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.

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.

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.

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.

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.

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