuel used for non-District purposes. This occurred because District officials permitted the contractor to control the entire fuel accountability process. Consequently, the contractor ordered and used more fuel than was needed for District operations. Approximately 30 percent of the fuel purchased by the District and delivered to the contractor's tanks was not used for District transportation purposes and the contractor failed to disclose all of its non-District related fuel use to District officials. While the contractor reimbursed the District for the majority of this excess fuel, we estimate that the contractor still owes the District approximately $74,000 for fuel used for non-District purposes from July 1, 2013 through March 31, 2015. There is no authority for the District to purchase fuel for resale to private parties for the private party's own use. Furthermore, District officials did not verify fuel use calculations prepared by the contractor, which were not made according to contract terms, and ensure fuel was properly accounted for.

The Board needs to improve its budgeting process to properly budget for and monitor Town financial operations. The Board has not adopted policies and procedures or a long-term financial plan to govern the budget process or the appropriate level of fund balance to maintain in each fund. Lacking appropriate budgetary guidance, the Board adopted unrealistic budgets that relied heavily on the appropriation of fund balance as a financing source. In addition, the Board did not authorize a $100,000 interfund advance from the Town-wide (TW) general fund to the Town-Outside-Village (TOV) highway fund or ensure this advance was repaid within the year with interest, as required. At the end of 2014, the TOV highway fund had an accumulated fund balance deficiency of more than $23,000 and the TW general, TW highway, TOV general, water and sewer funds had fund balances that exceeded a reasonable cushion necessary for the next year, ranging from approximately 40 percent to more than 400 percent of next year's appropriations. In addition, the Board did not provide adequate oversight of the Supervisor's financial and recordkeeping duties. The Board has not adopted investment or procurement policies as required by General Municipal Law or ensured that Town officials implemented procedures to control the Town's financial operations. As a result, the Supervisor did not maintain adequate control over the Town's accounting records and adequately oversee the financial duties performed by the bookkeeping firm. In addition, the Board did not perform annual audits of the books and records of all Town officials and employees who received or disbursed money during the year.

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.