The purpose of our audit was to review the projected cost and/or energy savings achieved by the energy performance contracts (EPCs) entered into by the five school districts for the period June 1, 2005 through November 10, 2014.

We found deficiencies in the IT controls over the Village's electronic data and computer resources including inadequate preparation for responding to IT security incidents, unnecessary user accounts, excessive user permissions to financial software, and inconsistent understanding of IT security responsibilities. As a result, Village IT assets are at risk of attacks that could lead to unauthorized access to or disclosure of sensitive information, inappropriate modification or deletion of critical data, or interruption of service availability. In fact, the Village experienced two IT security incidents in 2014. In addition, the Village has not established a process for staying current on water system cybersecurity threats. Village officials do not receive alerts to such threats from either the U.S. Department of Homeland Security's Industrial Control System Cyber Emergency Response Team or the Water Information Sharing and Analysis Center.

The Board and Town officials have not developed adequate policies and procedures or financial plans to govern budgeting practices. Due to a lack of budgetary guidance, Town officials adopted budgets which resulted in erratic swings in the tax rate. In addition, although the Town has four reserve funds, the purpose and funding levels of the reserves have not been established. Finally, the Board and Town officials have not formally established a multiyear financial plans.

The District reported year-end unrestricted fund balance at levels that essentially complied with the 4 percent fund balance limit for fiscal years 2009-10 through 2013-14. This was accomplished, in part, by appropriating fund balance totaling more than $20 million to fund ensuing years' budgets and using surpluses to fund reserves. The appropriation of fund balance should have resulted in planned operating deficits. However, because the District significantly overestimated expenditures in its adopted budgets, it experienced large operating surpluses, and, therefore, none of the appropriated fund balance was used to finance operations. In effect, the District kept year-end fund balance levels artificially low and accumulated money that could have been put to productive use. Additionally, because District officials did not include the funding of reserves in the annual budget, the District's use of taxpayers' money was not sufficiently transparent.

The Board did not effectively manage the Town's budget. The Board-adopted budgets for the highway fund were not structurally balanced, as they used non-recurring revenues to fund recurring expenditures. In the general fund, the Board also used non-recurring mortgage tax revenues to fund recurring expenditures, as well as to fund non-recurring expenditures and to build fund balance. The Board developed general fund budgets before learning how much the Town would receive in mortgage tax revenues, but did not amend the budget once it learned how much these revenues would be. Because the Board did not make budget amendments when necessary, multiple budget line items were overexpended in both the general and highway funds. This caused both funds' overall budgets to be overexpended in 2013, and the highway fund budget to be overexpended in 2014. Additionally, the Board did not establish a goal for fund balance levels and did not monitor available fund balance; as a result, it planned to appropriate fund balance in the highway fund which was not available. Lastly, the Board did not fund its long-term plans, instead relying on unplanned revenues to implement them, or – in the case of the Town's vehicle replacement – deferring implementation due to lack of funds.

The Board and District officials need to improve their oversight of the District's budget process to adequately manage the District's financial condition. The District reported year-end unrestricted fund balance at levels that essentially complied with the 4 percent fund balance limit for fiscal years 2011-12 through 2013-14. This was accomplished, in part, by appropriating fund balance and funding reserves at year end. Over the past three years, District officials' appropriated a total of nearly $24 million of fund balance, which should have resulted in planned operating deficits each year. However, because the District overestimated expenditures in its adopted budgets, it experienced large operating surpluses in 2011-12 and 2012-13 and did not use the appropriated fund balance to finance operations. From 2011-12 through 2013-14, total actual revenues exceeded expenditures by as much as $3.7 million, while only $1.8 million of the nearly $24 million of appropriated fund balance was used to finance operations. We also found that District officials did not maintain complete and adequate fuel inventory records to safeguard and account for its fuel. The head groundskeeper performed a monthly reconciliation of District fuel purchase and use records with the actual fuel on-hand. However, discrepancies were not investigated. As a result, the District could not account for 1,876 gallons of gasoline (more than 5 percent of the gasoline purchased), valued at approximately $5,628.

The District did not award accurate LOSAP credits because District officials did not award the appropriate number of points to volunteers for participation in department responses and accurately record volunteer activities. We identified discrepancies in the activities recorded and points awarded by the District for nine of 10 volunteers reviewed. As a result, two volunteers received one year of service credit and earned a defined contribution of $700 in 2014 to which they were not entitled. For the remaining seven volunteers, who were awarded points incorrectly, the inaccuracies did not affect the service credit awarded to those participants.

During our audit period, the Library collected approximately $49,000 in over-the-counter cash receipts from fines, fees and donations. We were unable to determine if all collections were recorded and deposited in a timely manner and intact. This was because the Board has not established policies and Library officials have not documented procedures for handling and recording over-the-counter cash receipts and waiving fines and fees. As a result, the Library did not always ensure that adequate documentation was maintained to verify that all collections were recorded and deposits were made timely and intact.

The Justices did not require the clerk to perform monthly bank reconciliations or accountabilities for their review to ensure all collections were accurately accounted for and any discrepancies were promptly identified and corrected. We performed reconciliations of the Justices' bank statements and determined that, as of December 4, 2014, Justice Lemen and Justice Mahoney both had small overages. Additionally, we found former Justice Kemp did not report unidentified money totaling $2,896 to the Justice Court Fund (JCF) on his final report, as required, or close his official bank account at the end of his term. We also found that the Justices did not routinely submit monthly reports to the JCF and did not remit more than $151,000 collected to the Supervisor in a timely manner. Furthermore, none of the Justices nor the clerk adequately monitored defendant cases with unpaid fines and surcharges so that appropriate action could be taken when these fines and fees were not paid in a timely manner. Finally, the Board did not conduct an annual audit of the Justices' books and records as required by New York State Town Law.

The Clerk-Treasurer receives the vendor invoices by mail and prepares the claim packets. The Clerk-Treasurer consecutively numbers all claim packets and lists them on an abstract. He submits the claim packets to the Board for review at the regularly scheduled Board meetings. Each Board member reviews the individual claim packet and signs the claim to document his or her review. Board resolutions approving payment of claims are then passed and documented in the meeting minutes. Except for minor discrepancies, which we discussed with Village officials, we found that the Board conducted a complete and thorough audit of the claims and that claims were adequately supported and for legitimate Village purposes. We commend Village officials for designing and implementing this system of controls over the approval and payment of claims.

From January 2010 through December 2014, the District purchased 106,648 gallons of diesel fuel and 139,284 gallons of gasoline at a total cost of $779,682. District officials did not purchase fuel in the most economical manner possible. Had the District purchased fuel from vendors listed on the State contract, it could have saved $79,601. District officials also did not maintain complete and accurate fuel inventory records to safeguard and account for fuel. As a result, the District could not account for 17,560 gallons of gasoline (nearly 13 percent of the gasoline purchased), valued at approximately $54,850. In addition to maintaining the fuel for its own use, the District permitted another fire district and two ambulance companies to use its fuel, without the benefit of a written agreement. The District's poor records also resulted in billing errors and uncollected amounts from these units that cost the District approximately $15,000. Finally, the District did not ensure compliance with its Board-adopted vehicle use policy, resulting in the District having no assurance that fuel was used only for legitimate District purposes. This included more than 10,000 gallons of gasoline, valued at $31,277, used by a Chief to commute to and from his place of employment in New York City. We also found that the Board has not established a thorough claims audit process to ensure that all cash disbursements are adequately supported and for valid District purposes. The Board also did not ensure that the Treasurer disbursed District money only after the Board directed her to do so by resolution. As a result, the Board did not properly audit any of the 1,474 claims, totaling $4,386,641, paid during our audit period. In addition, we identified questionable charges for out-of-state travel and local meals on the District's credit cards totaling $26,809. Four Commissioners reimbursed the District a total of $1,701 for personal purchases made on the District's cards.

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.

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.

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.

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.