We found that there is inadequate oversight of the Authority's payroll processing and accounting for leave accruals. Due to limited staffing at the Authority, there was no segregation of payroll-related functions. The Office Administrator performed all payroll functions with little or no supervision. Also, the timekeeping system used to record administrative employees' time worked does not accurately capture the hours worked. We found deficiencies for the hours worked for five of the seven administrative employees that tracked their time using the log-in and log-out times on the employees' computer. Finally, seven of the eight part-time employees did not have documented pay rates.

District officials need to improve internal controls over grant programs. The District expended more than $79,400 on grant-related expenditures that either were not approved, not properly supported or not expended for legitimate grant purposes. Further, grant expenditures reported to SED totaling $127,680 lacked sufficient supporting documentation to substantiate employee benefits, salaries and purchased services. As a result, District officials' oversight of grant programs is substantially diminished and they cannot be certain that grant proceeds were expended for authorized grant purposes.

The District reported unexpended general fund deficits for five consecutive years. The deficit was as high as $5.3 million in fiscal year 2008-09. However, the deficit started declining in the 2009-10 fiscal year when SED and DOB authorized tuition increases for the District. The District's enrollment has declined in recent years, which has adversely affected revenues. However, District officials have managed to decrease expenditures to offset the declines in revenues, which helped to relieve the deficit situation. We found that the District could improve its billing and collection procedures. As of June 30, 2013, the District had approximately $2.4 million in accounts receivable, of which $1.2 million (50 percent) had been outstanding for 90 days or more. If the District is unable to collect these outstanding amounts, the District's financial condition will be negatively impacted.

The Supervisor did not properly maintain the Town's accounting records. Specifically, the Supervisor did not record all receipts and disbursements, which left the Town's accounting records incomplete. The Supervisor also made disbursements that were not audited by the Board and were not included on the abstract of audited claims. We also found that bank reconciliations were not prepared. Additionally, the Supervisor did not submit adequate monthly financial reports to the Board and the Board did not perform an annual audit of the Supervisor's records and reports, as required by the Town Law. The lack of adequate and timely accounting records makes it difficult for the Board to determine the Town's true financial condition or effectively monitor the Town's financial operations.

The Board did not establish adequate internal controls or provide sufficient oversight of the District's financial operations. The Board's audit of claims was not effective. We found that almost half of the 60 claims we reviewed, totaling $15,109, had deficiencies such as insufficient supporting documentation, lack of Board approval or were approved by the individual submitting the claim. The District's use of credit cards was not in accordance with Board policy. Of the credit card charges we reviewed, about 60 percent either were not itemized or receipts were not provided to show that they were for valid District expenditures. The District also could have saved approximately $11,000 if District officials were reimbursed for travel costs at Federal reimbursement rates. The Board has not adopted an online banking policy and has not entered into an agreement with the District's bank for electronic transfers. In addition, the Treasurer performed online transactions without Board oversight and bypassed established internal controls over cash disbursements. The Treasurer also failed to file the required annual financial reports with the State Comptroller's Office in a timely manner or provide the Board with a required annual report. Finally, the Board has not obtained an independent audit of the District's finances or length of service award program (LOSAP) as required by law.

The Court was audited by the New York State Office of Court Administration, which released a report in July 2011 that found that at least $89,600 in Court funds were misappropriated by the former Court clerk. Given the past misappropriation of Court funds, we reviewed the Court's financial activity to ensure corrective action has been taken and preventative procedures have been established to safeguard Court assets. Overall, the Justices have established adequate processes and procedures for the Court's financial operations. The Court clerk collects cash receipts, records entries in the accounting system and prepares deposits. The Justices review the deposits to ensure they are accurate and that all receipts are accounted for prior to depositing the receipts. While the Justices properly account for monthly activity and prepare bank reconciliations, we found that the accountability reports were not properly prepared. We prepared accountabilities for both Justices for the months of June, July and August 2013 and found minor variances with both Justices' accountabilities. When the variances were brought to the Court clerk's attention she promptly investigated and accounted for the variances.

The Greene County Industrial Development Agency (GCIDA) entered into contracts in which we believe former GCIDA Board members had prohibited conflicts of interest. Members of the Board served conflicting roles with businesses that received benefits from GCIDA. This includes lease and PILOT agreements related to the construction and renovation of a ski facility; a lease and PILOT agreement relating to the construction of an aircraft component assembly facility; and the sale of land, a line-of-credit and the issuance of bonds with a bank. GCIDA had formal criteria for selecting which firms and businesses received sponsorship and economic development incentives. However, the Board cannot document that project incentives were consistently applied when approving projects because they did not prepare formal documented cost-benefit analyses. Finally, GCIDA does have a process in place to monitor employment goals. However, it does not have a policy that would allow it to effectively hold businesses accountable when they do not comply with employment reporting requirements or meet specific employment goals. Four of 10 businesses receiving GCIDA benefits that we reviewed have not met their employment goals and one business did not comply with employment reporting requirements. In addition, six of 10 PILOT agreements reviewed did not have a recapture clause.

In 1996, the Putnam County Industrial Development Agency (PCIDA) Board established criteria for approving projects, and for evaluating and recapturing benefits from projects that fail to meet their goals. However, the policy has not been evaluated since, and therefore does not reflect changes made by the Board to the recapture provisions that the Board should follow. PCIDA officials do not have project approval criteria that is specific to the County, and they approve individual projects despite a lack of information such as the additional police or emergency services required, the number of existing jobs or a cost-benefit analysis. Officials also do not conduct annual visitations to businesses to determine if projects meet their goals or recapture benefits when they do not. Officials also do not obtain sales tax exemption or capital investment amounts annually, and therefore cannot determine if projects are meeting their related goals or accurately report this information to the Office of the State Comptroller. As a result, there is an increased risk that businesses will receive unnecessary financial assistance and that the businesses will not provide the public benefits that have been promised to the County and local jurisdictions.

The Dutchess County Industrial Development Agency (DCIDA) Board did not design or implement an adequate system to monitor, evaluate and control benefits and incentives granted to businesses. Ten of the 21 businesses receiving DCIDA benefits have not met their employment goals. Job creation was less than the agreed-upon amount by 1,398 jobs. Six of these 10 companies will receive tax exemption incentives over the life of their contracts, in part, because of their plan to create jobs in Dutchess County. Therefore, taxpayers may not be receiving expected benefits. Also, DCIDA did not properly bill, collect and distribute the PILOT amounts for three of seven projects that required that DCIDA control the PILOT amounts. Additionally, none of the 12 PILOT agreements reviewed had a recapture clause. The annual report submitted by the DCIDA was not accurate or complete. In addition, of the ten projects with PILOT agreements, five totaling $14,351,627 were not reported on the Public Authorities Reporting Information System report. Furthermore, two projects that were reported were not correct. Finally, the employee statistical information was reported incorrectly by 14 of 21 project owners.

We found that, except for minor discrepancies that we discussed with District officials, all customers were accurately billed, penalties were calculated correctly, and late fee waivers and billing adjustments were generally made in accordance with District policies and properly authorized by a designated official.

A significant amount of Town resources are being inappropriately reported and sequestered in the capital projects fund because the Board and Supervisor did not close completed capital projects and transfer the remaining money to the appropriate operating fund. The Supervisor is accounting for $913,000 remaining from a “Host Community Fee” received in 2007 in the capital projects fund. Town officials indicated that they had not established future plans for this cash. Moreover, the Supervisor is also accounting for park operations in the capital projects fund, rather than the general fund. As of September 30, 2013, the capital projects fund held $39,600 in cash from park operations. These cash balances, which total $953,000, should be recorded in the general fund-townwide, where they can be used to reduce real property taxes and finance operations.

In recent years the District has struggled with fiscal challenges due to a deteriorating financial condition. District officials have adopted realistic budgets and its spending did not exceed the budget. However, they relied heavily on appropriations of fund balance in the budgets from 2010-11 through 2011-12. As a result, by the end of 2011-12, the District's unexpended surplus funds had declined to a deficit of $1,157,820. By the end of 2012-13, the District was able to increase the unexpended surplus funds to $1,127,047 (.8 percent of the ensuing year's appropriations). Although this is an improvement from the prior year, the District has very little cushion for managing unforeseen events. To meet short-term cash flow needs, the District borrowed at least $10 million each year, incurring about $150,000 for interest costs in the 2012-13 fiscal year. While the Board has attempted to address the District's declining financial position, it has not developed a multiyear operational plan to provide a framework for future budgets and facilitate management of financial operations.

The Board had not adopted comprehensive written policies and procedures providing guidance and internal controls over departmental cash receipts. Consequently, we found that $42,031 in cash receipts had inadequate supporting documentation of the collections and $11,429 in cash receipts were not remitted to the Business Office and deposited into District accounts in a timely manner. In addition, we found that open swim program cash receipts were not properly accounted for, were substituted by the open swim program coordinator with personal checks and were not all remitted to the Business Office for deposit. In addition, internal controls over the District's information technology (IT) system were not appropriately designed or operating effectively. We found that users were granted access to functions of the financial software applications that they did not need to fulfill their day-to-day job responsibilities. In addition, although the District's technology controls policy designates the Superintendent with the responsibility of assigning access rights (administrative rights) to the financial application, we found that the School Business Executive has been granted administrative rights to the financial application. Furthermore, audit logs were not generated and reviewed by someone independent of the Business Office's operations.

The District reported $195,355 of unexpended surplus fund balance remaining as of June 30, 2013. Given the size of the District's operations this is a dangerously low level. In addition, approximately $5.3 million in workers' compensation reserve funds were inappropriately used to fund other unrelated general fund operating costs. The District's last multiyear financial plan was prepared in June 2012, which included information on past financial trends and projections for revenues and expenditures. The financial plan also included a history of fund balance, which has substantially dwindled over the past six fiscal years. We also found that District officials did not establish adequate safeguards over mobile devices, and that District employees did not use mobile devices in accordance with the District's acceptable-use policy. For example, on 23 of the District's 40 mobile devices we found indications of personal use. We also found that 25 devices had minimal to no discernible use for District purposes and were used predominantly for personal use, or not at all.

Internal controls in the payroll department were generally operating effectively. We tested payroll payments for all 54 employees, including full-time, part-time, seasonal and temporary employees, to determine whether they were paid Board-approved wages. We found that employees were compensated accurately but that leave accrual records were not properly maintained. We tested the leave time used by all six highway department employees for whom leave records were maintained and found minor discrepancies that we discussed with Town officials. Because the Town did not maintain leave accrual records for other employees, Town officials have no way of determining the accuracy of time for vacation, sick and personal leave accruals.

The Town maintains two above-ground fuel storage tanks at its highway facility; a 1,500-gallon tank for diesel fuel and a 500-gallon tank for gasoline. From January 2012 through October 2013, the Town purchased 24,000 gallons of fuel costing approximately $80,000. The Town does not maintain perpetual inventory records to show the amount of fuel remaining in inventory at any given time, and it does not take periodic physical inventories for reconciliation purposes. We performed an analysis of the Town's fuel purchases and usage records. We determined that approximately 7,100 gallons valued at $23,500 were unaccounted for. We also found apparent errors in the fuel usage records. The Town has not taken measures to provide physical security over fuel. There are no procedures in place to record the distribution of fuel shed keys. Also, because the distributed keys can be duplicated, there is no assurance that an inventory would identify all of the keys that exist. Additionally, once the shed is opened, there is unrestricted access to the fuel tanks.

We found that the Board generally does not provide adequate oversight of the Company's financial activities. There was no evidence that the Board or Company membership adequately reviewed or approved all bills/claims prior to payment. The Treasurer did not provide the Board with monthly or annual reports and was not responsible for receiving and maintaining custody of all Company funds. Furthermore, the Treasurer did not prepare a budget or cash flow document to guide annual operations.

The Board has not established adequate policies and procedures to ensure that the Treasurer prepares monthly bank reconciliations. We found that, while the Board established some controls, they lacked some key components to ensure that financial activity was properly recorded and reported to safeguard District moneys. Specifically, both the former and current Treasurer filed the District's annual update documents (AUDs) late for the past five years and they failed to complete monthly bank reconciliations. We prepared bank reconciliations as of December 31, 2012 and August 31, 2013 and noted no material discrepancies.

Although the former Director properly accounted for some Department funds, she did not properly account for funds associated with the Center's operations. The day before the former Director officially retired, $21,526 of unsecured cash ($19,732) and checks ($1,794) was found in a Department file cabinet. Of this amount, $4,003, was in a sealed envelope and appeared to be ready to be remitted to the Town Comptroller. There was no indication that the remaining $17,523 would be remitted to the Town Comptroller. The former Director opened an unauthorized bank account in 2004 which the Board was not aware of, deposited Center funds in the account and wrote questionable checks from that account for Center activities. In addition, the former Director paid for overnight trips for Center members with her personal credit card and subsequently wrote checks to her husband for reimbursement of the payments, for which the former Director's husband was overpaid approximately $3,743. The former Director and her husband also did not pay $4,657 for the trips which they participated in. The former Director did not issue press-numbered receipts or properly account for moneys received. Payments were made without supporting documentation, and items were purchased that do not appear to have been used for Center activities. These activities occurred because the Board did not provide adequate oversight of the Department's financial activities.

The Board did not develop policies or procedures for budgeting practices and, as a result, repeatedly adopted budgets with unrealistic estimates for revenues, expenditures and appropriated fund balance. These inaccurate budgets caused significant budget variances and resulted in unused appropriated fund balance; fund balances were not actually reduced at the levels represented to taxpayers in the adopted budgets. The Board also has not adopted, reviewed, updated or enforced adequate financial-related policies to ensure Town resources are protected. The financial duties in the Supervisor's Office were not adequately segregated and there were no effective compensating controls. Additionally, the Board has not entered into detailed written agreements with the payroll processor and bank to ensure that the Town's information and resources are adequately safeguarded.