Payroll duties are not adequately segregated and there is no periodic management review of transactions, certification of payrolls or review of leave records. The Board also did not clearly document its authorization of compensation for all Village employees. As a result, Village officials could not provide documentation showing the Board's authorization for $15,309 of the Clerk-Treasurer's salary, and the former Clerk-Treasurer was overpaid $10,638 for a separation payment. In addition, seven employees received payments that were not authorized by the Board, totaling $5,091. The Clerk-Treasurer did not maintain adequate leave records for herself and for fiscal year 2013-14, five employees received less sick leave than the Board authorized. The Department of Public Works Superintendent also prepared and approved his own leave-time slips with no oversight. The Board also did not properly audit claims to ensure they were adequately supported or were for proper Village purposes. The Clerk-Treasurer does not present the Board with abstracts or claims for capital project funds. One Board member reviews and approves any capital project claims related to construction costs. Without a thorough and deliberate examination of the individual claims and the supporting documentation, the Board does not have enough information to determine whether the claims it approves are appropriate and legitimate and there is an increased risk that improper claims could be paid.

The Supervisor's prior bookkeeper, who retired effective December 31, 2014, used manual accounting records which were accurately maintained. Upon her retirement, the Supervisor hired two interim bookkeepers. As of May 18, 2015 monthly bank statements for 2015 were not reconciled and the accounting journals and general ledger were not posted except for the original budget entries. In addition, the Board has not received any monthly reports since February 2015. The Supervisor informed us that the new bookkeeper who was hired April 13, 2015 will be transitioning the Town records from a manual system to an automated software to improve efficiency and controls. The Supervisor plans to have monthly reports to the Board by June 2015.

The Board did not adopt, review, update or enforce adequate financial policies to ensure Town resources were protected. In fiscal years 2012 through 2014, the Board adopted budgets with inaccurate revenue and appropriation estimates to generate operating surpluses so that the Town could purchase equipment and make capital improvements. However, a more transparent way of planning for such items would be to establish reserve funds and include provisions in the budget for their funding. The Board also did not audit the books and records of any of the Town officers and employees that handled cash. In addition, the former Clerk did not routinely issue duplicate receipts for every transaction where no evidence of receipt was available, record daily cash receipts properly or make deposits intact. As a result, we identified a cash shortage of $465, of which the former Clerk − through substitution or theft − took $209 in cash. In addition, we found the former Clerk did not deposit tax receipts in a timely manner, and both Clerks did not remit tax payments to the Supervisor in a timely manner. We found the former Supervisor's records and reports were inaccurate because his bookkeeper did not properly record cash receipts and disbursements and made adjusting journal entries that exacerbated the problem instead of correcting the errors. We also found that the Code Enforcement Officers did not issue receipts for collections, maintain records for all issued building permits or collect all fees as required. Finally, we found the Justice did not retain copies of receipts issued for court-related activities.

Although the Board approved lists of vendor claims that were prepared by the Analyst, it did not complete a proper audit of the claims from vendors prior to paying those vendors from either the operating account or the private funds account. In addition, although the Library has accumulated over $762,500 in private funds as of the end of 2014, it has no formal written plan to use the money. The Library maintains approximately $627,000 in mutual funds, fixed income securities and cash equivalents with two investment brokerage firms; these are improper investments at unauthorized financial institutions. Finally, the Board failed to review the bank statements, bank reconciliations and investment statements of the private funds. As a result, there is an increased risk of loss on investments, including principal, and that errors fraud or abuse could occur without detection.

The City Manager prepared and the Council adopted general fund budgets that were not realistic and based on historical trends and/or prior year actuals for the years 2012 through 2014. The general fund budgets also relied on the appropriation of fund balance to finance operations. City officials did not maintain the City's accounting records or prepare the adopted budgets in accordance with the Uniform System of Accounts. The Council also did not receive adequate information to monitor the budget, and City officials did not make budget modifications in a timely manner. In addition, City officials did not implement corrective action on similar findings previously identified through their annual independent audits. As a result, the City's general fund experienced large unplanned operating deficits leading to its diminished financial condition in recent years. Although City officials have recently implemented some improved budgeting practices and certain cost savings measures, additional cost savings and revenue enhancement opportunities exist. Finally, City officials did not establish adequate multiyear plans.

District officials have not effectively managed fund balance as unrestricted fund balance annually exceeded statutory limits (projected to exceed by $4 million as of June 30, 2015) and reserves are overfunded by approximately $3.2 million. This occurred because District officials consistently overestimated expenditures by a total of $8.5 million over the four-year period ranging from 7 to 14 percent more than actual expenditures. Although District officials adopted budgets which included appropriated fund balance, the total appropriated fund balance was not needed because of their overestimation of expenditures. Despite the excess unrestricted fund balance, District officials continued to raise taxes each of the four years.

The Board and District officials did not effectively manage the fund balance of the general fund. As a result, the District had unrestricted fund balance in the general fund totaling $670,000 or 6.2 percent of the following year's appropriations as of June 30, 2014 and reserve fund balances that increased by almost $2 million (131.1 percent) from 2009-10 through 2013-14. If the real property tax levies remained at the level of the 2009-10 fiscal year, the total taxes paid would have been $1.1 million less than the amounts actually paid, while still generating more than $270,000 in surpluses. Although the general fund's fund balance was over the statutory limit and several reserves were overfunded, the Board continually adopted budgets that included tax levy increases that were not necessary. As of the end 2013-14, the general fund's unrestricted fund balance was 6.2 percent of the ensuing year's appropriations. While the Board has adopted budgets that included an average use of more than $570,000 in fund balance for each of the last five fiscal years, operations have generated a combined surplus of more than $1.3 million during the same time.

The Board needs to improve the District's procurement process. District officials did not adopt a procurement policy as required by General Municipal Law (GML). The Board also did not seek competition when obtaining goods and services that are not required to be competitively bid in accordance with GML. The only procurement guidance was contained in the District bylaws, which simply state that the Director will determine the most economical method of maintenance when purchasing Library office and service equipment. As a result, District officials did not consistently use competitive methods to procure goods and services. In addition, the Board did not ensure disbursements from the discretionary fund were made in accordance with the bylaws. Finally, the Board appointed an independent contractor as Treasurer. While the Treasurer does not take an oath of office (a requirement for holding public office), we found no significant indication that this is an independent contractor relationship.

The Board and District officials have appropriated a significant amount of fund balance for the District's budget over the past few years. For example, over the past three fiscal years the Board appropriated $675,000, $525,000 and $376,626, respectively, in its adopted budgets. The Board has not adopted a fund balance policy establishing the level of unrestricted fund balance to maintain. As a result, the general fund balance has declined approximately $1.2 million, or 64 percent, over the past four years. Furthermore, the District has used general fund money to help subsidize the school lunch fund operations over the past several years and at the end of the 2013-14 fiscal year, the school lunch fund owed the general fund nearly $44,000, which is likely uncollectible. Lastly, the Board did not use $250,000 in the insurance reserve for authorized and intended purposes during our audit period and it has not included a provision in the 2014-15 budget to make a required repayment of about $35,000 to the repair reserve to replenish it after moneys were used for emergency expenditures.

We identified significant internal control weaknesses in the Court's financial operations. The Justices did not properly segregate the cash receipt duties and did not provide oversight for cash receipts. Consequently, we found that collections were not properly accounted for or deposited timely. In addition, accurate and complete bail records were not maintained and bank reconciliations and accountability analyses were not performed for all Court bank accounts. As a result, the Justices and clerks were unaware that, as of January 31, 2015, Justice Lamitie had a cash shortage of $4,273 and when he resigned, Justice Cositore had a cash shortage of $834. Furthermore, when Justice Cositore resigned, he did not file a final report with the JCF, close his official bank account or transfer pending bail to the other Justice or the succeeding Justice. We also found that the Justices did not establish policies and procedures for enforcing unresolved traffic tickets, which resulted in unpaid traffic tickets not being properly enforced along with potential lost revenue to the Town. In addition, the Town lacked comprehensive policies and procedures for preparing and processing payroll and maintaining leave time accruals for Highway Department employees and Town officials did not provide adequate oversight. We found that 12 of 14 Highway Department employees did not receive the correct gross pay, resulting in 11 employees being overpaid a combined total of $3,885 and one employee being underpaid $193. Furthermore, Highway Department employees' leave accrual records were also not accurately maintained, which contributed to the overpayments. In addition, as of January 31, 2015, we found five employees' sick leave balances were overstated by a total of 91.20 hours, valued at $1,756, and four employees' sick leave balances were understated by a total of 32.90 hours, valued at $645.

The Board did not receive adequate monthly financial reports or establish a sound budget process.

The Board has not established procedures for the Library's collection and disbursement of donated funds, or for cash receipts collected at the circulation desk. The Treasurer has not maintained adequate records for the money received from donations and fundraising activities. In addition, the Treasurer wrote checks disbursing these funds without Board approval or sufficient documentation to demonstrate it was used for Library purposes. We also found that the Librarian did not properly account for fines and fees collected at the circulations desk and did not remit them timely to the Village.

The District is serving nutritious meals to its students. However, the meals cost more to prepare than the revenue generated by the meal sales. In addition, the District's productivity level for meals per labor hour is below the industry averages. Although the industry averages may not be achievable given certain District conditions, District officials can use the industry averages to monitor operations and work towards increasing productivity.

The Board did not establish policies and procedures to provide guidance to Village employees or implement sufficient controls over leave accruals and payroll timekeeping to ensure that the Superintendent's leave time was accurately accounted for. As a result, the Superintendent carried over unused leave time valued at approximately $57,000 as of November 28, 2014. Although Village officials discussed payroll and leave accrual procedures with employees, no comprehensive written payroll timekeeping and leave time accrual policies and procedures were in place to provide further guidance. The former Mayor told us that each pay period the Superintendent is required to complete a timesheet and accrue vacation and sick leave and use accrued vacation time during the calendar year, when possible. The Superintendent told us DPW employees are supposed to use the time clock to record their work hours. However, without a written policy, there is no formal guidance regarding the accrual and use of leave time or time clock use.

The Board did not properly manage the District's fund balance. The District's available fund balance has accumulated to more than 400 percent of the 2015 budgeted appropriations as of the end of 2014. Almost 89 percent of the District's $383,300 fund balance has been placed in 25 certificates of deposit accounts. While District officials told us these accounts were created to be used for future capital purposes, these funds have not been formally established as reserves. Therefore, these funds are available for funding operations. From 2012 to 2015 the Board budgeted to raise $91,300 in real property taxes for capital purposes.

While we commend the Board for contacting us with its concerns regarding the Project, we found that the Board should have known about most of the discrepancies detailed in the complaint (See Appendix A for our comments on the complaint). The Board did not provide adequate oversight of the planning and execution of the Project and did not ensure that the Co-Managers properly monitored the Project. The Board did not always provide clear, written expectations, such as the authority granted the appointed Project Co-Managers, or their monitoring and interim reporting requirements for the Project. As a result, the Board halted further work on the Project until it received clarification on the Project's status and costs. The construction phase of the Project was further delayed due to the redesign and requirements for landowner access, which resulted in increases in material and prevailing wage rates. In addition, the Board did not ensure that County contracts were properly approved, monitored and paid. Of 40 contracts, 11 did not have approval of both the Board and the County Attorney, and four contract renewals/amendments were not approved by either the Board or the Attorney. No procedures were taken to ensure the lowest possible cost was paid for 18 of 28 professional service contracts included, totaling $1.2 million. For the other 10 contracts totaling $6.3 million, although no quotes or requests for proposal (RFPs) were required per the County's procurement policy, County officials did use RFPs to seek the lowest possible cost.

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.