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.

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.

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 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.

The Board did not take an active role in overseeing the Library's financial operations and monitoring the Treasurer's work. The Board did not establish policies and internal controls over investments and certain other key financial areas. Library officials do not review or approve financial transactions before they occur, and instead, rely on Fairport Central School District employees to both process and approve all financial activity. Furthermore, the Board did not establish formal financial plans or budgeting policies to guide Library officials and inform taxpayers of its financial goals and related budgetary decisions. Thus, the Board cannot assure its taxpayers that all Library resources are adequately safeguarded and appropriately used, or planned for use, in furtherance of the Library's established goals, or that fund balance levels and tax levies are not higher than necessary.

Internal controls over the claims audit process were not appropriately designed. The Director and staff are responsible for signing and dating claims to indicate the goods or service being billed for have been received, which is a good internal control. However, the Board assigned the responsibility to audit and approve claims for payment to the Board President (President), which is not a good practice because it does not provide for an audit of claims by the entire Board. Furthermore, the Board policy was not followed because claims were reviewed and approved for payment by a Trustee serving as Board Treasurer (Treasurer) instead of the President. The Treasurer stated that she assumed the task of reviewing and approving claims from the prior Treasurer approximately four years ago. However, Library officials could not provide a Board resolution assigning her this role. Allowing the Treasurer to review claims and sign the checks for payment reduces the Board's ability to properly oversee financial activity and increases the risk of inappropriate transactions.

The Board needs to improve the claims auditing process. The District's claims auditor did not properly review claims to ensure that they were accurate, properly supported and for valid District purposes. The District paid 1,909 claims totaling about $31.2 million during our audit period. We reviewed 72 of these claims totaling approximately $874,900 to determine if they contained sufficient documentation, were properly authorized and approved, sufficiently itemized and for valid District purposes. We found deficiencies with 49 of these claims (68 percent) totaling approximately $317,175. These deficiencies included purchase orders issued after the goods were received and a lack of adequate supporting documentation. These deficiencies occurred because the claims auditor did not conduct a thorough audit as required by the District's policy.

The Justices did not ensure that Court funds were properly recorded, deposited and reported. Court clerks performed incompatible duties related to cash receipts and the Justices did not provide effective oversight of their work. As a result, bank accounts for one Justice had unaccounted-for funds in both the fine and bail accounts each month averaging $14,627 and $6,703, respectively. In addition, the Court was in possession of stale bail from 21 individuals totaling $5,935. Also, bail records were inaccurate and cash receipts were not always deposited within 72 hours as required by law. Because of this lack of oversight, the Court has an increased risk that errors and irregularities could occur without being detected, placing public resources at risk. Similar findings were cited in a previous audit.