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.

We reviewed five contracts with payments totaling $12.6 million and found that the Board did not properly award two of these contracts − for public works projects and sidewalk replacement services − that resulted in payments totaling more than $10.6 million to two contractors. The Town also failed to properly monitor the services provided by three of the five contractors. Town officials wasted thousands of dollars when deciding to use more expensive bulldozers when other equally capable options were available at much lower costs. The Town also paid approximately $600,000 more than was necessary for sidewalk replacement. Further, because property owners are required to reimburse the Town for sidewalk replacement, a significant portion of this cost was borne by individual taxpayers. In addition, the Town overpaid two vendors more than $100,000 for solid waste disposal and sidewalk replacement services.

The Board and District officials need to improve controls over the District's IT assets. The Board has not established a computer use policy for employees to define appropriate user behavior or procedures to ensure the security of the District's IT system. The Treasurer has administrative rights to the District's financial software that allow her to control and use all aspects of the financial software application, which creates the opportunity for the manipulation and concealment of transactions. Also, the District's vendor master file is outdated with inactive vendors and duplicate names for the same vendors. In addition, the District has no controls in place over remote access, such as user authorizations, policies or monitoring, and has not enabled the audit trail function for its network operating system. Therefore, the District cannot ensure accountability for unauthorized users, reconstruction of events, intrusion detection, and problem identification. Finally, physical security over the District's server room is inadequate, and the District's computer asset inventory record is incomplete and inaccurate.

The Treasurer has not filed the District's Annual Update Documents (AUDs) with the Office of the State Comptroller, as required, even though the accounting books were up-to-date and the Board received period information detailing actual revenues and expenditures. As of December 10, 2013, the 2011 and 2012 AUDs had not been filed, nearly 18 months and 6 months, respectively, past the deadline with a filing extension. The Treasurer has not filed the AUDs because a certified public accounting (CPA) firm contracted in January 2012 to perform the audit for fiscal year 2011 has not completed its audit and the Treasurer is waiting until the audit is complete to file.

The Board failed to ensure fund balance was maintained within legally established limits and that residents were not taxed more than necessary. Although District officials appropriated on average $630,000 of fund balance in each of the last five fiscal years to reduce the tax levy, the District had operating surpluses in four of the five years reviewed. District officials then used excess fund balance to fund five reserves that, as of June 30, 2013, totaled over $2 million. One of the District's reserve funds had approximately $434,000 or 50 percent more than the amount needed for authorized purposes. Also, three of the District's reserves, with balances totaling approximately $775,000, were not supported by a plan setting forth the amounts to be retained, or when the balances would be used. As such, the District has not demonstrated a valid need for about 60 percent of the amounts set aside in these reserve funds.

The Board has not adopted budgets that reflect the Library's operating needs. The Board has consistently underestimated revenues and overestimated expenditures over the past three years, which resulted in operating surpluses totaling nearly $1.6 million. This has also contributed to the accumulation of an unexpended surplus fund balance equivalent to an entire year's budget. For the same period, the Library also increased the real property tax levy by nearly $71,000. The Board also needs to improve controls over cash receipts to help ensure that they are recorded and deposited in a timely and accurate way so that Library assets were safeguarded. The Library does not have formal policies or procedures to ensure accountability for the cash receipts process. As a result, Library staff members do not always ensure that the cash counted agrees with the register tapes each night. In addition, although all 28 deposits made from February 2013 through July 2013, totaling $18,052, were made intact and recorded accurately, they were made between 10 and 66 days after the cash was collected, increasing the risk of loss or misuse of cash.

Based on the results of our review, except for certain matters, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The proposed budget does not include a tax overlay or provisions for infrastructure needs. There are budget gaps in the water and sewer funds which are planned to be funded by rate increases that have not yet been adopted. The amount of sewer rents revenue in the proposed budget has been increased without any supporting justification. The proposed budget complies with the tax levy limit.

Based on the results of our review, in general, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. The District's proposed budget complies with the property tax levy limit.

The Board and District officials did not develop reasonable budgets. Revenue estimates were generally close to the actual revenues received. However, over the last five fiscal years, the District's general fund spent $21.7 million less than planned. As a result of these budgetary surpluses, the District did not use any of the appropriated fund balance planned to finance operations (an average of $3.5 million for each of the last five years). Instead, between 2008 and 2013, the District's total fund balance for the general fund increased $4.8 million while the real property tax levy also increased by about $4.8 million.

We reviewed the various resolutions, minutes of Board meetings and bond statements to ensure the Board took appropriate actions to authorize the issuance of the water and sewer revenue bonds. Furthermore, we examined the chief financial officer's (CFO) financial records to ensure the debt proceeds were properly allocated and expended from the various capital projects. We found the issuance of debt proceeds were properly authorized by the Board and the proceeds and related expenditures were appropriately accounted for by the CFO.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. District officials have also taken some corrective action by preparing a projection of year-end fund balance for the food service fund while also improving the overall solvency of the fund. Finally, the District's proposed budget complies with the property tax levy limit because it includes a tax levy increase within the statutory limit.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget for the general, electric, library and parking funds are reasonable. However, the water and sewer funds' tentative budgets are not balanced, and include a deficit of more than $273,000 and $264,000, respectively, or almost 10 percent in each fund. Village officials told us they recognized the deficit, and planned to raise water and sewer rates to make up the difference. We recommend the Board address these deficits in order to avoid adopting budgets that include appropriations without sufficient financing sources. We had a similar finding in last year's budget and the Board did adjust the rate structure and reduced some expenditures; as a result of the actions taken by the Board, the funds are projected to not incur a deficit for the current fiscal year. In addition, the Village's tentative budget does not comply with the property tax levy limit.

We found that District officials established adequate internal controls over payroll. District officials implemented specific procedures to ensure that individuals reported and paid on the payrolls were paid at their approved salaries and wages, and that they received only the benefits to which they were entitled.

Controls over the Company's fiscal activities were weak. The Board failed to provide adequate guidance to those responsible for receiving and depositing cash and exercised little oversight of the Treasurer and other officials who performed these duties. The Board's failure to provide oversight of the Company's fiscal operations creates a significant risk that Company disbursements may not be for appropriate purposes and that all moneys received may not be deposited and accurately recorded. Further, the Company used the Association's account to deposit moneys and purchase items for the Company that were not approved by the Board, overseen by the membership, or recorded in the Company's financial statements, which conceals those transactions from members, taxpayers and other interested parties.

We reviewed the County Clerk's, Surrogate's Court's and Treasurer's processes, procedures and records for the receipt and management of court and trust funds. We found that the records maintained by the County Clerk and Surrogate's Court were up-to-date and complete, and we noted no material discrepancies. We also found that the Treasurer established adequate procedures, maintained appropriate records, and properly reported the condition of court and trust funds and abandoned property to the State Comptroller as prescribed by statute. We discussed minor deficiencies with County officials during our fieldwork.

The Board and District management are not effectively managing the District's financial condition and its reported financial position is declining. While the District's reported fund balance shows a deficit, most of its fund balance appropriations are not being used. District officials appropriated fund balance as a funding source for the past three years in amounts that were unnecessary and exceeded the fund balance actually available. As a result, at the end of 2012-13 fiscal year, the District's reported unassigned fund balance had declined to a deficit of $369,347. The District could improve its reported financial position by not appropriating unnecessary fund balance and, further, by appropriately transferring retired debt proceeds to the general fund. Additionally, the Board does not effectively monitor the budget throughout the year, and the Business Manager/Treasurer did not provide the Board with budget status reports or budget transfer reports.

The purpose of our audit was to review the projected cost and energy savings achieved by energy performance contracts (EPC) entered into by eight school districts for the period of October 1, 1998 through August 21, 2013.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. The 2014-15 preliminary budget includes the appropriation of $3.5 million of fund balance to help finance 2014-15 operations. District officials also plan to liquidate portions of the Tax Reduction Reserves in the 2014-15 budget. The District's actions are reasonable, given the current economic conditions. However, District officials must keep in mind that the continued reliance on using fund balance to fund District operations will eventually deplete fund balance. Finally, the District's proposed budget complies with the property tax levy limit.

Court moneys were not properly recorded, deposited or reported to the Justice Court Fund during the audit period. We determined that the Court's liabilities exceeded the Justices' total available cash as of June 30, 2013, resulting in a shortage of $117,120. On the surface, the Court's records appear to be well kept. However, when we compared the Court's computerized data to the previously printed computerized cashbook reports on file for January 2009 through May 2013, we found that there were 830 receipts totaling $115,045 in the computerized data that did not appear on the printed cashbook reports, going as far back as May 2009. It also appeared that certain fines and fees were originally entered into the Court's computerized program when they were received, but were later altered to change the receipt dates to a different month, and the receipt numbers were deleted. Finally, we identified 16 cash receipts totaling $1,490 that were deleted from the computer.

Due to the Board's continuous lack of oversight of the Village's financial activities, the Treasurer was able to misappropriate as much as $83,000 of Village funds prior to detection. The Board has not established written financial policies and procedures to safeguard assets, which allowed the Treasurer to perform all cash receipt and disbursements duties without oversight. The Board and Mayor did not ensure that the necessary supporting documentation was attached to the claims prior to approving them for payment and that claims were for valid Village purposes. The Treasurer did not keep complete and accurate financial reports, perform bank reconciliations and file required reports with OSC.