New York State General Municipal Law (GML) requires the industrial development agency (IDA) to send payments in lieu of taxes (PILOT) collected to each affected taxing jurisdiction within 30 days of receipt. The Agency used a computerized system to track billing, collecting and distributing PILOT agreement payments to the benefitting taxing jurisdictions. We tested 10 randomly selected PILOT projects to determine if PILOTs totaling $1.14 million were accurately billed, collected and distributed in a timely manner. Although the Agency's process for billing, collecting and recording PILOTs was efficient and payments were accurately billed and collected, our test disclosed that on average, PILOTs were disbursed 49 days after payment was collected. This occurred because IDA employees used an inefficient process to calculate and allocate PILOTs to the affected jurisdictions, which in turn delayed preparing the disbursement warrant directing the Comptroller's office to distribute the payments within 30 days, as required by GML.

We found that not all Court cash receipts were properly recorded and deposited. In addition, bail accounts had insufficient balances to cover liabilities, partial payments were not properly recorded and monthly accountability analysis were not performed. We determined that the Court's liabilities exceeded the Justices' total cash as of December 31, 2013, resulting in a shortage of $5,480. These discrepancies occurred because the Justices did not properly monitor the clerk's activities or implement good internal controls. The clerk was responsible for collecting cash receipts, issuing receipts, updating the case file in the computer system, depositing cash receipts, preparing monthly reports to the Justice Court Fund, reporting Court transactions to the DMV and performing monthly reconciliations. Because the clerk controlled all phases of the Court's cash collection process with little oversight by the Justices, she was able to conceal the theft. Further, due to insufficiencies in recordkeeping, the Board was unable to complete the annual audit.

The Board contracts with an accounting firm (Firm) to assist the Supervisor in fulfilling his financial duties. However, the Supervisor is still responsible for the accounting records and should adequately oversee and monitor the Firm's work. We found that he did not adequately monitor the Firm's work. The Firm maintained the Town's accounting records, prepared bank reconciliations and was responsible for all financial reporting with little oversight by the Supervisor. Additionally, the Board did not review key financial reports and did not perform an annual audit of the Supervisor's records, as required by law. As a result, there were significant problems with the accounting records and the Town's records did not agree with the annual financial reports. For example, restricted fund balance totaling $157,839 for various reserve funds was included in the accounting records but not in the Town's annual financial report. In addition, the Board did not approve interfund transfers and the transfers that were made were not always repaid in a timely manner. Finally, we found no evidence that the Town's reserve funds were properly established.

District officials properly managed the financial condition of the District. While facing some financial difficulties, the Board has adopted budgets with reasonable estimates, provided sufficient reserves for future expenditures, and reduced expenditures. While real property taxes have increased, the amount of available surplus money has been kept within the statutory limit.

The Village's local law states that overdue water rents must be placed on the tax levy, regardless of whether the accounts are open or closed. New York State General Municipal Law also allows unpaid sewer rents to be added to the tax levy. The Treasurer relevied only closed overdue accounts. During our audit period, the Village did not relevy $104,958 in unpaid water and sewer rents. Further, by not charging penalties, the Village has forgone approximately $57,000 in potential revenue. By not using these enforcement practices, the Village has negatively impacted its cash flow and the water and sewer funds' operations. The Board should ensure that it complies with local laws and takes advantage of collection enhancement opportunities.

The Board is not properly overseeing the Village's financial operations. The Board did not segregate the Clerk-Treasurer's duties or institute sufficient compensating controls where necessary. The Board did not audit all claims and ensure that all payments were supported by adequate documentation. The Board also did not require the Clerk-Treasurer to provide adequate monthly financial reports to properly monitor the Village's fiscal condition. In addition, the Board did not perform an annual audit of the Clerk-Treasurer's records. Village officials do not have written procedures for reconciling the water produced by the Village's water system with the water billed to the Village's customers. For the 2013 calendar year, the Village could not account for 75 percent of the water produced. We estimate that, if the unaccounted-for water was due to malfunctioning meters, the Village could have realized an additional $100,026 in revenue without raising rates in fiscal year 2013. Conversely, if the unaccounted-for water is due to leaks rather than malfunctioning meters, the Village is incurring excess costs of $43,944 per year to produce the unaccounted-for water. Finally, Village officials appropriately enforce unpaid water rents for Village residents through re-levy on property tax bills. However, the Village has no policies or procedures in place for enforcing unpaid water rents for outside-Village customers. As of December 31, 2013, delinquent water accounts totaled approximately $6,900, of which approximately $2,400 (35 percent) were in relation to outside-Village customers.

In recent years, the District has struggled with fiscal challenges. The Board has balanced its adopted budgets with appropriations of fund balance and reserves while limiting tax increases, which has contributed to the District's deteriorating financial condition. As a result, by the end of the 2012-13 fiscal year, the District had approximately $815,000 remaining in reserves and a deficit unrestricted fund balance of $435,655. We reviewed budget-to-actual results for the 2010-11 through 2012-13 fiscal years and found that District officials adopted realistic budgets and kept expenditures within budgeted appropriations. The Board reviewed budget-to-actual comparison reports throughout the year to monitor the budget and approved budget transfers at the monthly Board meetings. However, the Board's heavy reliance on appropriated fund balance and reserves as financing sources in the annual budgets has resulted in a significant reduction in the District's unrestricted fund balance and reserve balances.

The Clerk did not record all receipts in the cash receipts journal, deposit amounts collected in a timely manner or intact, remit moneys collected from both Clerk and tax collection activity to the Supervisor and other entities in a timely manner, or issue press-numbered duplicate receipts. Due to these internal control weaknesses, cash receipts were not adequately safeguarded. We determined that the Clerk's account had a cash shortage of $7,741 as of August 31, 2013. However, on September 3, 2013, the Clerk deposited $5,956 to her account. This deposit still left a cash deficiency of $1,785 in Clerk fees as of September 3, 2013. We also found that the Clerk's tax liabilities at September 5, 2013 − all payable to the Supervisor − exceeded known cash assets by $6,424. On September 6, 2013, the day after we performed our analysis, the Clerk made a cash deposit to the Tax Collection account totaling $6,444, which eliminated this shortage. We referred our report to the Wyoming County District Attorney for further review.

The bylaws establish various controls to help safeguard Company assets. However, there are no controls or other procedures in place requiring the Board's review and approval of claims prior to payment. These procedures would strengthen the controls over the cash disbursement process. Although the President appointed an audit committee as required in the bylaws, the audit committee did not audit the Treasurer's records prior to the annual meeting and submit its audit report as required. In addition, the Board did not audit each claim prior to payment. Instead, the Treasurer provides a list of paid disbursements to the Board and Company members at the meetings. While providing information regarding these disbursements to the Board allows it to monitor the Company's disbursements, this is not as effective or as strong a control as reviewing and approving claims before payments are made

We found that District officials approved payment of claims that did not comply with District policy. Over 61 percent of the credit card transactions reviewed did not have documentation to support the purchase as required by District policy. Expense reports submitted for travel advances did not match the receipts that were submitted. In addition, the reimbursements to District officials for the use of personal cell phones were made without the required cell phone bills. As a result, District taxpayers do not have adequate assurance that all claims paid were for legitimate District expenditures.

In an effort to reduce unexpended surplus funds to a reasonable level, the Board adopted budgets that limited tax increases by balancing its budgets with appropriations of fund balance. As a result, the District spent $2.7 million more than it received in revenue, reducing unexpended surplus fund balance by $2.1 million. While we applaud District officials for taking action to reduce available fund balance in these funds, they have depleted these balances to precariously low amounts. Further, the school food service fund has not been self-sufficient and has required annual transfers from the general fund, averaging $77,000, in order to keep it solvent. The Board and Administration need to identify means to replace fund balance as a financing source or reduce expenditures to within the District's available revenues

The Board and Town officials have not adopted policies and procedures or long-term financial plans to govern the budget process or the appropriate level of fund balance to be maintained in each fund. As a result, the Board did not always adopt accurate budgets and relied heavily on the appropriation of fund balance to balance its budgets. Consequently, unexpended surplus funds declined quickly in the general fund, by nearly $87,000 from December 31, 2010 to December 31, 2013, to only 5 percent of the 2014 budget. Similarly, unexpended surplus funds in the highway fund declined as a result of $139,290 in unplanned operating deficits over three years, and the Board appropriated more fund balance in its 2013 budget than was available for this purpose. The Board also did not adequately fulfill its fiscal oversight responsibilities. The Board has not adopted policies or ensured that Town officials adopted procedures to govern financial operations or the management of cash, and has not adequately reviewed and updated its purchasing policy. Furthermore, the Supervisor did not maintain adequate control over the Town's accounting records and did not adequately contract for and oversee the financial duties performed by the bookkeeping firm. Finally, the Board did not perform an annual audit of the records and reports of the Supervisor and Town Clerk

The District did not have procedures for disbursements. In addition, the Board did not properly segregate the Treasurer's duties or implement effective compensating controls over the Treasurer's work. The Board also did not conduct an independent review of the bank statements or ensure that bank reconciliations were performed. As a result, there is an increased risk that fraud and abuse could occur without detection.

The Board has not provided adequate oversight to ensure that financial activities were accurately recorded and reported in a timely manner, and it has not effectively managed the Town's financial condition. Town officials were unable to determine the Town's true financial condition for each of the Town's funds because the accounting records and reports were inaccurate. Based on our analysis of all funds combined, the Town did not have enough cash to pay all of its bills at the end of fiscal years 2012 or 2013. As of December 31, 2013, the Town had a cash deficiency of about $325,000, or 24 percent of the next year's budget. The former Supervisor did not provide sufficient oversight of the bookkeeper to ensure that the Town's records were reliable and to address the Town's cash flow needs. The bookkeeper used interfund loans and transfers to keep the Town operational, but did not receive Board approval for most of the transactions and did not understand how to record them in the records. This resulted in misstatements, which obscured the Town's true financial condition. In addition, the bookkeeper did not regularly reconcile the Town's bank accounts to identify errors in the records. The Board did not fulfill its oversight responsibilities by performing a sufficient audit of the Supervisor's books and records. Also, the Board has not adopted a comprehensive multiyear financial and capital plan to adequately address the Town's long-term operational and capital needs. Finally, Town officials do not perform a formal needs assessment or cost-benefit analysis prior to acquiring highway equipment

The City's financial outlook, as projected by the City, has not improved in 2014 as a result of inaccurate revenue and expenditure estimates in the 2014 budget. Officials are projecting operating deficits for the 2014 fiscal year totaling $269,904 in the general fund and $5,582 in water fund. An operating surplus of $8,762 is projected for the recreation fund. The unassigned fund balances in these three funds are expected to remain as deficits of $3.9 million in the general fund, $523,679 in the water fund and $528,603 in the recreation and golf fund. The 2015 proposed budget contains significant financial risks that the City Council should consider when adopting the 2015 budget. The City continues to finance operating expenditures with debt when it should be funding such expenditures with operating revenues. In addition, the practice of supporting operating expenditures with unrealistic revenue estimates and one-shot revenues is not prudent. We also found that City officials had not fully implemented the recommendations in our prior budget review letter, issued on October 15, 2013. At that time, we recommended that City officials slow or curtail the use debt as a financing source to cover recurring operating expenditures such as tax certiorari payments, include reasonable revenue estimates, and adjust the City's budget presentation so that all fund activities are budgeted, accounted for and reported in the proper fund.

The Board established a “type” capital reserve to finance the cost of acquiring, refurbishing, constructing and reconstructing District owned buildings and grounds in accordance with GML. The Board funded its capital reserve through annual budget appropriations and by transferring operating surplus from the general fund. The Board approved the Substation 1 facility reconstruction capital project, which was funded with about $2.8 million from the capital reserve fund, without complying with the permissive referendum requirements. Because District officials failed to publish and post a legal notice on the project prior to approval, the Board had to petition the County Legislature to legalize and validate its actions. In addition, the Board did not approve change orders totaling more than $50,000 before the work began. These discrepancies occurred because the District did not have a written capital asset policy outlining the procedures to follow when constructing capital assets.

The purpose of our audit was to determine if actions taken by the county’s Child Protective Services (CPS) units were sufficient to reduce child abuse and neglect recurrence rates for the period January 1, 2011 through December 31, 2012.

Department officials did not establish policies and procedures or provide oversight of Department financial activities. Consequently, the Department's accounting records were not properly maintained, bank reconciliations were not performed and crucial financial reports were not prepared and submitted for Department officials' review. In addition, press-numbered receipts were not issued to provide supporting documentation for the funds collected during our audit period, checks received totaling $19,318 were not deposited in a timely manner and personal checks totaling $400 were cashed using Department funds. Further, Department officials did not review and approve all bills prior to payment or document approval in the minutes. As a result, 23 disbursements totaling $2,819 were not supported by adequate documentation, which would have allowed Department officials to determine if these disbursements were for appropriate Department purposes.

The Clerk and a bookkeeper perform virtually all of the Supervisor's financial duties with little oversight. The Clerk and Supervisor have functions that serve as checks against one another that do not exist unless they are performed by separate individuals. By allowing the Clerk to perform the duties of both offices, and by not properly monitoring the work of the bookkeeper, the Supervisor has weakened internal controls, creating an increased risk that moneys could be misappropriated and improper transactions concealed. Due to this lack of oversight and controls, the Town did not have receipts or source documents for $876,028 in deposits, and it disbursed $126,536 in payments without Board approval. In addition, the Clerk had sole online banking access to as much as $1.3 million. Further, the Supervisor did not submit financial reports to the Board, and the Board did not perform an annual audit of the Supervisor's records and reports, as required by law.

The Board did not fulfill certain key oversight responsibilities. The Board did not audit claims prior to approval for payment during fiscal years 2012 and 2013. In addition, the Board also did not conduct an annual audit of the books and records of all Town officers who received and disbursed cash for fiscal years 2012 and 2013. The lack of statutorily required Board audits of claims and annual accounting records limits the Board's ability to monitor and maintain accountability over financial operations and increases the risk of improper payments or accounting errors occurring without detection.