Based on our examination, it appears District money is adequately safeguarded. However, despite maintaining comprehensive, accurate and timely records, the Treasurer did not file the District's 2012 annual financial report with OSC until April 13, 2014 or 347 days late. Furthermore, although the Treasurer obtained an extension to file the 2013 annual financial report, this report was not submitted as of the end of our field work. The Treasurer told us he believed he submitted the 2012 report in the spring of 2013 after obtaining an extension. The Treasurer further stated he did not file the 2013 report because he was not sure how to account for bond refinancing in the report. District officials stated that they assumed the 2012 report was filed and therefore did not follow-up with the Treasurer to verify the report was submitted on time. In addition, District officials used a request for proposal process in March 2013 to award the contract for auditing the District's 2012 and 2013 financial statements. However, the audits have not been performed as of the end of our field work.

The Board did not establish adequate controls to ensure the District's financial activity was properly recorded and reported and that District money was adequately safeguarded. The Board did not adequately segregate the Secretary-Treasurer's duties, provide any additional oversight or implement other compensating controls, when segregating duties was not practical. The Secretary-Treasurer also does not provide the Board with any budget versus actual revenue and expenditure reports to help it monitor the District's financial operations. The Board authorizes each claim for payment and indicates its approval by having each member affix his signature on each claim voucher. However, the Board has no process in place to verify it approves all claims that are paid, because no one reviews the monthly bank statements, canceled check images or bank reconciliations. Furthermore, the Board did not perform an annual audit the Secretary-Treasurer's records.

City officials did not ensure that internal controls over payroll processing provided for adequate segregation of duties. The payroll clerk performed all significant phases of the payroll process. She entered new employees, pay rates and employees' time worked from their time records into the computerized payroll system, calculated withholding adjustments and finalized the payrolls. The payroll clerk also prepared, signed and distributed paychecks to employees and payroll withholding checks to outside agencies. The payroll clerk also had unrestricted access to a check-signing machine that she used to imprint the Comptroller's signature onto checks. She also prepared and transmitted the direct deposit file to the bank. In addition, no one reviews the completed payrolls. The Comptroller provides some oversight of the payroll process by performing bank reconciliations and reviewing cancelled payroll checks for reasonableness. However, these oversight procedures would not identify errors or discrepancies on direct deposit payments. As a result, it would not prevent the payroll clerk from paying herself or other employees for time not worked or paying a fictitious employee.

The Board did adopt realistic and structurally balanced budgets based on historical trends. As a result, the Village ended 2011-12 with an unplanned net operating deficit of $372,471. In addition, Village officials need to improve their oversight of the Village budget. Improved monitoring will enhance their ability to react to external influences such as economic downturns and emergencies and to accurately determine the actual amounts that should be charged to each budget line are restricted.

We selected a judgmental sample of 22 vendors which were paid approximately $911,000 during the audit period to determine if goods and/or services from these vendors were properly procured in accordance with the District's policies and procedures and applicable statutory requirements. We found that the District did not properly procure goods and/or services from 16 vendors that were paid approximately $866,000. We also found that the District could have saved up to $1,500 by using a State contract for certain purchases. While the District's purchasing policy does address statutory requirements, it does not state competitive bidding threshold amounts. Also, District officials stated that for day-to-day guidance on the purchasing process, staff should refer to the Business Office Manual (Manual), which contains key purchasing provisions and guidelines and is used by the Business Office on a routine basis. However, this Manual is kept in the Business Office and not readily available for others in the District, such as staff and department heads who are involved in the purchasing process. In addition, this Manual is more restrictive than statutory requirements for purchases subject to competitive bidding requirements.

While District officials have recently taken proactive measures to manage and improve the District's financial condition, their reliance on fund balance and reserves to finance planned operating deficits during the audit period has depleted available funds to dangerous levels. The District's total fund balance decreased over the past three years from $5.1 million to $4.0 million and is expected to continue to decline in the future. For 2013-14, District officials planned another operating deficit, budgeting $600,000 in appropriated fund balance and $384,560 from reserves as a funding source. We project that total fund balance will be $3.2 million at the end of 2013-14 and the available moneys for funding operations will be exhausted by the end of 2014-15. Over the last several years, District officials have developed reasonable budgets and controlled expenditures to offset a significant decline in State aid. The District has also eliminated positions, changed health insurance plans and eliminated student programs and services from BOCES (the Board of Cooperative Educational Services) to reduce expenditures. They continue to be proactive, planning to study consolidation with an adjacent district and working to reduce transportation costs by reducing bus routes. However, it is critical that, having stabilized the District's financial condition, District officials now discontinue relying on fund balance to pay for operations and instead adopt structurally balanced budgets that provide for recurring revenue sources to pay for recurring costs of operations.

The Board does not provide adequate oversight of the Department's financial activities. Although the Department's bylaws specifically detail the Board's responsibilities and the Treasurer's duties, they do not adequately segregate the Treasurer's duties or ensure that the Board provides oversight of the Treasurer. The Treasurer maintained appropriate financial records and disbursements were generally for reasonable Department expenditures; however, we found deficiencies in financial reporting, the audit of claims, and the recording and deposit of cash receipts. In addition, the Board has not adopted written financial policies or procedures addressing cash receipts, disbursements or claims processing. As a result, the Treasurer makes all deposits, disburses cash without the Board's prior approval, performs all recordkeeping functions and prepares bank reconciliations without independent oversight. Further, the Board does not audit the individual claims for accuracy or examine them for supporting documentation. We also found that the annual report provided by the Treasurer did not accurately total revenues and expenditures and that the Treasurer did not file the annual foreign fire insurance report for 2013 as required. Additionally, we were unable to verify when entries were recorded in the financial records because the Treasurer stated that the software allows entries to be post-dated and he sometimes used this feature. Lastly, the Board did not conduct an annual audit of the Treasurer's records, adopt an annual budget or develop a code of ethics.

The purpose of our audit was to determine if counties are controlling inmate hospital costs and paying the appropriate rates for the services provided for the period January 1 through December 31, 2012.

The purpose of our audit was to determine if local law enforcement agencies (Departments) took action to help enforce the State’s Sex Offender Registration Act (SORA) for the period January 1, 2008 through January 22, 2014.

We commend Authority officials for designing and implementing appropriate procedures establishing employee salary rate schedules. Authority officials implemented specific procedures to ensure the individuals paid through the payroll process were paid at the Board-established pay rates and employees were paid the salaries and wages to which they were entitled.

The Board did not adopt a financial management policy and Town officials have not developed procedures to address the level of unexpended surplus funds to be maintained. The Board consistently overestimates expenditures in the general town-wide and highway town-wide funds, which results in operating surpluses. Additionally, the Board did not develop a formal, comprehensive multiyear financial plan. As a result, the Town's general town-wide and highway town-wide unexpended surplus funds have increased to levels which are excessive in comparison with the Town's expenditures for those funds.

The Committee needs to enforce the requirements of the Company financial policy. The policy requires that the audit committee perform an audit of each bill prior to payment to ensure that it is for a valid purpose, the goods and services have actually been received, no sales tax is being paid and that the transaction is adequately documented by an itemized invoice. The audit committee is also responsible for reviewing the Treasurer's records on a monthly basis. This includes the review of the cash receipts, bank statements, bank reconciliations and verifying the timeliness and accuracy of the financial transactions and reports. We found that the audit committee did not audit the bills or review the Treasurer's records. There was also no review of the bank statements, cancelled checks or bank reconciliations. Furthermore, we noted that the audit committee included the Treasurer which negates the internal controls intended by having an oversight committee monitor the Treasurer's work. Additionally, although the Company obtains an annual independent financial audit, it is not an adequate substitute for the regular and detailed oversight called for in the Company's financial policy. Finally, the Treasurer performs virtually all duties related to the Company's financial transactions including; preparing, signing and mailing checks; depositing and recording receipts; reconciling the bank statements and preparing financial reports.

The Board and District officials need to improve their oversight of the District's budget process and financial condition. District officials adopted budgets that included plans to use fund balance totaling $1.4 million between 2008-09 and 2012-13. The District did use $612,399 of this amount in the 2008-09 and 2009-10 fiscal years while it incurred planned operating deficits in trying to avoid increasing its tax levy and the taxpayers' burden during the economic downturn. During these two years, the District depleted its unexpended surplus funds to 1 percent of the subsequent year's budget, and it also used more than $500,000 from its reserve funds. However, the District incurred operating surpluses from 2010-11 through 2012-13 that resulted in it not using the remaining $787,601 of appropriated fund balance. Beginning in 2010-11, the District gradually increased its tax levy and budget. In each of the three years from 2010-11 to 2012-13, the District incurred operating surpluses and grew its fund balance from 1.1 percent in 2010-11 to 5.6 percent in 2012-13. The District's external auditor informed officials that they exceeded the statutory limit of 4 percent in 2012-13, despite transferring more than $350,000 to reserve funds. When considering unused appropriated fund balance the effective unexpended surplus fund balance was 5.7 percent in 2011-12 and 7.5 percent in 2012-13.

The Board and District officials could have adopted more reasonable budgets. The budget estimates for revenues and expenditures have not been aligned with historical or actual needs of the District. This resulted in putting an unnecessary burden on taxpayers. From 2009-10 to 2012-13, the District spent an average of $6 million less than budgeted and received $2.3 million more in revenue than budgeted. While District officials planned for operating deficits from 2009-10 through 2012-13 averaging $6.4 million, to be funded by unexpended surplus funds, the budgets have provided surpluses. Therefore, these funds were not needed. Although District officials have taken steps and have lessened operating surpluses from $3.4 million in 2009-10 to less than $615,000 in 2012-13, unreserved fund balance has continued to grow. As a result of poor budgeting practices, unexpended surplus fund balance as a percentage of the ensuing year's budgeted appropriations has grown from 8.4 percent as of June 30, 2010 to 17.6 percent as of June 30, 2013 and is likely to continue to rise. Adding the overfunded amount of the reserve balances would further increase this percentage. Furthermore, due to another unexpected operating surplus in 2013-14, this percentage will likely be even greater, and the $5.5 million of appropriated fund balance in the 2013-14 budget would not be needed and if it had been included in surplus fund balance, this percentage would be 24.5 percent.

The Board has not provided adequate oversight to safeguard Town assets. We found that the Board has not adopted adequate policies to ensure Town resources are protected. Additionally, the financial duties in the Supervisor's office were incompatible because they were completed by the Supervisor's bookkeeper, who was also the Clerk. The Board also has not annually audited, or contracted for audits of, the Clerk's or the Supervisor's records as required. Further, the Board has not adopted comprehensive, multiyear financial and capital plans. The Board did not ensure that the Town had valid, comprehensive written contracts for fire protection and emergency medical services or that the shared services contract was kept current to reflect changes in the arrangement. The Board also has not deliberately and thoroughly monitored adherence to the provisions in these contracts. The Board also acted outside its authority when it provided the Highway Superintendent with bonuses totaling $1,200 for services already rendered. Town officials did not maintain controls over scrap metal and did not record $8,913 in revenues from its sale. The Board inappropriately allowed the Highway Superintendent to use approximately $6,000 in proceeds from the sale of the Town's scrap metal to fund Christmas parties over the years. Town officials could not account for the remaining $2,900 in estimated scrap metal proceeds, which increases the risk that these funds could have been used for non-Town purposes.

The Board did not adopt realistic budgets from fiscal years 2008-09 through 2012-13. While District officials maintained unexpended surplus funds in compliance with the statutory limit each year, they consistently overestimated expenditures and appropriated fund balance that was not used. This negated any benefit the appropriation of fund balance would have in reducing fund balance or the property tax levy. These budgeting practices were not transparent to taxpayers. Consequently, the District's effective unexpended surplus funds ranged from 4.6 percent to 6.9 percent during the audit period, which exceeded the 4 percent statutory limit each year.

The Board did not properly allocate operating costs between District 1 and District 2. If costs were allocated in accordance with regulations, District 1 would have had a $30,963 deficit. In addition, the Board's adopted budgets for District 1 were unreasonable, resulting in annual operating deficits and declining surplus. The Board also approved two extensions to District 1 without ensuring that the Town complied with all legal requirements, and the Board did not properly allocate project costs to benefited properties, which contributed to the declining financial condition of District 1. In addition, the Board has not adopted a multiyear financial plan to address the water districts' future financial needs. Finally, the Board also did not comply with one of its own resolutions when it failed to bill other municipalities for legal services provided to the municipalities by the Town's Attorney. As a result, the Town forfeited between $3,000 and $6,000 in revenues.

We found that the Board and Company officers generally provided adequate oversight of the Company's financial activities. However, the Board does not provide adequate oversight over purchases costing less than $1,000 and the corresponding cash disbursements because this authority was delegated to the committees. As a result, there was a lack of segregation of duties over authorizing and making purchases and approving payment for those purchases because the same committee members were able to perform all these phases of the purchasing process. Further, five committees comprise one member. As a result, these committees did not function as committees, but as one individual making decisions for the entire Company without sufficient oversight in approving purchases and the corresponding payments.

The Board needs to improve its oversight of the District's financial activities. The Board did not ensure that complete accounting records were maintained, that bank reconciliations were performed, that its annual financial report (AUD) was prepared and filed in a timely manner and that an annual audit of the Treasurer's records was performed. As a result, the Board does not have adequate assurance that cash has been properly accounted for. In addition, the Board, the Office of the State Comptroller and District residents are deprived of a tool to monitor District operations. In addition, the Board has not adopted a budget in the format prescribed by OSC or followed the statutory requirements for adopting the budget and computing the tax levy limit. Finally, it may have levied taxes in excess of what was needed.

We reviewed budget-to-actual results for fiscal years 2010-11 through 2012-13 and found that District officials did not follow sound budgeting practices. District officials used a roll-over budget process by taking the prior year's actual revenues and expenditures and adding a percentage to that figure without taking into consideration prior year's trends and future conditions. This resulted in underestimated revenues and overestimated appropriations and subsequently, accumulated fund balance. Over these three years, District officials underestimated revenues by a total of $5.2 million and overestimated appropriations by a total of $9.7 million in the adopted budgets. In addition, the District's fund balance has declined as a result of planned operating deficits and appropriating fund balance to finance the planned deficits. Specifically, the District's fund balance has decreased from approximately $16.5 million beginning in fiscal year 2010-11 to about $10.3 million in fiscal year 2012-13. The Board and District officials have more accurately estimated revenues and appropriations in recent adopted budgets. However, given the significant reduction in fund balance, the Board and District officials must accurately estimate revenues and appropriations in future budgets.