District officials adequately monitored the school's financial operations. However, the settlement of a tax certiorari claim and subsequent issuance of debt to pay the claim caused a decrease in the District's unassigned fund balance for fiscal year ending June 30, 2014. During the fiscal year ending June 30, 2014, a tax certiorari dating back to 2006 was settled, resulting in an unexpected $3 million payment by the District. The District had not included payments of tax certiorari judgments in the budget. The payment was financed mainly with a bond anticipation note (BAN) of almost $2.9 million until the issuance of long-term bonds. The District converted the BAN to long-term financing in the 2014-15 fiscal year. The result of issuing the BAN in one fiscal year and converting it to long-term financing in the subsequent year caused nearly a $650,000 deficit unassigned fund balance in the general fund as of June 30, 2014. Had the BAN been converted to long term financing in the 2013-14 fiscal year, the general fund unassigned fund balance as of June 30, 2014 would have been more than $2.2 million. The District's deficit unassigned fund balance as of June 30, 2014 resulted from the timing of issuing debt to cover an expense for which there was no budget appropriation. The impact of that transaction was reversed in the subsequent fiscal year and the District now shows a positive unassigned fund balance. The District estimates the general fund unassigned fund balance at June 30, 2015 will be approximately $2.3 million dollars.

During the audit period, the Village produced 54 million gallons of water at a cost of approximately $440,000 and generated revenue totaling approximately $388,000 but could not account for 22 million gallons (41 percent) of the water it produced. The Village billed customers for 30 million gallons and had authorized, unbilled usage of 2 million gallons, for a total of 32 million gallons of water recognized as consumed. This significant water loss occurred because the Board and Superintendent have not taken adequate steps to identify and reduce the unaccounted-for water within the Village's system. Village officials do not have written procedures for reconciling the water produced by the Village's water system to the amount billed. Annually, the Superintendent prepares a handwritten reconciliation comparing the total amount of water produced to the total amount of water billed to estimate the approximate water loss. However, he estimated the amounts of water used for municipal purposes and to flush the system − rather than actual usage − and did not develop a plan to address the causes of significant unaccounted-for water. Further, the Superintendent did not report the significant water loss that he calculated to the Board. As a result, the Board was unaware of the loss.

The District does not have written policies or procedures related to the preparation of the annual budget or the funding of reserves. As a result, the Board did not prepare District budgets in the format prescribed by OSC and based on reasonable estimates. Due to the unrealistic budget estimates, the District generated operating surpluses totaling $648,570 from 2010 through 2014. Of this amount, $620,984 was transferred to the District's reserves, in addition to $1.275 million appropriated through the budget process for the purpose of funding the reserves. Operating surplus and excess reserves result from the levy of excessive property taxes.

The Board adopted budgets from 2009-10 through 2013-14 that appropriated fund balance to finance operations. However, because the Board overestimated expenditures in those budgets, none of the fund balance that was appropriated was used in four of these fiscal years. As a result, the District's fund balance increased 13 percent from $10.7 million in 2010-11 to $12.1 million in 2013-14. Further, the District had three reserves totaling $5 million at the end of 2013-14 which were funded by transfers of surplus funds at year-end rather than through appropriations in budgets that were voted on by taxpayers. Of these, $2.9 million from the retirement contribution reserve accounts were excessive. With the inclusion of fund balance and excessive reserves, the District's fund balance has been in excess of the 4 percent allowed by law ranging from 6.65 percent to 10.59 percent. As a result, District officials may have missed the opportunity to accumulate less fund balance, reduce the tax levy and increase the transparency of the budgeting process.

The purpose of our audit was to determine whether school districts are adequately controlling access to their Student Grading Systems (Systems) for the period July 1, 2013 through May 1, 2015.

The District had 39 employees who retired, resigned or otherwise separated from the District during our audit period. We reviewed the terms of separation for each employee to determine those eligible for a separation payment and if the payments were properly calculated per Board-approved contract terms. We found 18 of the 39 employees were eligible for separation payments totaling $400,311. While these payments generally conformed to the terms of the written agreements, we did find the District paid an employee $15,895 that was not consistent with the written agreement, improperly paid Business Administrator B a separation payment totaling $1,777, and underpaid one employee $2,323. The result of these transactions was a net overpayment of $15,349.

The Town lacked comprehensive policies and procedures over water and sewer charges and, as a result, there were internal control weaknesses over the billing, collection and enforcement of water and sewer charges. The Clerk to the Supervisor performed all duties related to water and sewer charges without adequate oversight. In addition, the Town was not properly billing all parcels in the Westport Water District for operation and maintenance charges in accordance with the Board-adopted water code. As a result, the Town did not realize all potential revenues that it was entitled to. Lastly, the Board did not perform an annual audit of the individuals involved with billing, collecting and accounting for water and sewer charges.

We found that seven employees were paid $101,325 for unused vacation time without adequate leave time records to support the payroll calculations. For example, the former Deputy Mayor and Budget Director were paid $50,001 and $40,653, respectively, with only a memo from the former Mayor stating the amount of vacation time available and a calculation of the separation payment. City officials also need to improve the internal controls over the payroll process. The City's payroll recordkeeping processes are not consistent in all City departments. We found instances where time records were not kept, salaries did not agree to authorizations and employees in the Department of General Services (DGS) were not working their scheduled time by leaving before the end of their work day. As a result, the City could potentially overpay its DGS employees by approximately $124,000 due to an informal practice of Department management allowing employees to punch out eight minutes early each work day.

We reviewed 25 projects totaling approximately $535 million and found deficiencies in NCIDA's evaluation and approval of businesses seeking IDA benefits, its determination of benefits provided and its subsequent monitoring of the businesses for compliance. For example, the cost-benefit analysis (CBA) information prepared for each proposed project did not include a CBA ratio calculation, and NCIDA officials did not establish any policy or procedure to define the information or explain how a CBA ratio could be calculated and applied in the evaluation process. Therefore, evaluation criteria may not be consistently applied, and the basis for approval or rejection of businesses may not be clear. NCIDA officials also did not require periodic reporting of necessary information from businesses or verify the information that was provided, and therefore did not adequately monitor projects to determine if goals were met or remedial action was needed. As a result, PILOTs totaling $69,513 were billed incorrectly. Further, NCIDA under-reported inaccurate PILOTs totaling a net of $166,114 on its annual report to the New York State Authorities Budget Office for the year ending December 31, 2013.

TCIDA had no employees and instead the Board relied on Tompkins County Area Development, Inc. (TCAD) employees to carry out TCIDA's mission without making independent judgments. Although the Board approved the IDA projects submitted to it, the Board did not provide adequate oversight during its project approval process. Therefore the Board could not be certain if TCAD staff submitted all projects for its approval and projects could have been given benefits without its knowledge. Additionally, the Board was not sufficiently involved in monitoring various aspects of the projects. Although three businesses did not meet their job creation goals, the Board did not formally document its decision not to recapture benefits. Further, two local taxing authorities did not bill two businesses enough for PILOT payments. As result, the businesses were underbilled by more than $26,000 and the Board was unaware that, as a party to the PILOT agreements, it was responsible for overseeing this process. Lastly, the Board did not review or approve the required annual reports to ensure accuracy or completeness. As a result, the Board cannot be sure that the community is receiving the expected economic benefits.

We found that WCIDA did not adequately evaluate, approve or monitor projects, and did not properly bill for administrative fees. The Board did not consistently follow criteria established in the UTEP or compare submitted project applications to such criteria. WCIDA officials also did not ensure that all projects were permissible IDA projects in accordance with statutory requirements, and did not request sufficient data or verify the data reported by projects annually to evaluate project performance. Therefore, the Board cannot be assured that the community is receiving the expected benefits or that WCIDA is collecting all revenue to which it is entitled.

Commission officials are effectively managing financial operations. The Board and managers have developed a framework for the five key systems to effectively manage financial operations. We commend Commission officials for implementing adequate controls over budgeting, billing, cash receipts, purchasing and cash disbursements to provide for the effective management of the Commission's financial operations.

We found that the Board and District officials have established adequate online banking internal controls to ensure sufficient protection of the District's assets. The Board adopted an online banking policy that authorizes the Treasurer and Deputy Treasurer to perform online banking transactions with the oversight of the Business Manager. The District's banks only allow transfers to be made between accounts at the same bank. If the Treasurer initiates a wire transfer to an external bank account the bank calls the Business Manager for approval before processing the transaction. The District's internal procedures also require the Business Manager or Superintendent to sign-off on a transfer of moneys form, indicating approval prior to the transfers being initiated. We reviewed online banking transfers and wires for two months and found that all 35 transactions were approved by the Business Manager or Superintendent prior to transmission. Furthermore, both of the District's banks send the Treasurer an email confirmation when a transfer is completed.

We found that BOCES can manage its software more effectively and efficiently. The Communication and Technology Services (CaTS) and Assistive Technology departments maintained incomplete software inventory lists that did not contain all software programs used by BOCES staff or identify the number of purchased licenses for each installed program. In addition, the CaTS department did not formalize a plan or practice to regularly review BOCES computers to ensure that installed software is appropriate and properly licensed. As a result, we identified 62 software applications with 139 installations on BOCES computers that were not business- or academic-related, including coupon applications and those related to gaming. Also, we found that for 264 installations of 21 programs installed on BOCES and/or participating district computers, BOCES either did not have an adequate number of licenses for these installations or did not have sufficient documentation to provide evidence that it had purchased licenses for these installations. However, we commend BOCES officials for achieving cost savings by entering into an agreement with a software provider that has resulted in an estimated annual savings of $22,000.

We found that the Treasurer does not prepare monthly financial reports for distribution to the Board for its review. Therefore the Board cannot properly monitor actual revenues and expenditures with the adopted budget. Furthermore, the Director and Board President receive quarterly budget-to-actual reports from the Buffalo and Erie County Public Library System (System), but these reports only include System-paid expenditures and are not distributed to all Board members. A senior clerk updated a spreadsheet of Library revenues and expenditures monthly. This spreadsheet was shared with the System, however, it was not reviewed by anyone at the Library. In addition, although the Board appoints a Treasurer annually, it has not outlined the Treasurer's duties in the bylaws, as required by the Handbook. Therefore, the Treasurer was not aware that she should be preparing a monthly financial report, or that the System sent a quarterly report to the Director.

We found that although the Board has developed a procurement policy, the corresponding regulations do not provide adequate guidance for seeking competition when procuring professional services. The regulations do not indicate when, or at what monetary threshold, it is appropriate to use written request for proposals, written quotes or verbal quotes. Additionally, although the policy does require documentation be maintained, the corresponding regulations do not outline the specific documentation requirements to be used during the solicitation process, including documentation for the decisions made. We reviewed the District's procurement of services from 21 professional service providers totaling $1.3 million. We found the District properly sought competition for seven providers, with total expenditures of $820,953, including the procurement of the District's external auditor as required by law. However, the District did not properly seek competition for 14 professional service providers totaling $477,235.

The current Supervisor did not maintain accurate and complete accounting records or ensure that the Board was provided appropriate financial reports. Additionally, the failure to correct accounting errors in a timely manner and poor accounting records have created an environment where the Board cannot effectively assess or monitor the Town's financial condition. For example, the current Supervisor made adjustments to the accounting records, including cash and fund balance accounts, during 2012 in an attempt to correct errors. As a result, improper transfers of over $125,000 were made among Town funds. The current Supervisor also did not record the independent auditor's adjustments of more than $188,000 in a timely manner to correct receipts that were misclassified between the general town-wide and the highway part-town funds causing taxpayer inequity. These adjustments included a 2012 audit adjustment of approximately $165,000 and a 2013 audit adjustment of approximately $23,000 that was not recorded in the accounting records until February 2015. Finally, the current Supervisor did not maintain trust and agency fund records in 2012 or 2013. In addition, the current Supervisor did not accurately record trust and agency activity from January 1 through April 30, 2014, record any such activity after April 30, 2014 or compare the accounting records with the reconciled bank balances. As of December 31, 2014, funds held in the trust and agency bank account totaled approximately $20,000.

We commend the Board for establishing and implementing strong internal controls over the Authority's billing and collection process. The controls in place include formal and informal procedures that provide adequate supervision and guidance to Authority staff involved with generating monthly bills, collecting payments, preparing bank deposits and reconciling customer accounts.

The District should improve controls over payroll disbursements. District officials did not adequately segregate payroll duties or establish sufficient compensating controls. The Deputy performed all steps in the payroll process, which included entering and modifying employee information, salary information, payroll deductions and withholding amounts in the District's accounting software program. In addition, the Deputy prepared the monthly payroll account bank reconciliations. All the disbursements we reviewed were made to bona fide District employees and accurately calculated in accordance with applicable collective bargaining agreements and Board approved pay rates. Generally, payroll withholdings were accurate. However, because District officials did not establish adequate internal controls over payroll and allowed the Deputy to control all facets of the payroll process without appropriate oversight, there remains a risk that errors or inappropriate transactions could occur and not be detected or corrected in a timely manner.

The District's controls over the activity fund were not operating effectively. The Board did not ensure that District officials implemented and enforced its policy governing the operations of the activity fund. Consequently, we found that 27 of 30 collections totaling $20,029 that were remitted to the central treasurer for deposit did not have adequate supporting documentation. In addition, six of seven student treasurers' ledgers did not agree with the central treasurer's ledger. The failure to maintain and oversee the activity fund in accordance with the Board's policy increases the chance that extra-classroom activity money could be lost or misused.