We commend District officials for the steps they have taken to increase educational productivity and reduce the costs associated with instructional materials and program delivery. During the budget development process for fiscal year 2011-12, District officials decided to control expenditures and improve student achievement by using technology and bringing most special education programs in-house. In fiscal year 2010-11, approximately 47 percent of the District's students in Grades 3-8 received academic intervention services (AIS), including those enrolled in special education programs. District officials took action in March 2011 to raise students' standardized test scores using teaching and learning technologies. As a result, from 2010 to 2013 the District's test score ranking increased by almost 43 percent. District officials also decreased special education costs by using State and BOCES aid to finance additional teaching and learning technology, while at the same time reducing the District's real property tax levy.

The City currently has a stable financial condition. The City's general fund unassigned fund balance has increased from $1.6 million to $6.1 million from fiscal years 2011 through 2013. However, two funds − the capital projects fund and the internal service fund-workers' compensation − reported deficits in 2013. Although the workers' compensation fund deficit decreased from $1.3 million in 2012 to $597,743 as of December 31, 2013, the capital projects fund's deficit increased from $1.9 million in 2012 to $5 million in 2013. City officials do not report cash assets earned in each fund's cash account. All cash is deposited in a concentration account and recorded as an asset in the general fund. Instead of cash assets, the City's other funds include amounts “due from other funds” while the general fund includes a significant “due to other funds.” As of December 31, 2013, the general fund financial statements showed cash assets of approximately $22 million and “due to other funds” of $14.8 million, while other City funds, which received significant amounts of cash from operations, showed minor petty cash balances and significant “due from other funds” balances. As a result, the City's financial statements are not as transparent as they could be. While all funds have direct access to cash from the concentration account for payments of payroll and vendor invoices, City officials did not maintain separate cash accounts in the individual funds.

Village officials did not develop structurally balanced budgets for the general fund and did not ensure that sewer rates generated sufficient revenues to cover sewer fund costs over the last six fiscal years. As a result, the general fund balance declined from $219,000 to a negative balance of $19,000 and the sewer fund balance declined from $94,000 to $18,000. The significant declines in fund balances were contributed to by a reliance on surpluses in the general fund and fluctuations in sewer rent revenues. These declines, combined with a lack of a long-term plan could have a significant impact on the Village's financing of future budgets and the ability to maintain current service levels.

The Board has not established adequate policies and procedures for providing guidance on maintaining a reasonable level of fund balance. As a result, the Town has accumulated excessive fund balances in the general fund and sewer district fund that resulted, at least in part, from unrealistic budget estimates. In addition, the Board has not developed a long-term financial or capital plan or established reserves to help address the Town's future needs.

The Board has not implemented adequate compensating controls to address the lack of segregation of duties performed by the Treasurer. The Treasurer performs virtually all of the Village's financial operations without Board oversight and compensating controls. Although the Treasurer performs all aspects of processing payroll including adding and deleting employees, recording hours worked, maintaining leave records and signing checks, Village officials do not adequately review payroll records, including the Treasurer's timesheet, prior to payroll checks being printed. For 10 of the 35 (29 percent) bi-weekly payroll periods we reviewed, the Treasurer had either over- or underreported her hours worked. In addition, the Board does not review individual claims during the audit of claims to ensure that the Treasurer is making disbursements for Village purposes. Further, we were unable to determine if water and sewer deposits were made intact. The Board did not audit the Treasurer's records and reports during our audit period. In addition, the Village does not have policies and procedures in place to safeguard IT assets, including an appropriate use policy, a breach notification policy and a disaster recovery plan. Additionally, Village officials have not implemented adequate controls and restrictions over user access to the financial system. Lastly, the Board has not adopted comprehensive data back-up policies and procedures.

From January 1, 2011 through December 31, 2013 the Department received over $80,000 in revenues. However, the Committee did not establish policies and procedures for financial transactions. As a result, the Treasurer's monthly financial reports lacked information for units within the Department, such as the rescue squad and the ladies auxiliary, and the Treasurer did not prepare annual reports for the Committee to summarize financial activities or reconcile financial records. Furthermore, the Treasurer disbursed moneys without explicit prior authorization and there was no evidence that the audit committee reviewed the Treasurer's books and records to ensure they fairly represented fiscal events. Furthermore, fund-raising chairpersons and the Treasurer did not provide receipts for donations and the Treasurer did not file Internal Revenue Service Form 990 with the United States Treasury Department and reports of receipts, expenditure and balances of fire insurance premiums with the Office of State Comptroller.

The prior Justice did not establish adequate internal controls over the Court's financial operations. She did not prepare monthly accountabilities and did not deposit cash receipts in a timely manner, properly account for bail money held by the Court or submit the required monthly reports to the Justice Court Fund in a timely manner. Further, the Board did not properly audit the prior Justice's records and reports or document that such an audit occurred in the Board minutes. As a result, there is an apparent overage of $8,802 from the prior Justice. The current Justice, who was in office for less than one month when we began our onsite fieldwork, had not yet taken corrective action to address these control weaknesses.

The District reported unrestricted fund balance of more than $3 million as of June 30, 2010. District administration developed, and the Board adopted, budgets that included plans to use nearly $2.5 million of fund balance to finance operations during the 2010-11, 2011-12 and 2012-13 fiscal years. As a result, the District's unassigned fund balance declined by about $1.53 million or about 94 percent. The District also reduced fund balance by nearly $477,000 because of a prior period adjustment recorded during the 2010-11 fiscal year to write-off some accounts receivable and adjust accrued interest for a bond anticipation note issued during the 2009-10 fiscal year. The Districts' unrestricted fund balance as a percent of the next year's budget declined from more than 8 percent to less than 1 percent over this same period. The 2013-14 budget planned to use nearly $1.2 million in fund balance as a financing source. Moreover, the Board has not developed a comprehensive multiyear financial plan to address the use of fund balance to finance a significant long-term building project.

The Board adopted general fund budgets that were not structurally balanced because the Board routinely relied on significant amounts of appropriated fund balance to finance operations. The Board also did not adopt a policy establishing the level of unassigned fund balance that should be maintained to prepare for any unanticipated expenditures and/or revenue shortfalls. As a result, for the 2011-12 through 2012-13 fiscal years the general fund incurred operating deficits totaling more than $934,000, unassigned fund balance declined by 98 percent and cash balances declined by 47 percent. Further, at the end of each fiscal year 2010-11 through 2012-13, the general fund's cash balance was so depleted that District officials did not have sufficient cash to pay bills and other obligations when due. The District's financial condition could decline further if the Board continues to adopt budgets that are not structurally balanced. If the 2014-15 fiscal year's actual revenues and expenditures mirror the budget, the District will have limited unassigned fund balance as of June 30, 2015. Finally, the District's school food service fund was not self-sufficient and required subsidies from the general fund through interfund transfers and advances. At the end of the 2012-13 fiscal year the school food service fund owed the general fund accumulated advances of more than $167,000, which were not repaid by the end of the fiscal year, as required.

The Board-adopted 2011-12 through 2013-14 general fund budgets were not structurally balanced because the Board routinely relied on significant amounts of appropriated fund balance to finance operations. The Board also did not adopt a policy establishing the level of unrestricted fund balance that should be maintained to prepare for any unanticipated expenditures and/or revenue shortfalls. As a result, for the 2011-12 and 2012-13 fiscal years the general fund incurred operating deficits totaling more than $5.6 million and unrestricted fund balance declined by about 73 percent. In addition, the general fund's cash level was deficient, resulting in District officials not having sufficient cash to pay District bills and other obligations when due. As a result, District officials annually issued short-term debt to finance operations in the form of a revenue anticipation notes (RANs), which are a temporary source of cash borrowing in anticipation of the pending collection or receipt of certain specific revenues other than real property taxes. The District's financial condition will likely decline further in the future if the Board continues to adopt budgets that are not structurally balanced. Further, if actual revenues and expenditures for the 2013-14 fiscal year mirror the budget, the District will reduce the remaining fund balance to approximately $1.5 million as of June 30, 2014.

The Board needs to improve its oversight of District operations. The Board did not properly award a contract for $4,800 that was determined to be a prohibited conflict of interest, has not adopted key policies and procedures, and does not properly plan for reserves or capital expenditures. As of December 31, 2013, the District had $398,000 in reserves but did not have a formal plan regarding the use of these funds. As such, taxpayers are not properly informed regarding what their taxes are being used to fund.

The District maintains 10 reserves. The total balance of the reserves in the last five years has increased from $1.2 million to $12.5 million. At this point, the District's reserves represent 37 percent of the current budget. For the last five fiscal years ending June 30, 2013, the District generated approximately $11 million in operating surpluses, which it used to fund reserves. We reviewed these reserve funds for adherence to statutory requirements and reviewed the reasonableness of those balances. We found issues with the establishment, funding and use of certain reserves. For example, the District funded a repair reserve to $2.9 million without the required voter approval. The District also established and funded a liability reserve to $800,000 for a purpose that was not permissible. Furthermore, some reserve balances were excessive compared to the potential costs for which those reserves were established. These excess reserve funds could be transferred to other legally established reserves, as applicable, or used to reduce the tax levy. In addition, these reserves were not used in the last five years.

We found that Village officials have not taken adequate steps to identify and reduce the amount of unaccounted-for water within the Village's system, therefore all water and sewer usage may have not been captured. Generally, the Clerk-Treasurer properly billed, collected and deposited water and sewer rents. However, the Board did not properly segregate the duties of the Clerk-Treasurer or implement compensating controls. As a result, the Clerk-Treasurer calculates estimates and makes billing adjustments with no oversight and all unpaid water and sewer bills are not being enforced by levy on the tax roll. In addition, the Clerk-Treasurer does not maintain accounts receivable control accounts.

We found no material discrepancies with the accounting for moneys received by the Court or the accuracy of bank deposits. However, we found that the Justices did not always perform monthly bank reconciliations and accountabilities properly. We also found that the Justices did not always report and remit moneys to the Justice Court Fund in a timely manner. In addition, the Justices did not follow up on pending cases or enforce unpaid fines and fees. Further, the Board did not conduct an annual audit of the Court's records as required. As a result of these weaknesses, the Board cannot be assured that all Court moneys were received and properly accounted for.

While the Board planned properly for the ongoing capital project, monitoring the project's progress has been hampered by the lack of available complete information and the necessity to compile information from a variety of sources. As of the end of fieldwork, no one was preparing detailed financial reports to monitor the project's progress against the plan developed by the Board and District administration. The Board and District officials did not develop reasonable estimates for expenditures and use of fund balance in the annual District budget. While revenue estimates were generally close to the actual revenues received, expenditures for fiscal years 2008-09 through 2012-13 were consistently and significantly overestimated; the District spent nearly $14.2 million less than budgeted (nearly 7 percent) during this time. In addition, although the District planned to use more than $16 million in unexpended surplus funds and reserves over the last five fiscal years, it actually used $1.68 million (11 percent). The District, however, is facing considerable uncertainties regarding the final funding for the elementary school replacement, along with the funding for remaining flood recovery projects. If the District does not receive all of its anticipated funding, it may need to use unexpended surplus fund balance or reserve funds to fund these projects.

The Treasurer does not routinely prepare cash-flow analyses. We found that the Treasurer was only maintaining a record of daily cash-flows of cash receipt and disbursement activity and was not analyzing future cash flow for the fiscal year. Without cash flow projections, the Council and City officials were unaware of the magnitude of City's shortfall. We prepared a cash-flow analysis for 2014. Our analysis found that the City will run out of cash in September 2014 and the cash deficiency will increase to nearly $4.6 million by the end of the fiscal year. In addition, The City's accounting records are in such poor condition that City officials do not know the severity of their fiscal problems. The books for the 2013 fiscal year were not closed as of June 2014. The general ledger cash balances were unreliable and were not reconciled to cash in the bank. Further, City officials anticipate that the audited financial statements will not be available until October 2014. These delays have put the Council and City officials at a disadvantage as they try to resolve the current cash-flow shortfall, begin the 2015 budgeting process and develop a long term plan that would address the City's fiscal problems.

The Board did not adopt realistic budgets; budgets varied significantly from the actual results each year. We reviewed the Town's four operating funds for the four-year period ending in 2013 to determine if the Board reasonably budgeted for revenues and expenditures. Annually, each of the funds' estimates generally varied from actual results; the general town-wide and highway part-town overestimated revenues and expenditures, the general part-town underestimated revenues and overestimated expenditures and the highway town-wide underestimated both revenues and expenditures. These unrealistic budgets resulted in annual operating surpluses that caused unexpended surplus funds to increase in the general town-wide and highway part-town funds year after year.

The purpose of our audit was to determine if school districts have adequately controlled access to Student Information Systems for the period July 1, 2011 through April 30, 2013.

The purpose of our audit was to determine if Court officials properly collected, reported and remitted moneys on behalf of the Court for the period January 1, 2012 through December 31, 2013.

District officials appropriated $7.7 million more in unexpended surplus funds than was needed to fund District operations. Additionally, officials consistently overestimated budget appropriations from 2008-09 through 2012-13 by a combined total of nearly $5.4 million and the general fund generated combined operating surpluses totaling approximately $4.9 million, because reasonable budgets were not always developed. Officials also increased the real property tax levy by more than $800,000 or 5 percent over this five-year period. At the same time District officials transferred unexpended surplus funds to reserve funds to avoid exceeding the statutory limit. As a result, reserves as of June 30, 2013 totaled $6.9 million. By routinely using these practices, District officials withheld significant funds from productive use, may have levied unnecessary taxes and compromised the transparency of District finances to taxpayers.