BOCES officials have established adequate controls over the claims processing function that allow claims to be audited in a timely manner and in accordance with BOCES policy and Education Law. The Board has delegated the responsibility to audit BOCES claims to a claims auditor. BOCES policy states that the claims auditor is responsible for formally examining, allowing or rejecting all accounts, charges, claims or demands against the BOCES. We commend BOCES officials for establishing and implementing an effective system of controls over claims processing.

City officials are projecting operating surpluses for the 2015 fiscal year totaling $469,078 in the general fund and $150,449 in the water fund and an operating deficit totaling $172,691 in the golf and recreation fund. The City projects that, as of December 31, 2015, it will have unassigned fund balance deficits totaling approximately $4 million in the general fund, $516,476 in the water fund and $740,254 in the golf and recreation fund. The 2016 proposed budget contains significant financial risks that the City Council should consider when adopting the 2016 budget. The City continues to finance operating expenditures with debt when it should be funding such expenditures with operating revenues. In addition, the practice of supporting a significant amount of operating expenditures with one-shot revenues that may not materialize in 2016 is imprudent. The City included $3.5 million in revenue in the 2016 proposed budget from the sale of waterfront property and City officials were unable to provide any definitive documentation that the sale will take place during the upcoming year. The 2016 proposed budget contains an insufficient appropriation of $315,000 for the payment of tax certiorari refunds, which have averaged $848,000 over the last three years. City officials told us they intend to use debt to finance the balance of 2016 tax certiorari settlements above the existing appropriation. The City's proposed budget complies with the tax levy limit because it includes a tax levy of $29,352,553 that maintains the 2016 tax levy within the limits established by Law.

While the Board did provide limited oversight, the accounting records were not adequate and there were numerous errors in the financial reports. The only accounting record maintained is the budget-versus-actual report and notations on check stubs of vendor, date and amount. Neither the former nor current Treasurer kept any type of accounting records detailing payroll and cash balances. Therefore, neither Treasurer could perform bank reconciliations. Moreover, the current Treasurer does not maintain any accounting records documenting all revenues received. The budget-versus-actual reports were not adequate because they did not report bank balances and did not include all of the revenues received and disbursements made. For example, the April 2015 report did not include $37,800 in approved disbursements. Furthermore, the required annual financial report has not been filed with our office since 2012. Additionally, some payments made were not Board-approved, certain required payments were not made and most money was not deposited in a timely manner.

Over the last five fiscal years, budgets presented to District residents were not transparent because they did not include estimated amounts for tax certiorari judgment or the District's plan for funding them. District officials issued debt to pay for tax certiorari judgments, which masked the true operating results. Without the issuance of debt, the District would have had operating deficits in four of the five years and which could have caused a significant decline in fund balance. Also, the District did not use funds in the established reserve towards the payment of these judgments. As a result, the District has incurred additional debt and interest costs. In addition, the Board needs to improve internal controls to effectively protect the District's computer system and data. The Board has not developed policies such as a breach notification policy, PPSI (personal, private and sensitive information) policy or online banking policy. Staff were able to access websites in violation of the District's acceptable use policy, such as for shopping, personal email, social network, travel and automobile because the web filtering software was not configured to block these sites. Additionally, we found physical controls lacking as multiple empty classrooms with computer carts housing laptop computers were left unlocked, and the door connecting the school library to the computer storage room containing spare computers was open and unlocked.

We tested all eight full-time employees' submitted time sheets for eight randomly selected one-week payroll periods during our audit period to determine if they were approved by the Director and supported the amounts paid. Other than minor issues that we discussed with Authority management, all time sheets we reviewed were approved by the Director and supported the amounts paid. We also tested eight randomly selected one-week pay periods for the Authority's eight full-time employees and found that leave was appropriately approved and accurately recorded in the leave records. We also tested employees' leave balances, accruals and use during our audit period to determine if leave time used was accurately and properly earned and the balances were correct according to the personnel policy or collective bargaining agreement, as appropriate. Except for minor exceptions which we discussed with Authority management, leave time was properly approved and recorded.

The Treasurer and District Clerk do not maintain custody of their signature or supervise the signature being imprinted on the checks during the check signing process. Instead, the District's accounts payable and payroll clerks maintain custody of the signature flash drives that house the Treasurer's signature for disbursements and both the Treasurer and District Clerk's signatures for payroll checks. The accounts payable and payroll clerks insert the signature flash drives into their computers and, once prompted by the check signing software, enter a user name and password. We observed the payroll clerk print 1,736 payroll checks totaling $3,627,477 using the flash drive with the Treasurer's and District Clerk's signatures. Neither the Treasurer nor the District Clerk were present to supervise the imprinting of their signatures on the payroll checks. We also reviewed 50 disbursement checks totaling $111,198 to ensure they were for legitimate District purposes. We found no exceptions.

From fiscal years 2010-11 through 2013-14, District officials consistently overestimated budget appropriations. As a result, District officials generated operating surpluses that caused total fund balance to reach $11.9 million by June 30, 2013, which was 28 percent of the 2013-14 fiscal year's budget. To reduce fund balance, District officials transferred moneys to the District's reserves, which resulted in the reserves being overfunded by $6.3 million. In effect, this circumvented the 4 percent statutory limit. Furthermore, District officials did not include the transfers to the reserves in the budgets. In addition, District officials did not implement performance measures to effectively and efficiently manage transportation costs. As a result, we found that up to three contracted buses could be eliminated, which would generate potential cost savings of $147,451 annually. Also, the Transportation Supervisor did not correctly calculate the fuel allotment to the Contractor, resulting in overpayments totaling $3,101 in fiscal years 2013-14 and 2014-15. Furthermore, the District did not recoup $5,841 for excess fuel given to the Contractor in 2013-14. District officials also need to improve internal controls over IT assets. The District's acceptable use policy has not been updated to include guidance for the use of personal devices on the District's network and policies and procedures have not been established for computer security, disaster recovery, data backups and security awareness training. In addition, our review of Internet activity showed that 274 unique domain names were accessed but were not educational in nature as required by the District's acceptable use policy. Lastly, we found that physical controls were lacking because water pipes were above the main servers in the server room at the high school, and there was a recent leak that left water on the floor directly next to one of the shelves that housed a server.

District officials adequately monitored the District's financial condition and maintained fiscal stability. We analyzed the District's financial condition from 2009-10 through 2013-14. The District had operating surpluses from 2009-10 through 2011-12, ranging from $763,500 to $1.3 million and operating deficits of $943,600 and $1.2 million during 2012-13 and 2013-14. During 2013-14 and 2014-15, the District had consecutive planned operating deficits while maintaining fund balances of approximately 4 percent of the ensuing year's appropriations. In addition, restricted fund balance went from $12.5 million in 2009-10 to $10.7 million in 2013-14. This resulted in total fund balance decreasing from $19.3 million in 2009-10 to $18.9 million as of June 30, 2014. From 2009-10 through 2013-14, these items made up an average of 90 percent of the restricted fund balance. We examined the District's bases for restricting fund balances for tax certiorari, retirement contribution and compensated absences and found that the amounts reserved were reasonable

The Board did not review and the Committee did not audit the Treasurer's records or bank statements for the majority of our audit period. The Treasurer did not prepare monthly bank reconciliations and neither the Board nor the Committee reviewed bank statements and canceled checks to ensure that the Treasurer had properly recorded all transactions and reconciled cash balances. In addition, the Board did not conduct a proper audit of claims in accordance with Company bylaws. The reports prepared by the Treasurer did not always accurately reflect the total deposits or payments made from Company accounts. As a result, the Treasurer was able to misappropriate Company funds over a nine-year period, totaling at least $69,705. We found that at least $50,895 in cash receipts were not deposited and the Treasurer made 67 payments totaling $18,810 which do not appear to be for legitimate Company purposes. The Treasurer deposited 13 personal checks totaling $6,337 to the Company's checking account which may have been attempts toward repayment of the misappropriated funds.

We examined all purchases totaling approximately $1.5 million made by the Library System on behalf of or for the use by member libraries during our audit period and found that officials either used a competitive method or made purchases using State or Westchester County contracts. However, the Library System's purchasing policy needs to be improved because it does not address purchases made on behalf of member libraries. The policy addresses purchases made by the Library System for itself by indicating that staff must use competition when making purchases of $100,000 or more and must obtain quotes when making purchases of lesser amounts. It does not address General Municipal Law's bidding or best value requirements when procuring goods and services for the use and benefit of the member public libraries. As a result, Library System personnel do not have adequate guidance when making these purchases.

We verified relevant factors used to calculate the invoiced amounts to all school districts of residence and did not identify any discrepancies in the School's calculations with the exception of special education rates. While the accounting firm (Firm) that the School contracted with to prepare billings did review the original rates as established by SED prior to issuing the original bills, the Firm did not calculate revised bills after the rates were adjusted by SED. As a result, three school districts were underbilled by a total of $2,260. We then selected 15 students for further testing to determine if billings to the school districts of residence were accurate and supported. Overall, we found that the billings were accurate. However, we found the School did not have sufficient documentation of residency for eight of the 15 students tested. In addition, the Board has not periodically evaluated the existing procurement policy in order to ensure Board expectations are met and that purchases are properly procured. We reviewed the School's purchases from all 15 vendors that were subject to the Board's purchasing policy requirements. These vendors were paid approximately $433,000. We found the Board did not obtain the Board policy-required three written quotes from 11 vendors that were paid $297,176 and did not approve contracts with 11 vendors totaling $332,515. As a result, we reviewed one claim voucher from each vendor. We found no significant exceptions.

SCIDA generally monitored and evaluated the performance of firms or businesses for which benefits and incentives were granted. We reviewed 10 projects and found that four did not meet their job creation goals. Although SCIDA had provisions to reduce assistance for the businesses that did not meet their goals, SCIDA did not reduce the assistance for the four associated businesses because the Board did not review the performance of the businesses to determine whether or not to reduce assistance. Additionally, each of the 10 projects had a PILOT agreement that required SCIDA to bill the associated businesses and collect and remit payments to the affected taxing jurisdictions. However, SCIDA did not bill one project for 2014; based on our reading of the PILOT agreement, the affected taxing jurisdictions may have been underpaid by $108,000. In March 2015, as a result of our audit and various legal opinions, the Board suspended its grant and loan program. SCIDA had issued 11 grants totaling $964,000 and made three loans totaling $1.2 million with its own money to local governments and private entities. Principal amounts totaling $350,000 had been repaid and two of the three loans had outstanding balances totaling $850,000. General Municipal Law contains no authority for IDAs to provide grants or make loans to local governments or private entities using their own money.

The Board did not enforce the financial provisions in its bylaws and did not adopt policies and procedures to establish internal controls over cash receipts – including timely deposit and proper accounting of all fundraising revenues and activities – and disbursements for purchasing, claims processing and audit, credit card use, stipends, gifts and service awards. Officials stated that they believed such policies could not be adopted outside of the bylaw provisions and, because amending the bylaws could entail a tedious process, they did not do so. In addition, the President did not appoint a Finance Committee to perform the key financial oversight duties required by the bylaws, and no other Department officials performed them. Neither the Treasurer nor the Board prepared the required annual financial reports; no Board or committee members audited bills before they were paid; and neither the President nor the Board required or reviewed detailed reports from each fundraising committee to ensure that all revenues were deposited and that both revenues and expenditures were properly recorded and reported.

The purpose of our audit was to assess the financial condition of the five regional OTB Corporations to determine if it has continued to deteriorate and whether officials have developed and implemented plans to benefit the Corporations’ financial condition for the period January 1, 2009 through August 31, 2014.

The purpose of our audit was to assess software management and website, web application and supporting server vulnerabilities for the period September 1, 2013 through April 30, 2015.

From 2012 through 2014, the District gradually restored its unassigned fund balance from a deficit of $206,815 at the end of 2011 to $64,138 at the end of 2014 and has continued this positive trend in the 2015 budget. The District's past financial problems date to an operating deficit in 2010 that resulted in an unrestricted fund balance deficit of $61,233 at the beginning of 2011. The problem worsened when the Board adopted a structurally imbalanced 2011 budget that included an appropriation of $150,000 of fund balance which the District did not have. The District ended 2011 with an unrestricted fund balance deficit of $196,815. Since the end of the 2011 fiscal year, the District has steadily improved its financial condition. Between 2012 and 2014, the District increased its tax levy and recognized additional equipment sales revenue, and also had positive expenditure budget variances totaling $268,796. As a result, the District had operating surpluses, totaling $449,443, and gradually replenished its unassigned fund balance. As of December 31, 2014, the District reported $64,138 in unassigned fund balance (equivalent to 2 percent of the next year's appropriations) and its reported reserves were fully funded. While these improvements represent significant progress, we urge the Board to continue building the District's unassigned fund balance to ensure an adequate cushion for cash flow issues or unanticipated expenditures.

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.

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.

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.