Key controls for payroll processing were not appropriately designed and operating effectively. Although the City had properly segregated payroll duties, management oversight was lacking. The Council did not establish written policies and procedures for preparing and disbursing the City's payroll or for the maintenance of timekeeping records. For example, City officials did not compare processed payroll registers to the approved time records. Further, departmental timekeeping processes used were not consistent. For example, employees in the Department of Public Works used a time clock and completed manual time sheets, while Fire Department employees' time records were prepared by the shift supervisor and the Fire Chief. We also found that time records for department heads were not reviewed or approved by the Mayor before being submitted to the Treasurer, and only some department heads signed employee time records to document their approval. Although our testing of payroll transactions did not reveal any material discrepancies, inadequate internal controls increase the risk of the City making unauthorized payments or employees receiving pay for unauthorized time not worked.

District officials adequately monitored the District's financial condition to maintain fiscal stability. During the period 2009-10 through 2013-14, accumulated fund balance in the general fund increased from $6.6 million for fiscal year 2009-10 to $9.8 million for fiscal year 2013-14. Preliminary results of operations for the 2014-15 fiscal year and District officials' projections showed that the District could have $9 million in unexpended surplus fund balance at June 30, 2015. District officials plan to restrict $5 million of this amount and plan to assign $2 million towards the 2015-16 budget. This would leave an unassigned surplus of approximately $2 million, which represents about four percent of the 2015-16 budget.

The Board did not implement adequate controls over the Department's financial activities. Although the Board has adopted Department bylaws, we found them to be outdated and inadequate. The bylaws do not specifically detail the Board's responsibilities and the Treasurer's duties. In addition, the guidelines did not adequately segregate or provide for oversight of the Treasurer's duties. Further, the Board did not adopt a code of ethics or policies and procedures for financial operations such as cash receipts and disbursements, procurement or information technology. As a result, the Board did not provide adequate oversight of Department financial activities and the Treasurer did not have sufficient guidance to properly perform her duties.

Town officials were unable to effectively monitor Town's financial operations and ensure the fiscal stability because the Town's financial accounting system was inadequate and the Town's accounting records were inaccurate and incomplete. Additionally, the Town's accounting records did not support the amounts reported to the State Comptroller, including more than $850,000 in fund balance variances. Further, monthly bank reconciliations were not properly performed. As a result, Town officials do not have adequate assurance that all funds received are properly recorded and accurately accounted for. We found the Town could not account for almost 24 million gallons of water valued at $30,900. To address this water loss, Town officials plan to replace water meters and locate and repair water leaks and were notified that a NYS Environmental Facilities Corporation grant was approved to help finance these improvements. We also found the Town's allocation of personnel service costs between the water and sewer district funds was not made based on reasonable methodologies. As a result, Town officials cannot be assured that the water and sewer funds are operating efficiently.

We found the District has not developed a formal reserve plan, appears to have overfunded the unemployment reserve, and did not have proper documentation for the establishment and use of certain reserve funds. We did find the District was transparent in its communication of the capital project prior to voter approval and was able to undertake it with proper voter authorization. In addition, the purchases for the capital project were generally within its scope.

The Board and District officials need to improve controls over the District's information technology (IT) assets. The Board did not establish adequate IT policies and procedures. District officials did not maintain software inventories and the hardware inventory records were not accurate and up-to-date. We also found that service level agreements for IT consultants do not adequately identify who is responsible for various aspects of the District's IT environment. Furthermore, we identified sites in the web filter that were not reviewed for actual content. As a result, the Board does not have adequate assurance that the District's IT assets are secure.

We found that Town officials generally adhered to GML for purchases of goods and services subject to competitive bidding requirements; however, officials did not always follow the requirements of the Town's procurement policy for purchases requiring quotes. In addition, during the time that there was no Comptroller, the Town did not establish an effective claims auditing process as the Board, as a whole, did not audit claims. Instead, we found that the Town's computerized purchasing system only required one Board member or the Supervisor to approve each claim. The Board would then be provided a list of the “approved” claims for its review and approval for payment. Furthermore, we question whether the Board or the Comptroller conducted a thorough audit because the electronic claims generally did not include enough documentation to determine adherence to the Town's procurement policy.

Library officials need to improve the cash disbursement process to ensure that cash disbursements are properly recorded, supported and for valid Library purposes. During our audit period, the Treasurer paid 365 claims totaling $212,327 from eight Library bank accounts. The Board did not audit and approve any cash disbursements made from the Library's checking account before payments were made. Instead, the Board approved a list of vendor and payment amounts without any supporting documentation at the next month's Board meeting after the Treasurer already paid them. Further, the Director had sole access to the Library savings and money market bank accounts and withdrew more than $37,000 from these accounts. The Board did not audit or otherwise authorize these withdrawals and the Director did not record them in the accounting records. In addition, the Treasurer relinquished custodial control over Library bank accounts by allowing service providers to automatically deduct funds directly from the Library's checking account to pay for the Director's retirement contributions and the Library's phone and utility services. Finally, because Library officials did not ensure that all cash disbursements were properly included in the Library accounting records, the Library's 2013-14 annual financial report did not include all of the Library's expenditures.

District employees only used leave time to which they were entitled and unused leave payouts were generally made in accordance with collective bargaining agreements and individual employment contracts. However, record keeping procedures could be improved to reduce the risk of leave time being used or paid out for which employees are not entitled.

We found the Board generally provides adequate oversight of District financial activities, but should make certain improvements. The Board has adopted a code of ethics and a procurement policy, as required, but not an investment policy. Additionally, the Treasurer performed monthly bank reconciliations but did not bring the bank statements containing the reconciliations to Board meetings for the Board's review. Further, the District does not get copies of canceled check images, which Board members should compare with the abstracts (lists of claims to be paid) to ensure that District funds are used for legitimate District expenditures. Lastly, the Board did not complete, or contract with an independent accountant to complete, an annual audit of the Treasurer's books and records.

Village officials did not always use competitive methods for purchasing goods and consumable products. As a result, the Village paid $4,126, or approximately 11 percent, more for fuel than necessary. The Board has adopted a procurement policy that provides guidance as to when items must be competitively bid and when written or verbal quotes should be obtained for purchases not required to be bid. The Village's purchasing policy required verbal quotations from vendors for purchase contracts between $250 and $2,999 and written quotations for purchase contracts between $3,000 and $9,999. However, the policy did not address changes in GML, resulting in a lack of guidance during our audit period for certain purchases that were no longer subject to competitive bidding. The Village updated its procurement policy in June 2014 to include more guidance and a specific number of quotes for purchases falling below the competitive bidding thresholds. The policy also requires documentation and an explanation when a contract is not awarded to the lowest bidder or quote. The Board did not ensure that Village officials complied with the procurement policy and, as a result, goods and services were not always procured in the most prudent and economical manner.

Village officials, including the Village Treasurer, did not adequately monitor the Village's financial operations. As a result, general fund balance decreased from approximately $564,000 at the end of 2011-12 to less than $156,000 at the end of 2013-14 (73 percent) due to operating deficits primarily caused by underestimated budget appropriations. The fund balance decline ultimately led to an accumulated unassigned fund balance deficit of approximately $26,000 as of June 1, 2014. Based on our projections, the Village may incur an operating deficit for 2014-15 that, if realized, will further increase the accumulated unassigned fund deficit. Village officials consistently underestimated expenditures and did not have enough contingency funds to pay for the excess expenditures. Additionally, the Village's 2014-15 adopted budget was not structurally balanced because Village officials intended to finance operations by using $150,000 more in fund balance than was available. Further, Village officials did not make budget modifications when necessary and monthly financial reports provided to the Board were inadequate. Finally, the Board has not developed a comprehensive multiyear financial plan.

The 2015-16 budget relies on nonrecurring funding of $14 million which will not be available in future years. The City continues to rely on fund balance to close gaps in the budget. If police overtime savings are not realized, the City would potentially be over-budget by as much as $2.1 million based on the 2014-15 fiscal year overtime costs. The City plans to borrow up to $13 million for tax certiorari settlements in the 2015-16 fiscal year. With the 2015-16 budget, the City will have exhausted 88.65 percent of its taxing authority and the City's ability to increase property taxes may be limited in future years if property values do not increase. The City's outstanding debt has grown almost 12 percent and the City's debt service payments have risen 52 percent over the last 10 years.

Library System officials did not seek competition in accordance with General Municipal Law (GML) when making purchases on behalf of its member public libraries. In addition, Library System officials have not adopted a purchasing policy. Consequently, Library System personnel have no guidance when making purchases. We found that Library System officials purchased approximately $210,000 of computers and related equipment and warranties without seeking competition. These purchases included 289 computers and 110 various computer accessories and warranties for member public libraries and would have been subject to the requirements of GML if the member public libraries had purchased the computers and related equipment on their own.

The Board and Village officials' failure to perform procedures as directed by the Board-adopted payroll policy and the Village's personnel booklet and failure to establish comprehensive written policies and procedures for leave time accruals has resulted in a lack of segregation of duties and a lack of sufficient compensating controls. As a result, employees received compensation at pay rates that were not Board-approved. In addition, nine employees did not receive the correct gross pay during the 2013-14 fiscal year and three employees did not receive the correct gross pay during the 2014-15 fiscal year, resulting in combined overpayments totaling $4,922 and combined underpayments totaling $92. Furthermore, employees' leave accrual records were not accurately maintained, which contributed to these overpayments. This also resulted in employees' leave accrual balances being overstated by 11 hours, valued at $188, and understated by 169.25 hours, valued at $2,815, as of December 31, 2014.

Based on our limited procedures, it appears that the City has made some progress in implementing our recommendations. Of the 10 audit recommendations, five recommendations were fully implemented, two recommendations were partially implemented and three recommendations were not implemented.

The Board members believe they provide adequate oversight. However, they lack key procedures for the oversight of financial activity to safeguard District assets. The Board has not adopted a purchasing policy, code of ethics or an investment policy. The Treasurer does prepare bank reconciliations and submits detailed financial reports and abstracts of claims for payment to the Board on a monthly basis and the Board members do authorize all claims for payment as documented in the Board minutes monthly. However, the Board does not periodically review the bank reconciliations and bank statements or compare canceled check images to approved abstracts to verify that prior approved claims were in fact paid as directed. Additionally, the Treasurer's monthly reports were not accurate reflections of the prior months' activities. The Treasurer was not consistently providing reconciled monthly reports with supporting bank statements and accounting record balances for the same period of time. Lastly, although the Board members were conducting an annual audit of the Treasurer's record, they were only briefly examining portions of the Treasurer's records and were not following the proper steps to provide a thorough audit.

The Board did not effectively oversee the Town's financial operations. The Supervisor did not provide the Board with adequate monthly financial reports, and the Town's procedures for auditing claims and signing checks were not in compliance with Town Law. The Board also did not annually audit or provide for an audit of records and reports of all Town officers or employees who received or disbursed moneys on the Town's behalf.

We found that the District's point system requires that firefighters participate in a minimum of 10 percent of the District's total annual responses to be able to earn 25 points service for participation in department responses. However, since the District's point system policy was modified in 2009, the District has been responding to more than 500 incidents per year. Under the GML, when call volume increases to between 500 and 1,000 calls per year, the percentage of the total calls a volunteer must run to receive the 25 points drops from 10 percent to 7.5 percent. District officials were not aware that the District's point system did not award points for participating in department responses in accordance with the GML.

During our audit period, the School had two purchasing policies. The first policy was effective from July 2012 through June 30, 2014. The Board adopted a new policy effective July 1, 2014. During our audit period, the School made payments to vendors totaling more than $1.2 million. We found no exceptions for purchases made using either policy. The School also made 98 payments to SASCS totaling $266,175 for startup purchases made by Syracuse Academy of Science Charter School (SASCS) prior to the School receiving its funding. We found that all payments made to SASCS were for a valid School purpose.