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.

The Board did not develop and adopt realistic, structurally balanced general fund budgets because Village officials used fund balance as a recurring revenue source. This resulted in the repeated adoption of budgets using fund balance to finance operations. During fiscal years ended 2012 and 2013, the Village used over $120,800 of fund balance. This continued use diminished the Village's general fund balance to a precarious position by the end of the 2013-14 fiscal year. From fiscal years 2011-12 to 2013-14, the use of fund balance kept the real property tax levy artificially low while at the same time revenues remained at the same level and expenditures were increasing by 6 percent. The Village's 2014-15 budget includes an appropriation of $100,000 of fund balance, which is $150,000 less than the previous year. In order to fill the budget gap, Village officials overrode the property tax cap limit and increased taxes by over 8 percent.

The Board has generally adopted adequate policies and procedures, but there are still areas in need of improvement in its oversight of the Village's financial operations. The Board does not complete an adequate, documented annual audit of the Village Justice's and Clerk-Treasurer's records. Additionally, although the Board discusses plans for future equipment purchases regularly, a formal, written long-term financial plan has not been developed. We discussed other minor deficiencies with Village officials during our fieldwork.

We reviewed 151 health insurance buyout payments totaling $85,250 and 14 separation payments totaling $121,014 and found they were accurate, in compliance with the terms of employee contracts and approved by the Board. We commend the District for designing and implementing an appropriate system of controls over health insurance buyouts and separation payments.

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 February 28, 2014.

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.

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.

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 November 30, 2013.

We found that the Town's use of wind power revenues was reasonable. However, the Board did not adequately oversee the Supervisor or ensure that wind power revenues were properly reviewed for accuracy. Additionally, the Board did not annually audit the Supervisor's records as required. Consequently, Town officials were unaware the Town was not receiving the correct amount of host community licensing fees. As a result, from January 2009 through March 2014 the Town was underpaid wind power revenue totaling approximately $356,000. Further, the Board did not have a comprehensive multiyear financial and capital plan in place to adequately address wind power revenue use and the Town's long-term operational and capital needs. Finally, the Board did not properly establish its reserve funds. As a result, Town officials cannot ensure that the current and future use of wind power revenue will be in the best interest of Town residents.

We found that the Board did not monitor the Village's finances. The Board has not ensured that adequate policies and procedures required by law and sound business practice have been adopted, regularly reviewed and updated, monitored for compliance and distributed to officials/employees. It did not ensure that the Clerk-Treasurer maintained accurate accounting records. It also did not ensure that duties in the Clerk-Treasurer's office were properly segregated or provide mitigating controls, which created an environment that allowed for the possible misappropriation of Village funds. The lack of monitoring also led to the Village accumulating fund balance in excess of its current needs. We calculated an estimated fund balance level for the general, water and sewer funds at the 2012-13 year end, and estimate unexpended surplus funds to be excessive at $474,479 (82 percent) for the general fund and $131,095 (91 percent) for the sewer fund. The water fund, at $59,360 (23 percent), is more reasonable, but still high. Furthermore, there was no oversight of water/sewer account adjustments, which were made by the former Clerk-Treasurer without the Board's approval, and resulted in approximately $300,000 in reductions and $269,000 in added charges to customer accounts during our audit period. The Board also did not provide adequate oversight of payroll taxes, where Federal monthly and quarterly payroll-tax reports were filed late or incorrectly on numerous occasions and the Village incurred approximately $4,000 in penalties and interest during the audit period alone. Finally, the Board has not established policies and procedures related to acceptable use, computer security, breach notification or online banking, and the Board has not adopted a disaster recovery plan to address potential disasters.