The Board did not properly establish any of the Town's 14 capital reserves, totaling $614,266 as of May 31, 2014. The Board also failed to seek approval from OSC to establish any of these reserve funds. Furthermore, two of the reserve funds, entitled “communications” and “software” totaling approximately $35,000, are not permitted by GML. During our audit period, the Board expended funds from three of their type capital reserve funds and failed to subject the expenditures to permissive referendums and obtain approval from OSC. In addition, internal controls over the Court's accounting and reporting of financial activity were inadequate. Justice Atwell did not perform monthly bank reconciliations or accountabilities during 2012 and 2013. In addition, he did not always deposit collections in a timely matter. Furthermore, when he resigned from his position on October 23, 2013, he transferred the funds in his bank account to the succeeding Justice without supporting records indicating associated pending cases. Justice Durkin did perform monthly bank reconciliations, but did not perform monthly accountabilities of cash on hand and on deposit to outstanding liabilities and she had unaccounted for funds in her bank account.

Internal controls over the department's cash receipts process are not appropriately designed or operating effectively. The Board has not adopted comprehensive written policies for departmental cash receipts or implemented procedures to provide guidance for employees when recording transactions to help ensure that the department's financial reports are accurate and reliable. As a result, the Comptroller incorrectly recorded department revenues which results in the Board not having adequate information to make budget decisions for recreation programs.

The Board has not developed policies and procedures to govern budgeting practices and the level of unexpended surplus funds, and as a result, the Town has accumulated a significant amount of unexpended surplus funds. For example, the town-wide general and highway funds had unexpended surplus funds totaling $288,800 and $170,500 at the end of the 2013 year. These amounts represented 75 and 42 percent of 2014 appropriations in those funds. Further, we found that the unexpended surplus funds in the town-outside-village general and highway funds reached $65,448 (106 percent) and $264,118 (120 percent), respectively, of 2014 appropriations. The accumulation of unexpended surplus funds in the Town's operating funds was primarily due to consistent operating surpluses and underestimation of sales tax revenues.

While all the disbursements we reviewed were properly recorded on Board-approved abstracts, the Board does not conduct a comprehensive audit of each claim as required by Town Law. We reviewed 205 disbursements totaling $708,616 to determine if they were properly approved and supported by adequate documentation. We found that 43 disbursements totaling $139,303 were authorized by the Secretary instead of the Director as required. In addition, claims for 13 disbursements totaling $170,008 did not contain an authorizing signature. The Director properly authorized the remaining 149 expenditures totaling $399,305. We also found credit card claims were not always supported with adequate documentation.

The Board did not ensure that District personnel used competitive methods when purchasing goods and services not subject to competitive bidding. This occurred because the Board did not require that District personnel obtain quotes or issue requests for proposals in accordance with the Board-adopted procurement policy. District officials paid 27 invoices totaling $83,370 for purchases without obtaining any type of competition. In addition, the Board did not follow its own procurement policy because it approved 22 vendors for use without obtaining competition. The District also did not seek competition when selecting four professional service providers who received payments totaling $155,865. The Board also did not enter into written agreements with two professional service providers who received payments totaling $35,113 during the audit period. In addition, the Board has not established written policies or procedures for granting, changing and terminating access rights to the District's financial system. It has not ensured that each financial system user is assigned only one username and password, and has not designated someone to be the financial software system administrator. The Board has not implemented policies or established procedures that address remote access to the financial system. Finally, the Board did not adopt a breach notification policy or a disaster recovery plan.

The Board did not provide proper oversight over the management of the Park. The Board did not ensure that proposed improvements were properly evaluated and authorized prior to committing Town funds. Town officials never received written authorization from NYS Parks for any of the proposed projects, as required by the terms of the agreement. Instead, the Board relied on the judgment of the Supervisor and the oversight of a local development corporation that it formed to identify potential projects and manage the Park. As a result, Town officials wasted money by contracting for services that ultimately provided little or no benefit to the Town. To date, the Town has spent more than $1.1 million on the Park, and this spending has not resulted in any significant improvements other than normal Park maintenance and the paving of two parking areas. Furthermore, the Board did not properly monitor fuel purchases and usage at the Park, and the Town did not have adequate controls over Park fuel supplies. We identified approximately 2,000 gallons of diesel fuel with a value of approximately $6,500 that is unaccounted for and may have been dispensed into an employee's personal vehicle.

We found that the Board could improve its oversight of the Department's financial activities. Although the Board has adopted Department bylaws, which includes cash disbursement policies, we found them to be inadequate. Even though the Department's bylaws specifically detail the Board's responsibilities and the Treasurer's duties, these guidelines did not adequately segregate or provide oversight of the Treasurer's duties. Further, the Board has not adopted policies or procedures for financial operations such as cash receipts, procurement and claims processing. As a result, the Treasurer receives all Department funds, prepares and makes all deposits, pays Department bills and performs all recordkeeping functions, including bank reconciliations, with little or no Board oversight. In addition, the Treasurer did not always obtain Membership approval prior to transferring funds in the Department's bank accounts as required by the bylaws. We found that the Treasurer generally maintained appropriate financial records; however, completed bank reconciliations were not maintained. While the Treasurer provides a verbal bi-weekly report to the Board and Membership detailing the Department's finances, the Treasurer did not provide the Board with written financial reports for review. Furthermore, the audit committee did not complete an adequate annual audit and the results were not documented in the meeting minutes. Finally, the Board did not prepare or adopt an annual budget and has not adopted a code of ethics.

We found that the Clerk did not deposit all money collected. As of June 23, 2014, she had a shortage totaling $3,147. In addition, the Clerk did not record, deposit or remit money collected in an accurate and timely manner. We also found that the Board did not provide adequate oversight of the Clerk's operations and did not conduct a thorough audit of the Clerk's records. As a result, Town money was misappropriated.

We found that the town-outside-village operating fund balances were reasonable and the Board's budget estimates for revenues and expenditures were generally reasonable for all funds. However, because the Board did not fully understand the impact of appropriating fund balance each year, fund balance for both of the town-wide (TW) operating funds combined experienced significant declines over the last three years totaling about $463,316. The TW general fund ended 2013 with an unrestricted, unappropriated fund balance of $2,683 and the TW highway fund ended the year with an unassigned fund balance deficit of $75,952. The Board adopted budgets that relied too heavily on appropriated fund balance as a financing source and appropriated more fund balance than it had available. Additionally, the Board has not developed a fund balance policy to determine the amount of fund balance to maintain or multiyear financial and capital plans to address the Town's long-term priorities. As a result, the Town's ability to react to external influences, provide basic services and plan for capital needs is diminished.

The Board did not effectively oversee the Town's financial operations. The Supervisor did not provide the Board with adequate monthly financial reports. In addition, the Town's procedures for auditing claims were not in compliance with Town Law. Furthermore, the Board did not annually audit or cause an audit of records and reports of all Town officers or employees who received or disbursed moneys on behalf of the Town. As a result of these deficiencies, there is an increased risk that inappropriate payments or irregularities could occur and the Board's ability to effectively monitor the Town's financial operations is diminished.

The Justices do not provide adequate oversight of Court operations to ensure the accurate and complete collection, deposit, recording and reporting of Court moneys in a timely manner. The Justices have not adequately segregated the duties of the clerks and do not regularly review accounting records, bank statements, or monthly reconciliations and accountability analyses. Although the Court issues computerized receipts, the receipt numbers, dates and amounts can be altered or deleted in the computer system and the Justices do not review system activity as a compensating control. Further, 71 receipts were not deposited within 72 hours of receipt and various receipts or transactions were deleted from the system without a valid documented reason. Finally, the Justices have not developed a policy or procedures to enforce collection of unpaid fines and fees. As a result, 34 unpaid tickets were not submitted to the Department of Motor Vehicles (DMV) to be scofflawed and five tickets were incorrectly reported as disposed of to the DMV. Due to these control weaknesses, it is impossible for the Justices to hold any clerks responsible for any errors, deficiencies or fraudulent or abusive activities that may occur and the Court is not collecting all potential revenue.

Internal controls over the claims audit process were not appropriately designed. The Board assigned the responsibility to audit and approve claims for payment to the Board President. This is not a good practice because the entire Board is not auditing or approving claims. Further, while the account clerk prepares an abstract of claims for the Board, the abstract does not include payments made in advance of the Board President's audit and approval, and the Board does not take any action to approve the abstract. Also, the Director is paying various claims in advance of audit and approval for payment; however, the Board did not pass a resolution authorizing the payment of eligible claims in advance of audit. We reviewed 177 payments totaling $309,724 and found that all payments were for purchases that appeared to be for appropriate Library purposes and were supported by itemized invoices. However, 49 claims totaling $83,757 did not include signatures from the Director or department heads to indicate the goods or services were actually received.

The Board has not established adequate policies and procedures or provided guidance on maintaining a reasonable level of fund balance. As a result, the Village has accumulated excessive fund balance in its general fund that resulted, at least in part, from unrealistic budget estimates. Specifically, over the past eight years, the Village's fund balance has ranged from approximately 25 percent to 52 percent of the next year's budgeted appropriations. In addition, the Board has not developed a long-term financial or capital plan or established reserves to help address the Village's future needs.

The Board did not properly oversee the Town's financial operations. The Board and Town officials have not developed multiyear financial plans, policies, or procedures to govern budgeting practices or the level of unexpended surplus funds to maintain. Lacking an established financial plan and budgetary guidance, the Board adopted budgets that were not based on sound and realistic estimates of revenues and expenditures and appropriated fund balance based on the former Supervisor's estimates without ensuring funds were available. Poor budgeting, along with overspending in the highway fund, has caused cash flow problems, which required interfund transfers and advances from the general fund to pay bills over the last several years. The Board's continued reliance on using money from the general fund to pay highway fund bills has caused the Town's overall financial condition to be volatile in the last four years. Finally, the Board has not provided sufficient oversight to Town departments collecting and disbursing cash by performing an annual audit.

The Supervisor did not maintain accounting records. Specifically, general ledgers, receipt and disbursement journals, subsidiary revenue and expenditure ledgers and cash account balances were not maintained. As a result, the Supervisor was unable to prepare monthly bank reconciliations or provide the Board with complete and reliable financial reports. Additionally, 88 disbursements totaling approximately $68,300 were made either without proper supporting documentation or Board authorization and an accurate 2013 annual financial report was not filed with the Office of the State Comptroller. Further, the Board did not adequately oversee the Supervisor's financial duties to properly monitor and manage financial operations and assess the Town's financial condition. The Board also did not annually audit the Supervisor's records or develop and implement policies and procedures over its budgeting practices and the level of fund balance to maintain. As a result, cash at the end of 2013 totaled $689,998 or more than twice the 2014 Board-adopted budget and the Board may have raised more real property taxes than necessary to finance Town operations. Finally, the Town purchased an engine for a highway vehicle from the Highway Superintendent for $1,300, which created a conflict of interest.

The Board has not provided adequate oversight to safeguard Town assets. Specifically, the Board did not adopt structurally balanced budgets. As a result, in each of the fiscal years 2011 through 2013, the general fund had available fund balance that was more than 90 percent of the ensuing year's budget and the highway fund had available fund balance that was more than 50 percent of the ensuing year's budget. These fund balances are excessive. The Board did not audit any claims from the general fund, water district and street lighting fund. As a result, we found that eight disbursements totaling $13,563 were lacking supporting documentation to determine they were appropriate Town expenditures. In addition, the Board did not audit the books and records of any of the Town officers and employees that handled cash. Finally, the Town's lack of policies and procedures also allowed deficiencies to occur without detection in cash receipts and disbursements.

The Town's general, sewer and water funds all had a deficit fund balance at some point during the period from 2009 through 2013. The general, water and sewer funds all had accumulated fund deficits for fiscal years 2009, 2010 and 2011. While Town officials were able to improve the fiscal stability of the general fund during this period, which reported a positive accumulated fund balance in 2012 and 2013, the sewer and water funds still had accumulated fund deficits in 2012. The sewer and water funds had accumulated deficits from 2009 through 2012. The Town reported marginal positive accumulated fund balances of $23,442 and $8,967, respectively, for 2013. While Town officials were able to eliminate accumulated fund deficits in these funds by the end of 2013, officials have not developed a multiyear financial plan to assist them in monitoring operations and guarding against future operating deficits.

We were unable to determine if all collections were recorded and deposited in a timely manner and intact. This was because Library officials have not established formal policies or procedures for handling and recording cash receipts. As a result, the Library did not always ensure that adequate documentation was maintained to verify that all collections were recorded and deposits were made timely and intact. In addition, the Budget and Finance Committee did not audit monthly revenues, to confirm that moneys were accounted for.

The Board-adopted budgets during our audit period included overestimated expenditures and appropriated fund balance that was not actually used to finance operations. As a result, in 2011-12 and 2012-13 the District accumulated fund balance that exceeded the amount that may be carried over into the next school year. The excess fund balance was more than 16 percent of the next year's budgeted expenditures for both years and District officials did not use any of this excess to reduce the real property tax levy for the 2012-13 or 2013-14 fiscal years. Additionally, for fiscal years 2010-11 through 2012-13, the Board-adopted budgets included about $1.45 million of appropriated fund balance. However, about $30,000, or 2 percent, was actually used to finance District operations. Further, although District officials reserved money to prepare for future contingencies, funding of reserve funds was not included as an appropriation in the budgets voted on by taxpayers. Instead, District reserve funds were funded by unrestricted fund balance determined by the Board at the end of each fiscal year. The taxpayers did approve the establishment of a building repair reserve. Although the Board prepared its budgets without using a multiyear financial plan, District officials initiated preliminary work on such a plan before we completed our audit fieldwork.

The purpose of our audit was to determine whether law enforcement agencies have established appropriate controls over property room inventory for the period January 1, 2012 through December 5, 2013.