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.

The purpose of our review was to examine the County’s controls to safeguard and account for court and trust funds for the period of January 1, 2011 through January 1, 2014.

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.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. The District's proposed budget currently includes a tax levy that slightly exceeds the statutory limit.

We found that the Treasurer maintained appropriate financial records and the Board generally provided adequate oversight of District financial activities. The Treasurer performed monthly bank reconciliations and submitted monthly financial reports to the Board. However, the Treasurer did not submit an annual report of financial activity to the Board and has not filed the required annual financial report with OSC since 2008. Although the Board does not audit the Treasurer's financial records annually, the Board reviews the Treasurer's records monthly. At monthly Board meetings, the Treasurer provides the Board with bank reconciliations, bank statements, canceled check images, a report of cash receipts and disbursements, and a budget report comparing actual expenditures to budget appropriations. Additionally, the Board reviews and approves all claims prior to payment.

In recent years, the District has struggled with fiscal challenges and deteriorating financial condition. We found that the Board adopted budgets that limited tax increases by balancing its budgets with appropriations of fund balance and reserves. As a result, by the end of the 2012-13 fiscal year, the District had approximately $2 million remaining in reserves, and unexpended surplus funds of $461,000. We reviewed budget-to-actual results for fiscal years 2010-11 through 2012-13 and found that District officials adopted realistic budgets and kept expenditures within budgeted appropriations. The Board reviewed budget-to-actual comparison reports throughout the year to monitor the budget and approved budget transfers at the monthly Board meetings. We commend District officials for their continuous efforts in closely monitoring financial operations and evaluating numerous options to close the District's budget gaps. However, the heavy reliance on appropriated fund balance and reserves as financing sources in the annual budgets has resulted in a significant reduction in the District's unexpended surplus funds and reserve balances.

Overall, we found the books and records were reliable and the monthly financial reporting to the Board was adequate. However, there is a lack of formal written guidance for financial transactions. We reviewed 133 deposits, totaling $90,855, and found that the collections were deposited intact and were properly recorded in the accounting program. However, the collections were not always deposited in a timely manner. We also reviewed 178 disbursements, totaling $77,292, to determine if they were for appropriate purposes, adequately documented, properly recorded and reviewed by the Board. The disbursements included 152 checks and 26 electronic fund transfers. We also reviewed the transactions to determine if they were signed by both the President and Treasurer, as required by the by-laws. We found all the disbursements were for legitimate Company purposes, properly recorded, and reviewed and authorized by the Board. However, we found that 117 of the 152 checks, totaling $63,405, only had one signature (either the Treasurer's or the President's) instead of the two required signatures.

The Board did not ensure that competition was sought when procuring goods and services not subject to bidding. Although District officials have adopted a procurement policy that addresses procurement below the bidding thresholds, the policy states that professional services do not lend themselves to competitive procurement procedures. Therefore, District officials did not solicit competition for eight of the nine professional service contracts we reviewed, which totaled $288,276. Furthermore, District officials did not enforce the policy requirement that quotes be solicited for purchases below the competitive bidding thresholds.

The President did not ensure that the Treasurer fulfilled his duties. The Treasurer was allowed to pay bills and make cash withdrawals without evidence of Company approval or without proper supporting documentation. The Treasurer did not perform bank reconciliations and failed to supply the members with necessary financial reports. As a result, Company members cannot be assured that Company cash is adequately safeguarded.

Department employees may not be conducting inspections of all potentially eligible businesses in the County, and when inspections are performed, employees are imposing fines below maximum amounts allowed by Agriculture and Markets Law (AML). Because of this, there could be significant revenue enhancements in the Department. If the number of potentially-eligible businesses to be inspected were increased and the fines imposed were increased to the AML maximum amounts, potential revenue enhancements could have ranged from $550,000 to $2.3 million for 2013, and could range from $591,000 to $2.6 million for 2014. Additional revenues could be collected if the Department were to increase follow-up inspections for businesses that fail to meet minimum requirements. In addition, County officials have not segregated duties for billing, cash collecting and record-keeping. For example, the Director and both inspectors bill customers for fees and fines and also collect payments. Despite his other duties, the Director also records activities in the software application. County officials have not implemented mitigating controls.

The Board needs to improve its oversight of District financial activities. The Board did not ensure that complete accounting records were maintained and monthly and annual financial reports were prepared. In addition, the Board did not follow the statutory requirements with regard to adopting the 2014 budget and computing the tax levy limit. It also has not adopted a code of ethics, procurement policy or an investment policy. Finally, the Board did not conduct a thorough audit of claims before they were paid.

The Board and Library Board have not adopted cash receipts policies requiring internal control procedures to be established and implemented. We identified weaknesses in the cash collection procedures at the Recreation Department, Clerk's office, Highway Department and Library. Management and employees developed cash collection procedures that were not consistent with good internal control practices, resulting in errors recording and reporting cash receipts without management questioning the errors or re-evaluating procedures. We also found that neither the Board nor Library Board audited and approved claims for payment. Instead, the Treasurer and his staff audited all claims against the Village and the Library. Checks were signed electronically using a single signature file containing facsimile signatures of the Mayor and a Village Trustee, with neither the Mayor nor the Trustee retaining custody of the signature file or being present during the affixing of the signatures. This arrangement is not in compliance with the law and allowed claims to be paid without a proper audit.

The Board did not properly monitor and manage the Village's financial condition. As a result, fund balance for all three major funds (general, water and sewer) decreased significantly from 2008-09 to 2011-12 due to operating deficits caused primarily by poor budgeting which resulted in revenue shortfalls and overspent appropriations. For example, the fund balance of the general fund dropped from $927,214 in fiscal year 2008-09 to a deficit of $39,827 at the end of the 2010-11 fiscal year before showing some improvement in the 2011-12 fiscal year. The Board also relied on fund balance and interfund loans to fund recurring operating expenditures. The Board also did not adequately monitor the budget and allowed appropriations to be overexpended for many line items and in total for the general fund budget. General fund appropriations were overexpended by $143,908 in 2011-12, $197,420 in 2010-11 and $313,832 in 2008-09. Although the 2009-10 budget was not overspent in total, several individual line items were overspent. The lack of monitoring also caused expenditures to consistently exceed appropriations in the water and sewer funds. Finally, the Board has not developed comprehensive, multiyear financial and capital plans to improve the budget development process.

The Department recorded collections of $74,685 in DWI fees, $39,797 in administrative fees, $21,312 in ignition interlock fees and $17,672 in restitution and surcharges during the audit period. We found that the Department has instituted proper controls and is collecting revenues due the Department.

We found that the Board and membership generally do not provide adequate oversight of Company financial activities. The Board has not adopted any written policies and procedures for financial operations. The Board has not set standards of conduct for the guidance of the officers and members with respect to disclosure of interests. The Company's financial duties are not adequately segregated and there are no sufficient compensating controls. The Treasurer provides a monthly report at the membership meeting detailing receipts, disbursements, cash balances and the list of bills to be approved that month. Although the written report is available, no one reviews it; instead, the Treasurer reads it aloud. The individual claims are not audited for accuracy or examined for supporting documentation. The President did not provide the legally required written disclosure of his ownership interest in a business used for the Company's website hosting. The Board did not conduct an annual audit of the Treasurer's books at any time. Finally, the Treasurer has not filed the annual foreign fire insurance report for 2012, as required, and does not maintain separate records of expenditures from these moneys.

The purpose of our review was to determine whether County officials have established appropriate controls to safeguard and account for court and trust funds for the period January 1, 2010 through January 1, 2014.