The City's proposed budget for the School District has a budget gap of $25.8 million. The District's budget request did not include an appropriation for textbooks, which cost the district $3.5 million in 2013-14. The City plans to issue a bond anticipation note for the textbook expenditures, which will incur additional debt and interest costs. The District's budget request underestimated pension costs by approximately $400,000. In addition, the City has appropriated $37.5 million, or approximately 52 percent of the available fund balance, in its general fund in the 2015-16 proposed budget. The City's use of fund balance to close gaps in the budget decreases the fund balance that is available to cover unforeseen shortfalls in revenue or unexpected expenditures. The City will also have to increase rates for metered water and sewer rents by 31 percent and 50 percent, respectively, to realize additional amounts included in the proposed budget. Further, the City may need more funds to pay tax certiorari claims in the 2015-16 fiscal year than have been budgeted. The proposed budget includes $500,000 for payment of tax certiorari claims, while the City settled claims for approximately $6.2 million in 2013-14 and approximately $11.9 million as of March 31, 2015. The City's proposed budget does not include an appropriation for contingencies. The City's proposed 2015-16 budget complies with the tax levy limit.

We identified a cash shortage of $38,136 in the Clerk's office; $29,322 from the tax collection account and $8,814 in Clerk fees. If the Board had conducted the required annual audit of the Clerk's records it may have been able to detect these shortages. The Clerk was responsible for all Town tax and fee collections, deposits and recordkeeping. No one else was involved in the recordkeeping or depositing. Our audit determined that certain tax collections were not deposited or recorded in the Clerk's cash receipts journal. We identified numerous questionable deposits that were made into the tax account and may have been made by the Clerk in an attempt to conceal the shortage in tax collections. We also identified numerous checks deposited into the Clerk's fee account that were not recorded in the cash receipts journal nor included on the Clerk's monthly report.

The Justices did not ensure that Court moneys were accounted for. We found that the Court had bail money totaling $35,955 on deposit, of which only $8,550 was for current court cases; bail deposits totaling $13,550 were in a fine account rather than the bail account; and bail deposits were not always returned to individuals who posted them. Additionally, receipts were not deposited in a timely manner and all receipts were not accounted for. Finally, the Court did not properly prepare bank reconciliations or prepare an accountability analysis, resulting in excess funds in the Justices' bail and fee accounts which could not be accounted for. While this amount was not significant, routine bank reconciliations and accountabilities are important controls for the Court in detecting errors or irregularities.

The Board did not establish procedures to ensure that the Middle School project costs were within authorized limits. The project was completed in May 2012, eight months after the original targeted completion date, at a total cost of $10.9 million which exceeded the authorized cost by $2.6 million. In addition, we reviewed the selection process for the general contractor and professional service providers for the project and determined that School officials did not seek competition for approximately $6.8 million in project-related expenses to the general contractor, the architect and the owner's representative. The Board also needs to improve its oversight of the Company's activities. Our examination of the School's financial activities disclosed that the School does not have custody of its funds until after the Company pays most of the School's bills and deducts their expenses. The Company then transfers the remaining funds into the School-controlled bank account. We also found that the Board and School officials do not receive or review bank statements and bank reconciliations. We also reviewed the Company's agreement and determined that the School was operating under an expired contract.

Both the Clerk-Treasurer and her deputy were able to perform all cash disbursement functions and have full access rights to record financial transactions in the accounting system. The deputy was responsible for entering invoices and payroll information, making bank transfers and printing and distributing checks. The Clerk–Treasurer was also responsible for making bank transfers and online payments, recording journal entries and reconciling the bank accounts. Although the Clerk-Treasurer reviewed the deputy's work, no one reviewed the Clerk-Treasurer's work. As a result, errors and irregularities could occur without detection.

The Board needs to improve controls over the District's cash disbursement process. The Board did not audit each claim before payment or provide oversight of disbursements related to the District's line of credit, payroll or petty cash. District officials did not receive and review more than $200,000 of line of credit invoices before disbursements were made. Additionally, no District official reviewed the processed payroll reports before disbursing payroll checks. Further, two service providers had direct access to the District's bank accounts and withdrew more than $517,000 for payroll and payroll related expenditures and monthly fees associated with the District's capital fund-raising campaign. Finally, District officials have not established a secure petty cash process to ensure that more than $12,300 used to fund petty cash was appropriately accounted for.

The City's proposed budget includes estimated one-time revenue of $1.3 million from the sale of City property. However, City officials could not provide documentation to show that this revenue will be realized in 2015-16. The proposed budget includes estimated revenue of $2.3 million in federal aid. However, the City has not yet submitted the application to the federal agencies. Overtime salaries are budgeted at $2.1 million, despite costs averaging over $2.9 million for the last five completed fiscal years. The proposed budget includes revenue estimates for metered water sales and sewer rents of $4.4 million each. These estimates include amounts that are expected to be realized from a 2 percent increase in metered water rates, which the City Council has not yet authorized. The City's proposed budget complies with the property tax levy limit set by statute. We also determined that City officials generally implemented our recommendations included in our budget review letter issued in May 2014.

The Board does not ensure that all financial activity is properly recorded and reported and that money is properly accounted for. As a result, the Treasurer does not prepare and present detailed financial reports to the Board or reconcile the bank balances to the cashbook balances and present them to the Board in a timely manner. In addition, the Board does not perform an annual audit of the Treasurer's records. We also found that the Board does not properly audit claims. At each meeting, claims to be paid are read aloud to the membership by the Treasurer for approval, but there is no list in the minutes of what claims were approved by the Board. Furthermore, during fundraisers, purchases are made from the collected cash receipts before they are deposited, circumventing the claims approval process. We also found that while summaries of revenues from fundraisers are prepared by the chairperson and presented to the membership, there is no reconciliation of tickets sold to cash deposited to ensure that all fundraising revenues are accounted for. The Board has also not adopted a code of ethics. Between April and November 2013, the Company paid $10,714 to a vendor that was owned by the Company president. A written code of ethics would provide clear guidance and ensure transparency for related party transactions.

Based on the results of our review, except for the following matters, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. Although District officials increased real property taxes within the amount allowed by law, District officials could have instead used amounts from their excessive reserves and/or appropriated additional fund balance to finance operations. Therefore, District officials could be imposing a higher tax burden on District taxpayers than is necessary to provide educational services. Furthermore, because District official's presented the tentative budget to OSC for review prior to the adoption of the State budget, District officials should make appropriate changes to their State aid estimates based on the information that has since been provided. The District's preliminary budget complies with the property tax levy limit.

The Board did not adequately monitor ambulance billings and amounts collected. Moreover, the Board allowed a third party to collect Village money. The Board did not have sufficient procedures in place to enforce unpaid ambulance bills. The Board did not review bills prepared by the billing agent to ensure they were based on Board-established rates. Additionally, the Village did not send invoices to the three towns for unpaid ambulance bills and administrative billing fees, as required by the written agreement. As a result, as of September 10, 2014, the Village is owed more than $1 million for ambulance services and Village taxpayers are, in effect, subsidizing the cost of providing ambulance service to the towns.

Village officials have not designated an IT administrator who is independent of the financial recordkeeping. In addition, the Board has not developed written policies and procedures, including those for acceptable computer use, internal user and remote access, password security, data backups and disaster recovery. As a result, the Village has an increased risk that inappropriate transactions could be made in the computerized financial system. In addition, hardware and software systems and data could be lost or damaged and the Village could suffer a serious interruption in operations.

Based on our limited procedures, it appears that the City has made some improvements. Of the seven audit recommendations, three recommendations were fully implemented and three recommendations were partially implemented. One recommendation was not implemented.

Neither the former nor the acting Treasurer maintained accurate, complete and up-to-date accounting records. Additionally, neither Treasurer consistently performed monthly bank reconciliations or provided the Board with monthly and annual financial reports. For example, since May 2014, the acting Treasurer did not record revenues or expenses in the financial accounting system or report the Company's financial activity to the Board.

We found that, although FCIDA has a process in place to monitor the businesses' employment goals, as stated in their applications for FCIDA benefits, it does not have a process for effectively holding businesses accountable when they do not meet specific employment goals. Seven businesses receiving FCIDA benefits during our audit period have not met their employment goals, and only one PILOT agreement allows for the recapture (recovery) of benefits that were provided to the business. In addition, FCIDA did not adequately monitor the PILOT payment process. For one project, the business has not made complete PILOT payments in the last four years and as of April 30, 2014 owed the affected taxing jurisdictions approximately $400,000. As a result, taxpayers may not be receiving expected benefits and affected municipalities have not received all the PILOTs to which they are entitled.

COIDA provides loans from revolving loan funds to eligible borrowers to finance a portion of the cost of approved projects. The repayments of principal and interest from companies are used to make loans to future borrowers. While the IDA statute expressly authorizes an IDA to issue its own bonds and notes to provide financial assistance for IDA projects, it has been the State Comptroller's Office (OSC) long standing view that such legislation does not authorize an IDA to establish a revolving loan program using its own funds, including money that would have been otherwise paid to the County as a portion of a PILOT. Nonetheless, COIDA had 90 loans outstanding as of May 31, 2014, totaling nearly $9.6 million, which were financed with COIDA's own funds. In order to receive loans, companies represent that they will retain and/or create a certain number of jobs. COIDA did not design and implement systems to evaluate job data and the overall performance of companies that received loans from the revolving loan programs. We found no formal process to compare current and projected jobs at the time of application, to the reported number of jobs actually created and retained, in order to determine whether the loan program is successfully resulting in job creation and retention.

The Board has not established documented criteria and procedures for selecting projects and subleases. However, the Board has established a Uniform Tax Exemption Policy, but this policy does not include specific criteria for selecting and approving projects. The Board also does not document their approval process or rationale for approved projects or subleases, or prepare a documented cost-benefit analysis or risk assessment during the project approval process. Although the Board has established an application and administrative fee schedule, the amounts collected for administrative fees deviated from this schedule for six of the nine current active projects where information was available for review. As a result, SCIDA charged approximately $50,000 less in fees than their schedule. In addition, they forgave administrative fees after the fact, resulting in approximately $100,000 in additional lost revenue. SCIDA also relies on County officials to negotiate and select subleases, and has not established their own criteria.

SCIDA officials monitored job creation performance by collecting data from businesses on an annual basis, but because it did not include recapture provisions in its PILOT agreements, they were unable to recover economic benefits if companies did not meet their job creation goals. Our review of 10 projects disclosed that one business met its job creation goal, two businesses did not report sufficient information to allow us to determine whether they met their goals and seven businesses did not meet their goals. Additionally, because SCIDA did not monitor PILOT payments, SCIDA was unaware that affected taxing jurisdictions were underpaid $94,341 from 2003 to 2014.

The Board and management did not formally document and adopt procedures for calculations of cost-benefit ratios and the determination of contractual time periods for businesses seeking financial assistance. As a result, evaluation criteria may not be consistently applied, and the basis for approval or rejection of businesses is not clear. Further, none of the open projects' PILOT agreements we reviewed contained a “recapture of benefits” clause holding businesses accountable for delivering promised benefits to the community in exchange for COIDA tax abatements. Therefore, businesses can terminate their agreements without any financial consequences. One business closed its operations after three years on a 10-year PILOT agreement, having made PILOT payments of approximately $99,000 while receiving a net of nearly $605,000 in tax abatements; however, it was not held accountable for reimbursing those funds to the community. In addition, COIDA officials billed one business using a PILOT billing schedule different from the Board-approved schedule, resulting in the under-billing of $246,000 in the 12 years since the PILOT agreement inception. If not corrected, this will increase to a projected $635,000 over the 20-year PILOT period. Finally, COIDA officials did not require periodic reporting of necessary information from businesses or verify the information that was provided, and therefore did not adequately monitor projects to ensure they meet promised goals.

We found that the CCIDA was effective in its efforts to promote, develop and assist in economic development projects in the County. However, we identified some opportunities for the CCIDA to improve controls and accountability to assure the community it is receiving the expected benefits. CCIDA officials do not verify the investment and job information provided when businesses apply for financial assistance. Additionally, CCIDA officials have not established adequate procedures for meaningful cost-benefit analyses. As a result, the Board may not have accurate and meaningful information on which to make its decisions. Further, CCIDA officials do not adequately monitor ongoing project activity. The CCIDA does not obtain annual confirmations from all active projects and does not verify the accuracy of annual reported data obtained. Without assurance that the amounts reported represent actual activity, which are monitored and compared with expected activity, the Board cannot be sure that the community is receiving the expected economic benefits

County officials did not properly oversee the usage and disposal of county vehicles. The Board has adopted a vehicle policy that specifies that each department head is responsible for establishing written procedures for the assignment of county vehicles as well as the records that should be maintained. However, the policy does not cover the disposal of county vehicles. In addition, we found that five of the six departments that we reviewed did not have written procedures for the assignment of vehicles and four did not maintain vehicle logs. These findings were also identified in an audit completed by our Office in 2003 and remain uncorrected. Furthermore, County officials were not adequately monitoring vehicle usage or performing cost-benefit analyses to support the after-hours locations of vehicles or disposal methods used. Lastly, seven of the 19 vehicles that were disposed during our audit period did not have proper Board authorization and 17 were sold or scrapped without determining if another method could have potentially netted more revenues.