Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable, except for the possible revenue shortfall related to the expiration of the County mortgage recording tax law. In the 2015 budget, the County has included $3.4 million as revenue from the County mortgage recording tax. However, the law permitting the County to collect this revenue is due to expire on February 21, 2015. The Legislature must pass a law to extend the mortgage recording tax law or the County will face a revenue shortfall of approximately $2.9 million after the law expires. The County's proposed 2015 budget complies with the tax levy limit.

District officials did not obtain quotes or requests for proposals (RFPs) for most professional services during the audit period. The District made payments to eight professional service vendors totaling $153,238 for six types of services. In 2013, the cost of these services consisted of $84,584 for insurance coverage, $11,086 for legal services, $10,675 for physician services, $7,800 for investment management services, $5,000 for external audit services and $650 for engineering services. Through May 2014, these services consisted of paying $27,889 for insurance coverage, $4,679 for legal services and $875 for physician services. The District issued RFPs for the external audit services; however, RFPs, verbal or written quotes were not obtained for any of the other professional services rendered to the District.

The Board did not adopt realistic, structurally balanced general fund budgets or adequately monitor the financial activity of capital projects to ensure fiscal stability. The Board also did not adopt a policy regarding establishing an adequate level of unrestricted fund balance to maintain. As a result, the general fund's financial condition has diminished in recent years. In 2011-12 and 2012-13, the Board appropriated significant amounts of fund balance to finance operations which caused the general fund to realize operating deficits in both years. As a result, the general fund reported an accumulated fund balance deficit of approximately $275,000 at the end of the 2012-13 fiscal year. Furthermore, the Board and District officials failed to properly monitor capital project activity. Consequently, the District expended $741,000 more than the total amounts authorized for two projects causing a fund balance deficit in the capital projects fund in that amount. The District will ultimately need to transfer funds from the general fund to eliminate the capital project's deficit. As of June 30, 2013, the general fund did not have sufficient funds available to do so.

District officials have taken appropriate action to manage the District's financial condition. District officials provided for effective financial planning and management by ensuring unrestricted unappropriated fund balance levels are in accordance with statutory requirements, and budget estimates and reserve balance levels are reasonable.

The Town was categorized as being "susceptible to fiscal stress" in a report issued in September 2104 as part of the Comptroller's Fiscal Stress Monitoring System. The 2015 proposed budget for the Town's five funds totals $1,378,325 and is funded by estimated revenues of $134,785 and real property tax revenues of $1,243,540. Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. The Town has adopted a local law to override the tax levy limit in 2015.

The Town was categorized as being “susceptible to fiscal stress” in a report issued in September 2014 as part of the Comptroller's Fiscal Stress Monitoring System. The 2015 tentative budget for the Town's funds totals $1,311,410 and is funded by estimated revenues of $370,880, appropriated fund balance of $116,905 and real property tax revenues of $823,625. We project that the general town-wide fund will end the current fiscal year with a deficit fund balance of up to $21,000; Town officials did not consider this when developing the 2015 budget. The allocation of payroll expenditures in the highways funds does not appear to be equitable. The Town's tentative budget complies with the tax levy limit in 2015.

We found that the Treasurer did not prepare adequate monthly reports. Our review of Council minutes disclosed that the Treasurer's monthly financial reports consisted of a listing of Department bank account balances. However, the bylaws require the Treasurer to keep a complete record of all funds received and disbursed and furnish a report showing this activity at the Department's regular meetings. While there was also evidence that Department non-Council members performed an annual audit of the Treasurer's records, it would be difficult to perform a thorough audit without the benefit of the cancelled check images to review. Further, for the Department's ox roast fund-raiser held in 2013, the event's committee chairman told the President that he did not maintain an accountability of ticket sales. Finally, because the Council did not approve claims prior to payment, we reviewed all 271 checks listed in the 2013 check disbursement ledger totaling $100,158 and the claims associated with these checks. Our testing revealed no significant discrepancies and we found that the disbursements reviewed were supported with appropriate claims documentation, properly recorded and agreed with images of the checks used to pay these claims.

The Clerk did not properly safeguard taxpayer funds. As a result, we could not determine if the Clerk is receiving, recording, depositing, disbursing and reporting all the money owed to the Town and/or paid to her. The Clerk failed to issue duplicate receipts or record the form of payment for any moneys collected and stopped recording tax payments in her records after the second month of the five-month collection period. Further, she did not consistently report the monthly activity to the Supervisor, reconcile her bank accounts with her accounting records or reconcile the amounts she had collected with what was owed to various parties. Finally, the Clerk and Code Enforcement Officer failed to compare the money received for building permits with the building permits actually issued.

The Board has established adequate internal controls for processing over-the-counter cash receipts to ensure that all cash collections are properly accounted for and deposited timely and intact. These controls include policies and procedures that provide guidance to the Library staff involved in the cash collection process, from the initial receipt of cash, accounting for cash receipts, preparing deposit slips to the timely deposit of collections. The procedures also adequately segregate duties within the cash collection process to ensure that no one individual controls all phases of a transactions.

The City's proposed budget, while generally reasonable, needs improvement to make it a better tool for prudently managing the City's resources. The sewer fund continues to display a trend of declining financial position and the proposed increases in revenues for the sewer fund's 2015 budget do not appear reasonable. The water fund's cash balance has steadily declined over the last several years and projections indicate that the fund will end 2014 in a deficit cash position. The City's 2015 proposed budget does not appropriate enough money for contingencies to provide adequate flexibility to pay for unanticipated costs. The City's 2015 proposed budget continues to provide minimal funding for capital improvements and, having nearly depleted its capital reserve, is issuing debt to fund capital expenditures. Due to a change in accounting for retirement expenditures, the City will be required to recognize increased retirement costs in future years. The City's proposed budget is in compliance with the tax levy limit.

Based on the results of our review, we found that generally the significant revenue and expenditure projections in the preliminary budget are reasonable. However, we found that the Town's projections for rental income in the hospital fund were not based on amounts expected to be received according to current lease agreements. The Town did not budget for an additional $95,000 in nonrecurring rental income, but did include $30,000 of lease payments for which no lease agreement exists. As a result, the Town underestimated rental revenue by a total of $65,000. In addition, the Town is currently reporting accounts payable in the hospital fund related to the hospital which closed in 2005. While the hospital fund is primarily responsible for the $1.9 million payable, the fund has only approximately $535,000 in current resources available to liquidate the liability. Because the Town has been reporting the same liability for several years without any changes, we recommend that Town officials determine if these payables are legitimate liabilities and, if not, remove them from the balance sheet. The Town's preliminary budget complies with the property tax levy limit.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The Town's 2015 tentative budget complies with the property tax cap levy limit.

We found that the Board did not ensure that foreign fire insurance tax moneys were spent in accordance with the special act that created the Association. Although the 106 payments made during 2013 totaling $49,545 were supported with itemized claims, it is unclear if they were all proper because the Association bylaws were not adequately detailed regarding allowable expenditures. Also, the benefits provided by the Board were well in excess of the $100 limit indicated in the special act. Of the 106 checks, 17 (16 percent) were $100 or less. Further, we found that the Treasurer prepared the 2013 annual report of foreign fire insurance tax moneys and filed it with OSC, as required.

Based on the results of our review, we found that revenue and expenditure projections in the proposed budget are reasonable. The Town's preliminary budget complies with the property tax levy limit.

The Board and Town officials have not developed adequate policies, procedures or financial plans to govern budgeting practices and the amount of unexpended surplus funds to maintain. Lacking established budgetary guidance, the Board has repeatedly adopted budgets with unrealistic estimates of revenues, expenditures and the amount of fund balance that would be used. Therefore, the Town has levied more real property taxes than necessary and accumulated a significant amount of unexpended surplus funds in the town-outside-village (TOV) funds. Had the Board budgeted more realistically and appropriately allocated sales tax among the TOV funds, it could have eliminated the tax levy in the TOV general fund and reduced the levy in the TOV highway and drainage funds. In addition, Town officials could not provide adequate evidence to support the establishment of reserve funds. The Board also did not receive monthly reports from the Supervisor to monitor financial activity. Finally, the Justices did not establish adequate internal controls over the Court's financial operations. Specifically, we found that both Justices did not ensure that all cash receipts were timely deposited and did not complete or ensure that their clerks completed adequate monthly bank reconciliations and accountability analyses, which resulted in multiple errors remaining undetected for long periods of time.

The Town's claims processing policies and procedures are adequate. Board members approve the payment of claims against the Town each month by reviewing and signing an abstract listing current claims for goods and services provided. However, our review of 35 consecutive abstracts that the Board approved during our audit period showed that claims were consecutively numbered within each abstract but not between the monthly abstracts. Therefore, 111 duplicate claim numbers were used and eight claim numbers were not used. In addition, one abstract containing only a claim number and no supporting claim detail was signed by four Board members certifying that, as a Board majority, they had audited and approved the claims for payment. In addition, during the audit period, the Town purchased approximately $25 million dollars in goods and services. To determine compliance with the Town's procurement policy we judgmentally selected 12 purchases; six over the General Municipal Law (GML) bidding threshold, totaling over $470,000, and six under the GML bidding threshold, totaling over $13,000. Of the six purchases that exceeded the GML bidding threshold, five were properly bid and awarded to the lowest bidder and one was obtained using another municipality's contract as permitted by GML. All six purchases under the GML bidding threshold had quotes on file as required by the Town's purchasing policy.

The Board did not ensure that cash disbursements and receipts were properly accounted for because it did not implement proper internal controls over the Department and the three Companies. We found that 134 of the Department's and Companies' expenditures totaling $47,093 lacked sufficient support and/or Board approval to verify that they were appropriate. In addition, the Department's and Companies' records were insufficient for us to determine if the Treasurers deposited all the moneys they collected. If the Board does not improve its controls, the Department's and Companies' funds remain at risk of being used for inappropriate purposes.

The School signed a compact agreement with the Foundation in December 2012 and then entered into a revised three-year compact agreement with the Foundation in June 2013, which is still current. The revised compact does not describe in detail the services that the Foundation will provide. For example, according to the compact, the Foundation ‘may' provide professional development services, teacher evaluations, external marketing assistance and financial consulting services. When asked to describe the specific services being provided to the School, the Board Chairman stated that the School receives access to educational software, recruiting services, management services, website design development services and other services. We reviewed the compact agreement and could not determine how the quality of the services provided would be measured because the compact was insufficiently detailed. Therefore, School officials do not have a means to determine whether the School received an adequate level of services to justify the fees it paid to the Foundation. The fee structure, based on a percentage of per pupil revenue, does not appear to be reasonable, as the services being provided do not have any relationship to the number of students at the School or the Charter School Basic Tuition rate.

District officials did not always comply with District's purchasing policy and procedures when procuring professional services. Therefore, the Board does not have adequate assurance that services were procured in the most economical way and in the best interests of the taxpayers. We reviewed the procurement of 20 professional service contracts totaling $2.4 million during the audit period. The District properly awarded nine professional services contracts after issuing RFPs for architectural services, special education services, auditing services, legal services, energy performance services and for a graphic artist. However, District officials did not seek competition for nine professional service contracts totaling $908,759 which included the following; $544,256 for general liability insurance, $200,000 for the construction manager, $48,784 for investigative services, $39,600 for professional development of District teachers, $24,631 for a homeless student liaison and grant preparer, $25,000 for a school physician, $11,800 for a graphic artist and $14,688 for a Medicaid claim specialist. Furthermore, District officials did not have documentation to support why eight of the nine professional service contract providers were chosen.

Village officials did not always use competitive procedures for the procurement of goods and service as required by General Municipal Law. We found a contract for public work for paving in the amount of $51,150 was not competitively bid. We also found two equipment purchase contracts for $50,000 and $109,970 were not competitively bid. Although the Board awarded the $50,000 purchase contract using what they believed was a “best value” method, the award did not adhere to the best value method requirements. As a result, the Village may have incurred higher costs than necessary, or in the case of best value, not optimized quality, cost and efficiency for the items it has acquired.