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.

We found that the Board generally provides adequate oversight of the District's financial activities, but should make certain improvements. The Board has adopted a code of ethics and purchasing policy, as required by statute, but not an investment policy. Additionally, the Treasurer prepared monthly bank reconciliations but did not bring the reconciliations and bank statements to Board meetings; therefore, the Board did not review them. Moreover, the Board did not compare canceled check images to approved abstracts (lists of claims to be paid) to ensure that District funds were used only for legitimate District expenditures. Lastly, the Board did not complete, or contract with an independent accountant to complete, an annual audit of the District's records.

The Board has also established controls that ensure that financial activity is properly recorded. For example, on a monthly basis, the Board reviews financial records including the original bank account statements, the associated bank reconciliation, and a listing of all receipts and disbursements during the month. However, the Board does not review canceled check images because they are not returned with the Department's bank statement. The lack of these images prevents the Board from verifying all disbursements were made as intended and only for appropriate Company purposes. In addition, three Board members are responsible for reviewing the financial records. The Board also has access to financial records, disbursements listings and all claims packets. Additionally, the Treasurer presents the receipts and disbursements listing to the Board and the membership during monthly meetings. The Treasurer posts the listing of receipts and disbursements in a public and conspicuous area of the Fire Station. However, the Board has not adopted written financial policies or procedures addressing cash receipts and disbursements. As a result, the Department relies on informal rather that written policies and procedures.

HIDA officials developed a Uniform Tax Exemption Policy (UTEP) for project selection, but the method of determining the benefits to be provided is not well defined or required to be documented. Therefore, it is possible that not all project applications of the same type were evaluated using the same objective criteria. The Board did not design and implement an adequate system to monitor HIDA approved projects and did not develop an adequate recapture policy to allow for the recovery of previously granted benefits if job creation, economic goals or other terms of the agreements are not met. Further, HIDA officials do not verify the amounts provided by businesses when applying for financial assistance or verify the annual reported data that could be used to evaluate project performance. For example, HIDA officials did not have a system in place to track the amounts directly billed and collected by taxing jurisdictions for PILOTs. As a result, we found that 21 businesses were overbilled PILOTs by a total of $17,870 and 25 were underbilled PILOTs by a total of $38,850. Also, HIDA officials did not establish a process for monitoring and tracking sales and use tax exemptions.

Based on our limited procedures, it appears that the Town has made progress implementing corrective action. Of the six audit recommendations, two recommendations were fully implemented and four recommendations were partially implemented.

Based on our limited procedures, it appears that the Town has made progress implementing corrective action. Of the six audit recommendations, two recommendations were fully implemented and four recommendations were partially implemented.

To assess the effectiveness of the controls over cash disbursements, we tested a random sample of 30 disbursements totaling $23,301 and found all were adequately documented and for legitimate Department purposes. The claims were approved by a Department official prior to the Board's audit and approval and the Treasurer accurately recorded the disbursements in the accounting records. We also traced the claims to the related canceled checks and found they were in agreement. Additionally, we tested a random sample of 10 electronic bank payments totaling $1,387 for electric and gas charges at the Department's three fire stations. We found that the Treasurer authorized the payments, and the payment amounts agreed with the utility bills and were accurately recorded. Finally, we reviewed all 20 bank statements covering our audit period to determine if any unauthorized or undocumented electronic withdrawals or payments were made from the bank account; we did not note any questionable withdrawals or payments.

Village officials did not always comply with GML and the Village's procurement policy. We found that Village officials made nine purchases totaling $647,522 without seeking competitive bids and 11 purchases totaling $19,338 without obtaining quotes, as required by the Village's procurement policy. As a result, Village officials did not receive these goods and services at the lowest cost. Village officials could have saved at least $59,735 if they had utilized State contracts for certain purchases or sought competition through competitive bids or quotes.

The Board needs to improve its oversight of Village operations. The Board has accumulated unexpended surplus funds totaling $2.4 million without a long-term plan for its use. Because the Board did not always adopt budgets with realistic estimates of revenues and expenditures, only 16 percent of the $1.5 million of unexpended surplus funds appropriated over a four-year period to reduce the tax levy was actually used. Also, the Board has not annually audited, or caused to be audited the records maintained by the Clerk-Treasurer and the Justice, diminishing its ability to effectively monitor the Village's financial operations. In addition, the Board did not audit claims prior to payment. We also found that the Clerk-Treasurer released payments for 65 percent of the claims that we reviewed, totaling $7,915, from five to 36 days prior to the Board approving the abstract for payment. Finally, it appears the Village improperly entered into a contract for publishing services, totaling $7,190 during the audit period, in which a Trustee had a prohibited interest. Although it would not have cured the prohibited interest, the Trustee also did not publicly disclose her interest in the contract as required by law and the Village's code of ethics.

The District has not consistently generated sufficient revenues to finance recurring expenditures. District officials have instead relied on the use of fund balance and reserves to close budget gaps, which has negatively affected the District's financial positon. The District reported a general fund operating deficit of $824,815 and zero unassigned fund balance as of June 30, 2013, after the appropriation of $820,187 for the 2013-14 budget. The District incurred an even greater operating deficit in 2013-14 of $1,060,295. While nearly 80 percent of these operating deficits were planned through fund balance appropriations, they significantly reduced total fund balance. The repeated use of fund balance to close budget gaps instead of making necessary amendments to revenue or expenditure estimates quickly caused the fund's financial condition to deteriorate and, if continued, will lead to fiscal stress. Furthermore, the Board's adopted budgets did not include realistic estimates for revenues, expenditures and the amount of fund balance that would be available and used.