We found that the School's purchasing policy does not provide appropriate guidance as to when written or verbal price quotes should be obtained and when items must be competitively bid. The policy also does not address threshold amounts under which approval can be made by management, versus large purchases that would require Board approval. Additionally, we found that although the policy requires the use of purchase orders, School officials are not routinely using them to initiate the acquisition of goods and/or services. We also found that School officials often did not properly document verbal or written price quotations when making purchase decisions. For example, School officials spent $11,346 on computers but did not have adequate documentation to demonstrate that the lowest price was obtained. We also reviewed 12 disbursements associated with three capital projects that totaled approximately $1.3 million. We found that one of the three project contracts was not properly approved by the Board and there is no evidence that change orders totaling approximately $63,000 were approved by the Board.

Internal controls over the Court's operations were not operating effectively to allow for proper accounting and reporting of activities. Justice Bartlett failed to account for all moneys received, resulting in a $2,295 shortage in the Justice's account. The Justice did not prepare monthly bank or accountability reconciliations, issue appropriate receipts for all money received, deposit money intact or in a timely manner, file accurate and timely financial reports, maintain an accurate listing of bail, properly report ticket dispositions to the DMV or close his bank account as required when he resigned.

District officials consistently over-estimated expenditures over the past five years, which resulted in operating surpluses totaling $7.1 million. Although the Board appropriated unexpended surplus funds each year (exceeding $14 million over a five-year period) to help finance the ensuing year's operations, District officials actually used less than $1 million for District operations. As a result, the District's unexpended surplus funds routinely exceeded the amount allowed by statute and District taxpayers paid more than necessary to sustain District operations.

The 2014 proposed budget contains significant financial risks that the City Council should consider when adopting the 2014 budget. The City continues to finance operating expenditures with debt when it should be funding such expenditures with operating revenues. The practice of supporting operating expenditures with unrealistic revenue estimates and one-shot revenues is not prudent. The City projects operating surpluses for the 2013 fiscal year for the general fund and the water fund. However, due to overstated revenue estimates, the golf and recreation fund is projecting a $93,308 operating deficit. The unassigned fund balances in these three funds are still expected to remain as deficits. The 2014 budget included estimated revenue of over $1 million from the sale of property that may not happen timely or as planned.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The 2014 budget includes estimated revenues of $1.5 million in the general fund from the sale of Town property. Revenue from the sale of property is non-recurring (one-shot) revenue that will be received in one year, but will not necessarily recur in the following year. The Town's tentative budget complies with the tax levy limit.

Based on our limited procedures, it appears that the District has made substantial progress in addressing our recommendations. Of the 13 audit recommendations, seven recommendations were implemented, three recommendations were partially implemented and three recommendations were not implemented.

The District was identified as being susceptible to fiscal stress due to a general fund operating deficit during the 2010-11 fiscal year. Our audit determined the District is not currently in fiscal stress. District officials developed reasonable budgets and managed fund balance responsibly in accordance with statute. With the exception of the 2010-11fiscal year when the District incurred a planned operating deficit, fund balance has steadily grown during the period reviewed. During the 2011-12 fiscal year the District produced an operating surplus of approximately $2.8 million. The operating surplus was achieved through a decrease in salary and employee benefit costs due to staff reductions and lower energy costs. Additional cost savings were realized in pupil transportation costs due to declining enrollment and the combination of bus routes during the 2011-12 fiscal year.

Justice Tripp did not meet his required responsibilities when he resigned his position. Records were incomplete and, as a result, we could not determine if the amount he remitted to the Village was sufficient to meet Court liabilities.

We found that the Town Comptroller has not properly accounted for and reported reserve funds and other restricted moneys. The Town Comptroller does not record reserve activity in the financial system, instead she accounts for certain reserves separately and in some cases does not maintain any record of the reserves. This resulted in more than $2 million, which should have been used for debt service, remaining idle since 2004. In addition, we found that the Town Comptroller has not properly recorded and reported interfund activity. In addition, the Town has not established an effective fleet management program. The Town does not have any written policies or procedures to determine if the acquisition of new or replacement vehicles is cost effective. The Town does not maintain - in any consistent manner - repair, maintenance, usage, or fuel records for its fleet. Overall, we found that the Town's Engineering Department had the most comprehensive system for tracking vehicle maintenance and repair costs. We were unable to determine if cost savings could be realized due to the lack of certain information in the Town's records.

We tested purchases made in 2012 from five vendors totaling $100,943 for compliance with the Town's procurement policy. The Town purchased $10,362 of unleaded gasoline and $33,068 of diesel fuel from a local vendor. These commodities were not competitively bid as required by the policy. We compared the price that the Town paid with the State contract price and noted that the Town could have saved approximately $1,167 in 2012 had the fuel been purchased from the State contract vendor. In addition, the Town purchased a tractor in April 2012 for $38,200 without publicly soliciting bids as required. Tires of various sizes were purchased from a local vendor six times during 2012, totaling $9,140. The Highway Superintendent only obtained quotes from vendors for one of the six purchases, costing $424, which was from the vendor who quoted the lowest price. In 2012, the Highway Superintendent purchased air, oil and hydraulic filters totaling $2,213 but did not obtain any quotes as required. We compared the costs of the filters purchased to the costs from other vendors in the area and noted that the Town paid reasonable prices for these items.

The Legislature adopted budgets for the general fund that were not structurally balanced; instead the Legislature routinely relied on appropriating significant amounts of fund balance and reserves to finance operations. In addition, the County's enterprise infirmary fund was not self-sufficient, and therefore required subsidies from the general fund through both interfund transfers and advances. The Legislature also had not adopted a policy establishing a reasonable level of unexpended surplus funds to maintain and had not developed and adopted comprehensive, multiyear financial and capital plans. As a result, the general fund realized annual operating deficits, a declining fund balance, and a declining cash balance over the last four fiscal years (2009 to 2012). In fact, the general fund's cash balance was so depleted over the last four fiscal years that the County could not transfer cash to the county road, road machinery, and enterprise infirmary funds for the entire amounts that were included in the general fund budgets for interfund transfers to these funds. In addition, we found that the County's financial condition declined further during 2013 to a position that the County did not have sufficient cash to pay its bills and other obligations when due, resulting in the County issuing short-term debt in the form of a tax anticipation note for $4 million on May 31, 2013. The County's financial condition will likely decline further during 2013 because the general fund budget is not structurally balanced.

The Board's adopted budgets were based on accounting records with discrepancies because the Clerk-Treasurer did not maintain the Village's accounting records in an accurate manner. As a result, in two of the last five fiscal years, Village officials appropriated more fund balance than was available in the general fund. In addition, the Board arrived at a tax levy it deemed necessary, but the Village rarely receives that total amount, making it necessary to use more fund balance than planned to offset that shortfall. However, the Board did not consider the affect of the unlikely collection of the full levy on its adopted budgets. Also, the Board has not developed long-term funding plans to address the Village's deteriorating financial position and capital assets.

The Board did not adopt realistic and structurally balanced budgets and instead consistently relied on appropriating fund balance, a non-recurring revenue, to finance recurring expenditures. Further, in two of the last three years, the County incurred operating deficits. As a result, the financial condition of the general fund has diminished in recent years. As of December 31, 2012, the County reported a total fund balance of $11.4 million in the general fund, a decline of 41 percent from the January 1, 2010 total fund balance of $19.2 million. We also found that the County's cash on hand declined from twice its average monthly expenditures in 2010 to about $324,000 less than the average monthly expenditures in 2012, and the County's contingency appropriation is not adequate for current financial conditions. The County's declining financial condition is the result of poor budgeting and financial management practices and the Board's failure to develop and use long-term financial plans.

Neither Justice performs a monthly accountability analysis, issues appropriate duplicate receipts, or properly reports pending and disposed cases to DMV. Our review of Justice Hise's records disclosed a $721 shortage in his account as of April 23, 2013. Also, Justice Hise did not deposit money in a timely manner, file accurate monthly reports, maintain an accurate listing of bail, or maintain a reliable cash receipts record. Our review of Justice Orr's records disclosed minor deficiencies. We also found internal control weaknesses with the Court's recordkeeping software, which raises significant concern regarding the integrity of the Court's data. Finally, there was no indication that the Board conducted, or retained anyone to conduct, the required annual audit of the Justices' records.

Even though the Board adopted realistic budgets, the general fund's financial position and the fund used to account for the operations of Maplewood Manor (the County-run nursing home) have shown negative trends from 2010 through 2012. The negative financial trends realized by the County are a result of the operating deficits in Maplewood Manor caused by the increasing costs to run the facility. The total general fund balance decreased 41 percent, from $24.7 million at January 1, 2010, to $10.3 million at December 31, 2012 due, in part, to subsidizing Maplewood Manor. In fact, during this period, the general fund subsidized Maplewood Manor for a total of $13.7 million. While this decline in fund balance was planned by County officials to help keep property taxes down, it is important that County officials continue to monitor the general fund results of operations on a regular basis. Further, County officials have been closely monitoring Maplewood Manor's results of operations, and the Maplewood Manor LDC is currently reviewing proposals for the sale of Maplewood Manor.

The Town's financial report did not properly reflect the true financial condition of the sewer district fund. On its 2011 annual financial report, the Town reported an unrestricted fund balance deficit of $230,368 in the sewer district fund. If the necessary adjustments were made the Town would have reported a positive fund balance of $451 in the sewer district fund. Although the financial condition of the sewer district fund has been improving and is better than as originally reported, the failure to provide accurate and reliable information increases the risk that the Supervisor and Board will not be able to effectively evaluate and manage the Town's financial activities. In addition, there is an inadequate segregation of duties for payroll. The payroll clerk's duties include making changes to salaries and wages but she is also capable of submitting data changes directly to the payroll-processing contractor without approval, and there is no comparison of the amounts of the payroll checks to the payroll journals after they are prepared. Even though the human resources bookkeeper's duties for vendor checks include creating and printing vendor checks, the Town's blank check stock is not secured and there is no comparison between the abstracts and checks when they are signed. Furthermore, the Town's payroll-processing contractor and postage-servicing contractor made withdrawals directly from the Town's bank accounts.

The Supervisor did not maintain accurate computerized accounting records and reports. Balance sheet amounts did not agree with general ledger amounts and the balance sheet included unsubstantiated liability accounts. For example, the balance sheet account and general ledger accounts for the general fund checking account balance at December 31, 2012 differed by $4,654. Because of these deficiencies, the Board did not have accurate information on which to base its financial decisions. Further, the Supervisor filed the Town's annual financial report with the Office of the State Comptroller 116 days late for 2008, 112 days late for 2009 and 374 days (more than a year) late for 2010. As of December 2012, the Supervisor had not filed the annual financial report for 2011. The Board has not ensured that the records of all Town officials and employees who handle cash are properly audited on an annual basis. In addition, the Board has not established a system to ensure that all claims are presented for audit prior to payment. We reviewed 110 randomly selected disbursements totaling $142,058 and 121 high-risk disbursements totaling $47,698. We identified 80 exceptions, totaling $38,603.

County officials did not consistently maintain sufficient levels of fund balance to support current and future operations or provide a mechanism to cover budgeted revenue shortfalls and, therefore, had to rely on short-term borrowings. The County did not maintain sufficient current and recurring revenues to finance the County's operations. Thus, the fund balance fluctuations previously discussed occurred because the general fund was spending more than it received in revenue until 2011 and 2012, when the general fund began to generate more revenue, while expenditures remained relatively flat. While the County's general fund seems to be in the early stages of recovery, the significant reliance and use of fund balance to finance operations has critically impacted the County's cash flow. In December 2009, the County incurred a cash flow shortage in the general fund that required the issuance of short-term debt to borrow against future anticipated tax and revenue sources.

The former Director operated an extensive adult and youth recreation program from which he misappropriated program funds totaling at least $107,984. Specifically, we found that the City could not account for $36,234 in fees that should have been paid for the various recreation programs and employee uniforms. In addition, the former Director made $71,700 in payments that did not appear to be related to the program, were payments for his family members or his own personal creditors, and other purposes not related to proper program functions. The former Director deposited more than $340,000 and made 427 disbursements totaling approximately $344,000 from a separate bank account titled the “Binghamton City Sport Leagues” for the period of January 1, 2007, to November 27, 2012. He was one of the two signatories on this account and the bank statements were mailed to his home address. Even though the account was titled in the City's name and used the City's Federal identification number, no one in the City knew this bank account existed because none of this activity was recorded in the City's accounting records.