While the County does have certain information technology (IT) user policies, they have not adopted a breach notification policy or a disaster recovery plan. We also found that while the County does have a policy regarding USB removable media, they are not monitoring or enforcing the policy. County IT officials told us that each department has the ability to order office supplies, including USB removable media on account. The IT Department does not have the capability to monitor or prevent unauthorized use of USB removable devices while still being able to allow authorized devices to operate. County IT officials also stated they did not aggressively monitor the use of USB media because it was determined that they are integral for some department's operations.

Town officials did not properly administer all aspects of the Restore NY grant and Community Development Block Grant (CDBG) grant funds awarded to the Town; they were successful in some aspects but failed in others. The Board failed to meet certain critical expectations regarding the application and screening process for awarding grant funds, protecting the Town's financial interests, monitoring the proper use of the moneys they awarded or auditing claims paid from the grant proceeds. However, the Board did properly ensure that Town policies were in compliance with grant agreements and that certain grant recordkeeping requirements and external reviews were met. The Board also received appropriate approvals from State agencies before it approved the demolition of the Dutch Barn. Finally, the Board has not closed out the CDBG grant in accordance with the grant requirements; this failure to close out the grant could jeopardize any future grant applications.

The Town's internal controls over payroll and leave time were not properly designed or operating effectively. The Board did not establish written policies and procedures for authorizing, processing and reporting payroll, including the verification, approval and monitoring of leave time. We also found errors in the leave accrual records for Highway Department employees and inadequate documentation of time worked. As a result, employees were credited with 69 hours of leave accruals, totaling $1,191, that they were not entitled to, and in some instances, employee leave accruals were charged in error. Furthermore, the Board has not established adequate timekeeping procedures for non-highway employees, and there was no supervisory review of time records submitted by employees. These control weaknesses increase the risk of error and the potential abuse of leave time benefits.

County officials adopted budgets and monitored budgets and operations throughout the year, resulting in available surplus funds at the end of 2013 totaling $10.8 million. However, surplus funds are below 5 percent of the 2014 adopted budget, which is required by the County's own policy. In addition, the County's revenues for 2013 included moneys raised by an additional 1 percent sales tax that is subject to reapproval from the New York State Legislature every two years. The New York State Legislature's reapproval for the County to keep its additional 1 percent sales tax ended on November 30, 2013. As a result, the County could not levy additional sales tax after November 30, 2013. County officials explained that the County would experience a revenue shortfall due in part to the loss of approximately $2 million dollars of sales tax revenue for December 2013. Because of the uncertainty regarding the sales tax extension, the County budgeted to use $13.2 million of the County's unexpended surplus funds to balance the 2014 Executive budget. The State Legislature reapproved the County's additional 1 percent sales tax levy in January 2014. We conducted a review of the County's proposed budget for 2014 and found that the significant revenue and expenditure projections in the budget are reasonable. Because the sales tax extension was approved, the County may not have to use all of the fund balance that it appropriated for 2014 and its surplus fund balance at the end of 2014 may be higher than initially expected.

In 2013, the Board attempted to improve the segregation of duties over water billings and collections. Although there was an improvement, duties were not fully segregated and compensating controls were not established. The Board established the position of water clerk to be responsible for billing and collecting water charges. The water clerk's duties were primarily the same as the former bookkeeper's duties except that the water clerk also collected payments. The Board also appointed an account clerk to make bank deposits. In addition, the Board approved the water billing rate and all billing adjustments for both years. Although there was a certain level of Board oversight and certain duties were segregated, these compensating controls were not sufficient because the water clerk was responsible for the billing process, collecting and recording the payments into the accounting records, and could make adjustments to the customers' accounts without prior approval from the Board. Having such responsibilities increases the risk that the water clerk could make adjustments to customer accounts and not record all collections turned over to her.

We found that the Treasurer maintained appropriate financial records, with the exception of bank reconciliations, and disbursements were generally for reasonable Department expenditures. However, the Board does not provide adequate oversight of Department financial activities. Although the Department's bylaws specifically detail the Board's responsibilities and the Treasurer's duties, these guidelines do not adequately segregate the Treasurer's duties. In addition, the Board has not adopted any written policies or procedures addressing cash receipts and disbursements, procurement or claims processing. As a result, the Treasurer makes all deposits, disburses cash without the Board's prior approval and performs all recordkeeping functions. While the Treasurer provided a monthly report to the Board detailing receipts, disbursements and cash balances, proper bank reconciliations have not been prepared. Further, the Board has not required the Treasurer to submit an annual report, conducted an annual audit of the Treasurer's records or adopted an annual budget as required by the bylaws.

The Supervisor relied on the bookkeeper to perform most of the Town's financial duties without providing any oversight. The bookkeeper was solely responsible for receiving and disbursing Town money as well as recording and reporting the Town's financial activity. The bookkeeper prepared reports for the Board by summarizing monthly financial activity without ensuring the reported balances were accurate and complete. Additionally, the Supervisor has not filed the required annual financial report with OSC since 2008. Finally, the Board failed to audit the Supervisor's financial records, as required.

Based on our limited procedures, it appears that the Village has made progress implementing corrective action. Of the four audit recommendations, two recommendations were implemented and two recommendations were partially implemented.

The Justices did not properly account for all court fines, fees and surcharges. We also found that pending cases and payments due were not followed up in a timely manner. In addition, we traced one month of cash receipts to bank deposits and the monthly report to the Justice Court Fund (JCF) for the former Justice and the current Justice. We found that the former Justice generally made deposits intact but not always timely. For example, fines and bail received on January 6, January 9, and January 13, 2012 totaling $3,470 were not deposited until January 17, which is not within the 72 hours required by the regulations. We found that the current Justice generally made timely and intact deposits. For both Justices, the amounts collected, during the two months we reviewed, were reported to JCF correctly. We also found all monthly reports we reviewed were submitted to the JCF in a timely manner.

For the last three completed fiscal years, the Board adopted budgets that inappropriately allocated $223,080 including State retirement contributions and medical insurance costs to the highway town-outside-village fund, and sales and use tax revenues totaling $88,605 to the general town-wide fund. This caused an inequity in favor of the taxpayers that reside in the Village of Westfield at the expense of those taxpayers that reside outside the Village. Town officials have properly allocated sales and use taxes in the 2013 and 2014 budgets.

The Committee and Board have not established effective internal controls over the Department's revenue collections. As a result, there are no written policies and procedures covering revenue collections and a lack of segregation of incompatible duties. Billings for inspection fees and fines totaling $4,490 were not recorded and uncollected fees and fines totaling over $600 have not been collected and/or included in the Department's aged receivable report. Formal bank reconciliations are not performed and Committee members do not review monthly reports provided by the Director for accuracy or completeness. These deficiencies create an environment where errors and/or irregularities can occur without being detected. Finally, the Department does not charge inspection fees up to the maximum amounts permitted by Regulation. If the Department had charged the allowable inspection fees and penalties, it could nearly have generated sufficient revenue to more closely match its operating costs.

The Board needs to improve controls over District financial activities. The Board did not establish adequate controls to ensure that financial activity is properly recorded and reported and that District moneys are safeguarded. Although the Board has adopted procurement and code of ethics policies, it did not adopt an investment or credit card use policy. The Treasurer also provides the Board with a monthly listing of claims, which it reviews and approves at the monthly Board meetings after reviewing the individual claims. However, the listing of claims does not include check sequence. Therefore, the Board is not assured that it is reviewing and approving all claims prior to payment. District officials informed us that the former Chairman reviewed monthly bank statements. However, because he was also authorized to sign the checks, this was not an adequate control to ensure that the checks listed on the bank statement were legitimate District disbursements. We found that the former Chairman signed 20 checks totaling approximately $21,400. Further, the Board approved claims for the payment of credit card charges without adequate support. The Board discovered that a Fire Chief made credit card charges that included personal expenditures at various gas stations totaling $795. In addition, the Treasurer filed the 2010 and 2011 annual financial reports in June 2013 and July 2013, respectively, well after the 60-day deadlines. She has yet to file the 2012 and 2013 reports. While the Board has contracted with an external auditor to perform the required annual audit, the audits were not timely for the last three years.

Financial activities are not always recorded and reported as per the Company’s by-laws.

The Library's employee leave accrual records are not accurate. We found errors in all 10 (five full-time and five part-time) employees' accrual leave balances we reviewed. A total of 209.37 leave accruals hours were overstated and 17.25 hours were understated. These errors are valued at approximately $5,800. The Principal Account Clerk processed all leave accruals with little or no oversight by management and made inconsistent manual adjustments to the timekeeping system and to the leave accrual balances. Although Library officials allowed adjustments to the systems, they never monitored the changes or had leave accrual balances independently verified to ensure accuracy. We also found that the Library officials did not use competitive methods when procuring goods and services from six of 10 vendors we reviewed that were paid a total of $77,111. In addition, Library officials did not enter into written contracts with two of these six vendors who were collectively paid a total of $36,177.

The District's 2014-15 appropriations of $23,108,013 are $3.6 million more than expenditures for the last completed fiscal year, 2012-13. Because the District overestimated appropriations and underestimated State aid by almost $680,000, the proposed tax levy is higher than necessary. Further, the appropriated fund balance of $469,595 is unlikely to be used, and the District will likely have an operating surplus. District officials have used operating surplus to create or increase reserves so that fund balance did not exceed the 4 percent limitation allowed by law. Additionally, the District's projected expenditures for the current 2013-14 fiscal year are not realistic. As of February 18, 2014, the District has spent $8.4 million of its 2013-14 budget appropriations. We estimate that the District will spend another $11.3 million, which is at least $1.1 million short of its projection. The District's tentative budget complies with the property tax levy limit.

We found no material discrepancies with the accounting for moneys received by the Court or the accuracy of bank deposits. However, the Justice did not perform monthly bank reconciliations and accountabilities. We also found that the Justice did not always make deposits, or report and remit moneys to the JCF, in a timely manner. Further, the Board's audit steps for the Court were not recorded in the minutes of its proceedings.

We reviewed budget-to-actual results for fiscal years 2010-11 through 2012-13 and found that District officials adopted budgets with realistic revenue and expenditure estimates. However, District officials have relied heavily on appropriated fund balance as a financing source in the annual budgets, which has reduced the District's unrestricted unappropriated funds. In each of the three fiscal years, the Board has budgeted for planned operating deficits by appropriating fund balance to help finance the budgets. As a result, total unrestricted unappropriated fund balance has declined from $7.2 million in fiscal year 2010-11 to $5.4 million in fiscal year 2012-13, which is a 25 percent decline. The District is considered to be susceptible to fiscal stress due to three years of operating deficits and low unassigned fund balance.

Controls over purchasing are not always operating effectively. We found that Town officials did not solicit quotes for certain purchases, as required by the Town's procurement policy. In addition, one contract was prepaid, purchases prices were not verified to bid prices and certain utilized contracts were not authorized by Board resolution. The Supervisor indicated that the Superintendent was allowed to make purchases using State or county contracts. However, she did not realize the Board needed to authorize the contracts by resolution. As a result of the various deficiencies, the Town may have not always received the best price for goods and services.

The Board did not adopt reasonable budgets. Over the last five fiscal years 2008-09 through 2012-13, the District budgeted to use an average of $495,000 of unexpended surplus funds to fund the ensuing year's expenditures. However, the District did not use these funds as intended because revenues exceeded expenditures by an average of more than $1 million in each of these years. As a result, the District's unexpended surplus funds, totaling $2.7 million as of June 30, 2013, were 7.5 percent of the 2013-14 budgeted appropriations, which exceeded the statutory limit of 4 percent. Further, as of June 30, 2013, the District had accumulated a total of $7 million in its reserve funds. We found that the Employee Benefit Accrued Liability Reserve is overfunded by more than $1.1 million. Also, the District's total balances of $1.75 million in the Retirement Contributions Reserve and $151,000 in its Unemployment Insurance Reserve are enough to cover the associated liabilities for at least three years without any additional funding. Therefore, we question the District's need to maintain these reserves at their current funding levels.

The Board needs to improve its oversight of the Village's financial operations. The Board has not developed policies and procedures for cash receipt and disbursement duties. As a result, the Clerk-Treasurer's duties are not segregated and Village officials do not provide adequate compensating controls, such as ensuring that bank reconciliations are properly performed and reviewed. The Village's most recent bank reconciliation, for example, showed an unreconciled difference of $11,451. In addition, the recreation department does not issue pre-numbered duplicate receipts for all transactions and an aide for the youth department is allowed to take cash receipts home before bringing them to the Clerk-Treasurer for deposit. Also, more than half of the claims we reviewed were either not audited by the entire Board, or lacked the required department head approval, and Village personnel do not review cancelled check images to reduce the risk of inappropriate disbursements.