The Board and District officials did not effectively manage the District's financial condition by ensuring budget estimates were reasonable. The Board did not adopt realistic budgets based on historical costs and trends. As a result, the District overestimated expenditures by a total of $33.5 million from July 1, 2011 through June 30, 2014. Additionally, the District consistently appropriated fund balance that was not needed to finance operations, in effect exceeded the statutory limit on unassigned fund balance. Finally, District officials used surplus funds each year to finance reserves instead of funding reserves through the annual budget process, which would have been more transparent to taxpayers. The Board made transfers into its reserves totaling about $10.6 million from unrestricted fund balance without sufficiently informing taxpayers of its intent to do so.

Generally, we found the Board provided adequate oversight of Library finances. However, the Board did not audit and approve claims from the private funds account prior to their payment. This increases the risk that errors or irregularities would not be detected and corrected.

The Justice generally ensures controls are in place to safeguard moneys. While the Justice has adequate controls for fines and fees collected by the Court and all moneys collected are properly accounted for, the Justice does not ensure the clerk is pursuing collections of unpaid traffic tickets. As a result, the Court has 17 unpaid tickets in our scope period that could represent $2,900 in uncollected fines and fees. In addition, although the Board performs an annual audit of the Justice's records, it could be enhanced by including a review of documentation such as case files and bail records in addition to the bank statements and the JCF reports that are already included in the audit.

The Board did not provide adequate oversight and management of the Town's financial operations within the townwide (TW) general fund. The Board placed a combined total of $579,200 into a building reserve during 2010 and 2011 that was not directly apparent to taxpayers. Also, Town officials have not developed policies and procedures to govern budgeting practices and the level of fund balance to maintain and have not communicated long-terms plans for the building reserve to taxpayers. The Supervisor did not provide the Board with monthly budget status reports, which contributed to the Board's underestimation of revenues and overestimation of expenditures in the TW general fund from fiscal years 2009 through 2013. These practices caused consistent positive budgetary variances totaling $670,000 for the five years reviewed. While these variances should have caused significant increases in unexpended surplus funds, the Town extensively funded the building reserve from fiscal years 2009 through 2011, which kept fund balance at reasonable levels. Further, the Board appropriated more fund balance than was actually available for 2013, 2014 and 2015, which led to fund balance deficits totaling $80,160 in 2012, $161,456 in 2013 and $136,153 in 2014. Town officials must now develop a plan to improve the Town's financial condition.

The townwide (TW) general and the (town-outside-village) TOV highway funds had operating deficits all four years totaling $45,200 and $127,400, respectively. The TW highway fund had operating deficits in three of the four years totaling $256,200, while the TOV general fund had an operating deficit in the 2014 year totaling $26,400. While these deficits were generally less than what was budgeted, they have led to declining fund balances within all of the funds. Specifically, the TW highway and TOV general funds ended 2014 with deficit fund balances of $26,900 and $2,100, respectively. Furthermore, the TW general and TOV highway fund balances are a small percentage of the next year's budget and, if the current revenue and expenditure trends continue, we project their fund balances will enter into deficits by fiscal year 2017. These deficit fund balances will ultimately impact the services the Town can provide. Although the Board members followed their procedures when developing budgets, including obtaining Department head “wish lists,” and discussing individual budget lines at budget workshops, they consistently adopted unrealistic budgets. Instead, they relied on one-time revenues to fund operations and used budget estimates that did not reflect historical trends. Additionally, the Board and Department heads were not monitoring and controlling the budget throughout the fiscal year.

The Board and District officials did not ensure that unexpended surplus funds were reasonable for the five-year period ending June 30, 2014. District officials planned to use a total of $17 million of fund balance during this period to finance District operations, an average of $3.4 million each year. However, they only used $2.4 million of the appropriated fund balance, or 14 percent of the total amount appropriated. In addition, the District overstated encumbrances by more than $6.5 million between the 2009-10 and 2013-14 fiscal years. As a result, the unexpended surplus fund balance exceeded the statutory maximum of 4 percent of the ensuing year's budget for each of the five years. In addition, although the District has a cellular telephone (cell phone) policy, officials do not have proper procedures in place to effectively manage cell phone use and acquisition. The District purchased cell service, cell phones and accessories totaling $45,877 during the audit period. We reviewed five payments totaling $28,741 and found that the District paid additional charges and fees of $3,277. Because the Board is not ensuring that officials adhere to the policy in place, the District incurred additional and unnecessary costs.

Because the Library's purchasing policy does not address procurements that are not subject to bidding laws, Library officials did not always seek competition when procuring goods and services. While the use of competition for such procurements is not legally required, the law does require a policy to be established; and best practices indicate that the use of competition helps ensure the most prudent use of taxpayer moneys. We found that Library officials paid a professional service provider and an insurance broker a total of $90,912 without soliciting competition. Further, Library officials did not solicit competitive bids when procuring services costing $134,076; and did not solicit competition when procuring goods and services from 10 vendors who were paid a total of $28,551. As a result, Library officials and taxpayers have limited assurance they obtained goods and services at the most reasonable cost.

The Board allowed budget line items to be routinely over-expended and budget transfers to be made after the end of the fiscal year, rather than throughout the year when needed. In addition, the Board did not properly audit all individual claims; we found instances of “confirming” purchase orders prepared after items were already purchased, claim vouchers approved by department heads after checks had been prepared, and a payment to a professional service provider without adequate documentation to support the claim. In addition, while the Court clerk does maintain up-to-date accounting records, the Justices and Village officials did not establish proper controls to ensure the Court clerk properly accounted for all issued parking tickets. For example, no one reconciled the issued tickets that the Court received from the Police Department with the entries recorded in the Court's financial software, resulting in eight tickets being unaccounted for with no supporting documentation. Further, the Justices did not provide adequate oversight of the Clerk's responsibilities, which were not adequately segregated. While the Justices review, sign and date the monthly bank reconciliations and reports prepared by the Court clerk, these functions alone do not adequately address the control weaknesses in the collection and recording of parking ticket fines. Furthermore, accountability for recording the Court collections is compromised because the Court clerk and assistant Court clerk share a username to access the Court's financial management software.

We found no material discrepancies with the accounting for moneys received by the Court or the accuracy of bank deposits. However, the Justices did not ensure that accurate monthly bank account reconciliations were being performed by the clerk, which should be part of their month-end accountability analysis. Furthermore, we found 20 cases were not properly closed out in the Court's computerized accounting system and the clerk could not locate 21 pending case files to allow us to determine whether the case files agreed with the Court's accounting system. Additionally, the Justices did not deposit all collections in a timely manner.

We found that the Committee could improve its oversight of the Company's financial activities. Although the Committee has adopted Company bylaws, which include cash disbursement policies, we found them to be inadequate. Even though the Company's bylaws specifically detail the audit committee's responsibilities and the Treasurer's duties, these guidelines did not adequately segregate or provide oversight of the Treasurer's duties. The Treasurer controls all aspects of the cash receipts and disbursements processes without any oversight or mitigating controls, such as independent review of his work. At each monthly meeting, the Treasurer provides a balance sheet listing the cash balance for three of the Company's bank accounts, check registers and cash receipt journals, where necessary, to the Committee and membership. Even though the Treasurer provides these financial reports at the monthly meetings, he informed us that no one discusses these reports during the meetings. Further, the President did not appoint a three-member audit committee to review the Treasurer's work during our audit period. In addition, the Committee has not adopted policies or procedures for financial operations such as conducting fundraising activities, purchasing goods and services, and processing claims.

The Board did not establish and maintain an environment committed to accountability, competence and transparency due to its lack of policies, guidelines and monitoring. The Board didn't ensure that the Secretary included sufficient detail in the Board's meeting minutes, did not comply with Town Law relating to Commissioner elections and did not properly document relevant payroll information. In addition, the Board-adopted policies related to food purchases and travel were not comprehensive and not adhered to by District employees and officials. The District also has no policy regarding credit card usage. The District paid 665 non-payroll expenditures totaling $1.3 million during the audit period. We reviewed 177 food, travel and credit card expenditures totaling $86,337 and found that the Board did not ensure that these expenditures were adequately supported and valid prior to approving them for payment.

The Board needs to improve internal controls to effectively protect the Town's computer system and data. Specifically, the Board needs to review user access and restrict administrative rights to those who need such rights to perform their jobs. The Board also has not provided Town personnel with a copy of the acceptable computer use policy. Furthermore, the Board has not developed computer security and disaster recovery plans, and has not established a breach notification policy or a comprehensive inventory policy for all hardware and software. As a result of these weaknesses, there is an increased risk of loss of critical data and interruptions to Town operations.

The Board did not properly plan and provide oversight and management of the Village Hall building project.

The Board has not taken sufficient action to initiate new projects and encourage the creation or expansion of new business, significantly affecting CIDA's viability. CIDA has undertaken no new projects since 2012. The Board has contracted with a consultant to, among other things, “create and maintain an outreach program whereby the Consultant can regularly solicit new, existing and potential businesses/companies to apply for the Agency's programs.” This Consultant was paid $1,800 each year for his services, for a total of $5,400 during our audit period. However, the Consultant does not provide any regular written documentation or reports to support any work he performs, and we could not find any indication that CIDA or the Consultant were working to bring in new projects. The lack of new projects has led to a significant decrease in revenues. However, the Board has not actively pursued new sources of revenue or taken sufficient action to reduce expenditures. The Board continues to budget for application and administrative fee revenues of $8,900, while interest revenue has been budgeted at $1,500, when actual revenue has not exceeded $85. In addition, CIDA's expenditures, mainly for consulting services, continue to increase. These practices have led to operating deficits in 2013 and 2014, totaling $10,097 and $10,583, respectively, and a decrease in fund balance from $50,476 as of December 31, 2012 to $29,796 as of December 31, 2014. We anticipate a 2015 operating deficit of $10,083, which would reduce fund balance to $19,713. Should these operating deficits continue, CIDA will deplete its fund balance by December 31, 2017, which would threaten its ability to continue operations.

Overall, the Board properly managed the Town's finances as it generally adopted realistic budgets. While the Town's operating funds have not recently experienced any significant year-end fund balance deficits, the Board could improve its monitoring of the Town's financial condition, in particular the town-outside-village general and highway funds.

Cash receipts were not properly safeguarded and accounted for in the Treasurer's office. We identified weaknesses over the collection, recording and deposit of cash receipts. The Treasurer and her Deputy did not issue duplicate receipts for all transactions where no other evidence of receipt was available, no one completed a proper reconciliation of receipts to deposits and the Board did not provide the Treasurer with a secure location to keep receipts until deposit. As a result, there was a cash shortage of $2,167 in real property taxes over a two-year period. The missing tax receipts went undetected because the Treasurer did not properly reconcile real property taxes and the Board did not audit the Treasurer's records.

The Clerk-Treasurer did not complete accurate bank reconciliations. Numerous bank account balances did not reconcile to their corresponding cash balances in the accounting records and had total differences ranging from $4,437 to $6,514 per month. In addition, interfund loans were not accurately recorded which caused due to other fund accounts to exceed due from other fund accounts by $2,867 for the last three fiscal years. In addition, the Clerk-Treasurer filed the AUD late for 2011-12, and, as of August 31, 2014, had not filed the AUD for 2012-13 or 2013-14. Lastly, the Board did not audit, or have audited, the Clerk-Treasurer's records for 2012-13 and 2013-14. As a result, there is an increased risk that errors in the accounting records or mishandling of Village funds will occur and that the Board, taxpayers and other interested parties may not be able to assess the Village's financial operations and financial condition.

We found that the Treasurer generally maintained adequate financial records. However, although the Board receives monthly financial reports from the Treasurer, the Board did not provide instructions or deadlines to the Treasurer for the preparing and filing of the annual financial report. As a result, the Treasurer has not submitted the required annual financial reports to OSC for the 2010 through 2014 fiscal years. In addition, the Treasurer does not provide the Board with bank reconciliations for review and there is no evidence that the Board reviews bank statements and/or canceled checks. Further, the Treasurer does not provide the Board with a budget-to-actual report monthly. Without receiving such reports, the Board cannot effectively monitor the District's expenditures and make budget modifications as needed. We reviewed budget-to-actual reports for fiscal years 2012 through 2014 and found that the District overexpended its budget in both 2012 and 2013. We also found that the Board does not review cash receipts, bank statements, canceled checks or bank reconciliations while conducting the annual audit, causing the audit to be ineffective.

Town officials' failure to establish comprehensive written policies and procedures for processing payroll and maintaining leave time accruals resulted in a lack of segregation of duties and sufficient compensating controls. As a result, we found that four employees in 2013 and six employees in 2014 did not receive the correct gross pay. These employees had combined overpayments totaling $4,759 and combined underpayments totaling $852. In addition, State and federal income taxes were not withheld in accordance with employees' withholding allowance certificates and the proper amounts were not deducted for health insurance premiums from any of the employees' gross pay during our audit period. The Town also lacked comprehensive policies and procedures for water and sewer charges resulting in an overall lack of segregation of duties and compensating controls. As a result, we identified significant internal control weaknesses over billing, collecting and enforcing water and sewer charges. We found that nine of 50 billings (18 percent) were incorrectly calculated, resulting in four customers being underbilled by $343 and five customers being overbilled by $419. The Town was also not properly assessing penalties for delinquent accounts and all delinquent accounts were not properly relevied. As a result, the Town did not realize all potential revenues and did not properly enforce all delinquent accounts. Town officials also did not establish an adequate system of internal controls over transfer station cash receipts. We found that 23 transfer station tickets, valued at $315, were unaccounted for. In addition, we were not able to trace collections totaling $1,870 for 123 transfer station tickets that were recorded as sold to a corresponding deposit.

The Board did not ensure the Supervisor maintained up-to-date, complete and accurate records. Although the Supervisor provided the Board with accurate monthly budget-to-actual reports, the balance sheets included inaccurate account balances. For example, the July 31, 2014 highway fund balance sheet overstated liabilities by more than $76,000 because the Supervisor had incorrectly recorded a receipt. Further, bank reconciliations contained outdated deposits in transit and inaccurate transactions, including journal entries that should have been removed to reflect the actual cash balances in the accounts. Moreover, the last time the Supervisor filed the annual financial report was for the 2010 fiscal year and the tax levy limit calculation has never been filed since the inception of the property tax cap law for the 2012 budget year.