The Treasurer did not use press-numbered receipts and did not deposit receipts collected on a timely basis. The Treasurer also did not prepare timely, accurate monthly financial reports for the Board's review; complete bank reconciliations; and submit an accounting of the District's financial activities to the Board at the annual organization meeting. The Board did not ensure that all claims were proper District expenditures. We reviewed 20 vouchers totaling $18,354 and determined that all had at least one deficiency. Further, no one prepared a claims abstract for the Board's review and gas purchases were not supported with documentation to ensure that they were appropriate District expenditures. These deficiencies occurred because the Board did not establish adequate controls over claims processing. Specifically, the Board has not adopted policies and procedures to guide employees when making purchases and handling claims. District officials did not use a competitive process to hire three professional services providers who were paid $15,297 during our audit period. District officials also did not obtain the required number of competitive quotations for 10 purchases totaling $23,921. Further, in fiscal year 2013 the District made $1,716 in purchases from a Commissioner's store. The Commissioner had a prohibited interest in this contract with the District.

The Board and District officials are not developing budgets that provide realistic financial plans or effectively managing the District's fund balance. For the three-year period ending June 30, 2014, District officials budgeted to use $2.6 million of fund balance to finance District operations; however, due to unrealistic appropriation estimates, they did not use any of this appropriated fund balance during this period. As a result, the unassigned fund balance exceeded the statutory maximum of 4 percent of the ensuing year's budget, ranging from 8 to 13 percent. In addition, the District has three reserve funds with excessive balances and no plans or policies for the use of reserves.

The Board is not properly overseeing the Village's financial operations, which has resulted in a weak control environment. The Board is not sufficiently segregating the financial duties of the Clerk-Treasurer or Deputy Clerk or implementing compensating controls to mitigate risks. The Board also is not implementing corrective action to weaknesses identified in the certified public accountant's report. In addition, the Board does not receive or request sufficient financial information from the Clerk-Treasurer. As a result, the Board is unable to monitor the Village's financial operations or prepare realistic budgets, which has caused the Village's unreserved fund balances in the general and water funds to total $350,000 and $200,000, respectively, which are excessive. The Board also does not ensure the Clerk-Treasurer files the annual financial reports or tax cap calculations in a timely manner. In addition, controls over IT are not adequately designed to ensure the Village's IT assets and computerized data are safeguarded. The Board also has not adopted a comprehensive disaster recovery plan or procedures for the sanitization of hard drives and other electronic media before disposing of them.

We found that the Treasurer generally maintained adequate financial records. However, the Treasurer has not filed the annual update document (AUD) with the State Comptroller's Office for 2010, 2011, 2012 and 2013 as required by GML. The Treasurer made 106 disbursements totaling $113,069 during our audit period. We reviewed 26 disbursements totaling $12,327. Except for two payments to the fire chief totaling $1,000, we found that the disbursements were for proper District purposes. The Treasurer told us the $1,000 payments to the fire chief were for administrative duties. It is our understanding that the chief performed these administrative services as a District employee in a position separate and apart from the position of chief. In addition, we believe that the Chair also had a prohibited interest in the turnout gear contract and received an indirect monetary or material benefit as a result of the contract. As a member of the Board, the Chair has one or more powers and duties that can give rise to a prohibited interest, such as the duty to negotiate, authorize and approve the claim and/or audit the claim.

The Council does not provide adequate oversight of the Company's financial activities. While the Council adopted the Company's bylaws, which dictate the manner in which operations are to be conducted, these procedures are insufficient. This is especially true given the concentration of financial duties with the Treasurer. The bylaws provide no guidance for addressing cash receipts and disbursements, auditing claims, using debit cards, auditing the Treasurer's records and conducting fund-raising activities. The Council also does not regularly review the bank statements and canceled checks as a way to mitigate the risk posed by the Treasurer having sole responsibility for financial record keeping and custody of Company funds. Additionally, the Council did not ensure that the Secretary included adequate details in the Department's minutes to identify that Company purchases were properly authorized, or that the Treasurer maintained an accurate account of all finances and submitted financial reports as required by the bylaws. Further, the Council did not adopt a code of ethics as required by law.

The District has adopted a procurement policy. However, the policy does not require the solicitation of competition before awarding professional service contracts. As a result, District officials did not seek competition for the services of 12 professional service providers. The District paid a total of $274,447 to 11 of these providers during our audit period. We reviewed claims paid to each of these providers, totaling $74,454, and found that the Board did not periodically seek competition for these professional services. Further, the District has contracted with five of these providers in excess of 10 years without soliciting competition. These providers were paid at total of $123,200 during the audit period. We also found the District did not enter into written contracts or pass detailed Board resolutions to describe the services to be provided or the basis for compensation for three of the professional service providers, who were paid a total of $44,775 during our audit period. In addition, the Board did not develop policies and procedures to achieve adequate safeguards of the District's fuel inventories, such as the maintenance of accurate and timely fuel delivery and usage records. As a result, fuel records were not accurate and fuel was not properly accounted for.

We found that the Board has not provided sufficient oversight of the Village's financial operations. As a result, the Clerk-Treasurer did not maintain accurate accounting records, did not perform timely bank reconciliations for all accounts and did not provide the Board with comprehensive monthly financial reports so that it could properly oversee the Village's financial activities. Also, the Board did not adequately segregate the financial duties within the Clerk-Treasurer's office or provide sufficient oversight of the work performed by the Clerk-Treasurer and Deputy. Although our audit testing did not disclose any instances of fraud, these deficiencies increase the risk that moneys could be collected and not deposited into a Village bank account or that inappropriate payments could be made without detection.

District officials developed reasonable budgets and managed fund balance responsibly in accordance with statute. Education Law allows a school district to maintain up to 4 percent of the ensuing year's budget as unrestricted fund balance. The District has maintained approximately this amount of unrestricted fund balance for the three fiscal years that we reviewed. We commend District officials for taking positive action in managing the District's financial condition. As a result, the District's financial position has remained strong.

Village officials have not designated a financial software administrator who is independent of the financial recordkeeping or restricted users' access to the financial system based on employee job responsibilities. In addition, Village officials do not review audit logs to monitor users' activities when accessing the financial software. The Board also has not developed comprehensive policies and procedures to protect critical financial data. As a result, the Village has an increased risk that inappropriate transactions could be processed without being detected.

The Board has not developed adequate policies and procedures for the procurement of goods and services, credit card use, cash receipts, cash disbursements or the audit of claims. The Treasurer's duties are not adequately segregated and the Board does not require the Treasurer to submit an annual report and does not conduct an annual audit of the Treasurer's records as required by the bylaws. In addition, the Treasurer does not prepare monthly financial reports and the Treasurer's profit and loss report for 2013 showed a net loss of $14,300 when the Company had a profit of $4,280. Furthermore, the Treasurer does not reconcile bank accounts in a timely manner or issue press-numbered duplicate receipts. In addition, fund-raising deposits were less than collections in March 2013, disbursements totaling $10,515 had no supporting documentation to identify their purpose and checks totaling $52,976 had no evidence of approval of Board or Company members.

The Board did not make sound, transparent financial decisions regarding payments to District administrators. The Board appointed administrators, changed administrators, and entered into and changed agreements with no documented plan, reason or clear benefit to the District. The Board approved a confidential separation agreement with the former Superintendent and was not transparent when adopting the resolutions for the current Superintendent's salary. Most Board decisions were made at special or emergency meetings. The Board's actions in these matters resulted in the District simultaneously paying two Superintendents a total of $449,604 during the 2012-13 school year. In addition, because the Board did not provide clear guidance, a former Deputy Superintendent inappropriately received two unauthorized payments for 50 vacation days totaling $34,375. Finally, the Board appointed a Board Assistant, who was paid $94,658 in vendor payments from July 8, 2011 through September 28, 2012. District officials could not state with certainty what work this individual performed for the District. In addition, the Board has not instituted procedures or scheduled sufficient meetings to ensure that all of its decisions and deliberations are performed in a transparent and public manner. The District also needs to improve controls over its personnel practices. District officials did not always ensure that students' special education evaluations were performed properly and did not adequately monitor the services provided to students to ensure that they received all services specified in their IEPs. Finally, District officials have not ensured the security of the District's IT system.

We found that the Treasurer maintained appropriate accounting records and submitted monthly financial reports to the Board. However, the Treasurer did not receive all Department cash receipts, as required by the bylaws. For example, in 2014, the Department collected $11,181 in cash from the carnival, but gave the Treasurer only $3,685 of this amount to be deposited. The Department President used the remaining $7,496 in cash to pay for various expenses, including carnival ground cleaning services ($3,800), food and supplies for a party for the carnival workers ($1,924), and carnival setup costs ($704). Although these expenditures were supported by invoices and handwritten documents, because the President paid for them in cash, the Board was not given the opportunity to review and approve the payments before they were made. In addition, the Ladies Auxiliary (Auxiliary) collected and deposited all of the Department's banquet, hall and pavilion rental revenues into its own bank accounts. This practice is not mentioned in the bylaws, and there is no written contract between the Department and Auxiliary. Furthermore, the Board did not properly authorize all disbursements prior to payment. Finally, the Board did not obtain an audit of the Department's records by an independent public accountant, as required by law.

The Board and Directors have attempted to provide oversight of Department financial activities, but some of these oversight processes could use improvement. Although the Department's bylaws specifically detail the Board's and Directors' responsibilities, and the Treasurer's duties, these guidelines do not adequately segregate the Treasurer's duties. In addition, the Board and Directors have not adopted adequate written policies or procedures addressing cash receipts and disbursements, procurement or claims processing. As a result, the Treasurer makes all deposits, disburses cash and performs all recordkeeping functions. While the Treasurer provides monthly reports to the Board detailing receipts, disbursements and cash balances, the Treasurer has not prepared proper bank reconciliations. Although we did not find significant deficiencies with the bank reconciliations we performed for the audit period, failure to perform bank reconciliations will allow errors to remain undetected and uncorrected. The Board minutes noted that the Audit Committee completed quarterly audits; however, there was no formal documentation of the procedures performed during these audits and the records reviewed. Department officials provided consistent explanations of the procedures performed during quarterly audits, but these procedures typically only included the review of cash disbursements; they did not include a review of cash receipts or deposits. In addition, the Board and Directors have not adopted a code of ethics.

We found that the records maintained by the County Clerk and the Commissioner's office were generally up-to-date and complete, and we noted no material discrepancies. We found that the Surrogate's Court, however, did not maintain all required records as the Surrogate's Court Clerk did not keep a court and trust fund register. The Surrogate's Court Clerk has not kept the required Register since 2003. As a result, the Surrogate's Court Clerk was unable to readily identify all assets ordered to be paid into a court, and the Surrogate's Court Clerk's records could not be used to verify that all court-ordered deposits had been properly received and deposited by the Treasurer.

The District did not prevent employees serving as active volunteers from earning points for responding to calls during their regularly scheduled work hours. In 2013, the District used a procedure where employees who were also volunteers would sign in for calls and other LOSAP-eligible activities using an alternative badge number when those activities occurred during regularly scheduled work hours. Although this procedure allowed the District's LOSAP computer program to identify which activities were performed during work hours and, therefore, ineligible for points, these volunteers still earned points for all calls in which they participated. In November 2013, the District changed their procedure to require that employees also serving as volunteers no longer have an alternative badge number. The new procedure requires them to clock out of work in order to sign into a call, and then make up the missed work hours by the end of the pay period. However, this new procedure still did not prevent these individuals from earning LOSAP points for activities performed during their regular work hours. Due to this weakness, we reviewed LOSAP and call attendance reports from January through March 2014 for the District's five employees with regularly scheduled work hours who also serve as volunteers. We found that these volunteers attended between 41 and 83 percent of fire and EMS calls during their regularly scheduled work hours.

The Board entered into “deferred compensation” agreements with a former sanitation supervisor (Supervisor A) and his successor (Supervisor B) and made payments from the District's general fund, despite having no legal authority to do so. These agreements were not in accordance with a deferred compensation plan as authorized under State Finance Law and New York State Deferred Compensation Board regulations. As a result of these unauthorized agreements, the Board has improperly paid more than $391,900 to Supervisor A over the past 15 years and $421,353 to Supervisor B during our audit period. In addition, the Board has not established a thorough claims audit process to ensure that all claims are audited by the Board and that the Treasurer disburses District moneys only upon receipt of a signed warrant. Finally, District officials have not established sufficient internal controls over the procurement of professional services. The District hired three professional service providers, paid a total of $263,277, without issuing requests for proposals or using any other form of competition. District officials also did not enter into adequate written agreements with these service providers.

Company controls are adequate to ensure moneys are safeguarded and financial activity is properly recorded and reported. The Company adopted bylaws and established procedures to ensure receipts were deposited and accurately recorded and disbursements were for legitimate Company purposes. We only found minor exceptions which we verbally communicated to the Company officers.

The Board and Committees did not ensure that financial activities were properly recorded and reported and moneys were adequately safeguarded. In addition, the bylaws were not consistently followed. The Financial Secretaries did not approve vouchers in a timely manner and the Treasurers often disbursed moneys before the expenditures were approved for payment. Furthermore, the Financial Secretaries also did not consistently record receipts in press-numbered duplicate receipt books and, therefore, we were unable to determine if the Treasurers' deposited all the moneys collected. Lastly, the Board and Committees failed to perform adequate annual audits.

The Board did not develop adequate procedures that required the solicitation of competition for the procurement of professional services and the District's procurement policy does not require competition to hire professionals. As a result, District officials did not solicit competitive proposals for eight of the nine professionals who provided services totaling $150,800 during our audit period. In addition, the District did not enter into written contracts with four of these professionals. Although three other professionals had signed contracts at the beginning of their engagements, these contracts were not renewed or updated for future periods when the District continued to use their services. In addition, the Board has not adopted a comprehensive IT policy, resulting in a lack of guidance regarding the District's IT processes. The Board has not adopted a policy and implemented procedures for remote access and breach notification and has failed to implement procedures to periodically produce and review audit logs that could be generated by the accounting software. The District also does not have a formal disaster recovery plan.

The Board implemented procedures that require selected Board members to review the Treasurer's work on a monthly basis. This includes reviewing bank statements and cancelled check images, ensuring revenues recorded in the general ledger are deposited and providing for an annual audit. However, they did not ensure that the monthly budget-to-actual reports provided by the Treasurer were complete and that miscellaneous revenues collected, other than taxes, were recorded and deposited. The Treasurer accounted for the District's financial activities and submitted monthly financial reports to the Board and annual reports to OSC. However, the budget-to-actual reports did not include revenues or a complete accounting of expenditures. For example, the reports failed to reflect expenditures that were not a part of the adopted budget. Those expenditures were reported separately to the Board during the month incurred. This practice circumvents the purpose of a budget-to-actual report and therefore could mask the fact that the District is spending more than originally planned. Finally, the Board attempted to segregate the cash receipt duties by having the Treasurer open the mail and forward all money received to a Board member for deposit. However, there was no audit trail beginning with the initial point of cash collection to show the amounts the Treasurer actually received.