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.

The Secretary paid herself $5,538 that she was not authorized to receive and paid her husband, a Highway Department employee, $1,800 that he was not authorized to receive. We have referred our report to the proper authorities so that they could take appropriate action. Additionally, employee healthcare contribution rates were miscalculated, resulting in employees paying incorrect amounts for their healthcare benefits. These discrepancies occurred and were not detected because no one reviewed the Secretary's work to ensure that it was accurate. In addition, we found errors in general fund employee payroll payments aggregating $2,484; $1,273 in over-payments and $931 in under-payments, because the number of hours worked were miscalculated. These errors were not caught by the part-time secretary/bookkeeper when processing the records for payroll.

Overall, we found that school officials adequately monitored the District's financial operations to ensure fiscal stability. We found that the District adopted budgets that allowed the unexpended surplus fund balance to remain relatively stable over the last few years and that the District had adequate unexpended surplus funds to support planned deficits for the 2010-11 and 2011–12 fiscal years. The Assistant Superintendent for Business actively monitors available unexpended surplus funds to ensure that the balance is maintained below the 4 percent cap required by law.

The District has made limited progress in implementing the recommendations made in our audit report. Of the three audit recommendations, only one recommendation was implemented. Two recommendations were not implemented. By not implementing the recommendations in the report, the District is forgoing potential revenue.

The system of controls implemented by the Board generally operated effectively. We reviewed the check sequence within and between all abstracts issued from January 1, 2012 through December 31, 2012 to ensure the check sequence was complete and all checks were accounted for. Five out of 674 checks totaling $6,257 were issued and paid but were not on abstracts, and the Town could not account for five checks. These five unaccounted for checks were not listed on any abstracts and were not paid. However, they were not identified as voided checks.

The Board failed to properly establish internal controls or provide adequate oversight of the District's financial operations. The Board's audit of claims was largely ineffective and the Board did not properly supervise the Treasurer's activities. Furthermore, it has not employed an independent public accountant (IPA) to audit the District's finances or LOSAP as required by law. Finally, the Board did not ensure that grants were properly managed. This lack of oversight diminishes the Board's ability to properly monitor the District's financial operations. Our testing disclosed that the District made payments of over $59,572 that appeared questionable, improper, or unnecessary, most of which were purchases made with District credit cards. The District also failed to claim over $121,500 in grant money awarded to it by the Federal Emergency Management Agency (FEMA). Finally, it is unclear whether District-paid cellular telephones are used primarily for District purposes because officials routinely shred the monthly usage documentation.

The District has accumulated more than $16.3 million in excess funds that could be used to benefit taxpayers. The excess balance is about 13 percent of the subsequent year's budget, which is much higher than the statutory 4 percent limit allowed for school districts. The District circumvented the 4 percent limit by inappropriately encumbering approximately $8.7 million in purchase orders and tax certioraris for the 2012 fiscal year. The District also had $2.3 million in excess funds in the unemployment and insurance reserves. In addition, nine of 40 employees started their employment at steps higher than the entry level and cost about $95,000 more a year than if they started at the entry level. According to District officials, individuals were given higher levels because of degree completion, work experience, difficulty of academic curriculum, and scarcity of a particular skill set needed by the District. However, District officials were unable to provide any documentation supporting why those nine employees received an initial salary at those particular levels.

We found that the Board generally does not provide adequate oversight of District financial activities. The Board has not adopted procurement or code of ethics policies in accordance with GML. The Board did not perform an annual audit of the Treasurer's financial records. The only accounting records the Treasurer maintained were a check register and savings account register; the Treasurer did not maintain journals, ledgers, subsidiary revenue or expenditure accounts. The Treasurer also did not document monthly bank reconciliations to determine whether any differences existed between bank records and her checking and savings account registers. We also found that the Board did not adopt an annual budget in accordance with Town Law.

County and Department officials had not established an adequate system of internal controls over the Department's financial operations. Written policies and procedures either had not been developed or they had not been adequately monitored, updated, or distributed to all responsible staff. The Department did not maintain adequate records to support amounts collected or uncollected, the amount of undisbursed restitution being held, or adequate records of unpaid victims, and did not properly segregate the duties of those receiving and disbursing cash. While the Department has consistently disbursed restitution payments it receives each month to the appropriate victims timely and routinely, it did not properly handle those moneys which could not be readily disbursed to victims who could not be located. The staff had not made payments of undisbursed restitution to unpaid victims, as required by law, in many years, if ever. As of August 2012, the Department held over $16,000 in undisbursed restitution which was collected between one year and over 20 years ago. Also, staff did not cancel checks outstanding for over a year as required by law. Finally, the Department did not consistently enforce payment of court-ordered restitution, and only reported noncompliance to the courts for six of the 31 selected cases that had balances in arrears.

District officials stated there was no audit committee active at the District. Also, the District has not received an internal audit report since 2010-11 and the District has not appointed an internal auditor for the 2012-13 school year. In addition, none of the 50 claims we tested, totaling $967,570, had been audited. One claim, totaling $48,998, was for a truck that had no documentation to show the purchase was subject to competition, and five claims, totaling $3,317, were for credit card charges where the credit card company electronically debited the payments directly from the District's bank account. In addition, the Board did not adequately design and implement policies over the security of information technology. As a result, the District does not have a written disaster recovery plan. The Treasurer has administrative rights in the financial software that allow access to all aspects of the system and District officials do not produce or review activity logs.

The recorded total fund balance for the general, sewer, and water funds at the end of the last three fiscal years were either overstated or understated due to various accounting errors. As a result, the Clerk-Treasurer and the Board were not aware of the general, sewer, or water funds' actual operating results and overall financial condition. In addition, the Board did not adopt realistic budgets and did not properly monitor financial operations, which contributed to the Village being in fiscal stress at the end of the 2011-12 fiscal year. Specifically, the general, sewer, and water funds had a combined total deficit fund balance of $4,623 and a combined cash balance of only $6,451 at the end of the 2011-12 fiscal year. The operating funds only had a combined cash balance of $6,451 because the community development fund made an interfund advance of $20,000 to the general fund during the 2011-12 fiscal year. The sewer fund remained in fiscal stress at the end of the 2012-13 fiscal year because the sewer rates did not generate sufficient revenues to cover the costs incurred, resulting in the sewer fund having a total fund balance deficit of $35,029. The financial condition of the general fund and water fund improved and both funds had a healthy fund balance at the end of the 2012-13 fiscal year.

The recreation director did not remit all cash collected at the concession stand to the Supervisor, totaling $12,229 for the years 2010 through 2012. Additionally, we found that disbursements were made directly out of the concession stand bank account and were not reviewed and approved by the Board, or recorded in the financial system. In addition, Town officials have not implemented policies and procedures over the IT system, including a computer-use policy and adequate controls over computer inventory. Audit logs are not reviewed for inappropriate activity and the Board has not adopted a comprehensive disaster recovery plan.

Although the Board and District management believed they were effectively managing the District's financial condition, the adopted budgets continually included over-estimated appropriations. For fiscal years 2007-08 through 2010-11, these budgeting practices generated $2.76 million in operating surpluses, which caused the accumulated fund balance to exceed the statutory maximum of 4 percent of the ensuing year's budget for those same fiscal years. To reduce the unexpended surplus fund balance and bring it closer to the 4 percent limit, District officials made unplanned transfers to the District's reserves. We found those reserves to be over-funded by approximately $699,000 at June 30, 2013. The Board was more conservative in its budgeting practices for fiscal year 2011-12 and 2012-13 and reduced its unexpended surplus funds to a more reasonable level. However, we found that the Board did not include in its 2013-14 budget more than $790,000 in insurance revenues it expects to receive during this fiscal year ending 2013-14. This, combined with the over-funded reserves, will bring total available fund balance to more than $1.9 million in fiscal year ending 2013-14.

The Board adopted budgets that included the use of surplus fund balance to finance operations in an effort to avoid raising unnecessary real property taxes. However, although fund balance was included in the budgets, the District has not actually used fund balance to finance operations since 2008. In fact the District has had operating surpluses for the past several years. Instead of spending down the District's accumulated surplus by an average of $248,000 annually, as the Board had planned, the District's operations generated additional surpluses totaling nearly $1.8 million over the last five completed fiscal years. These operational surpluses occurred because the Board's adopted budgets consistently included overestimated expenditures for each of the last five years and underestimated revenues for three of those years. As a result of the Board's budgeting practices, for the fiscal years ending 2008 through 2012, total fund balance has increased 72 percent to $3.6 million with reserves at almost $3 million or 82 percent of the fund balance at June 30, 2012.

Internal controls over payroll ensured that the District employees were paid only approved salaries and wages. However, although the Board adopted a leave accrual policy, District officials did not enforce the policy's maximum accumulated leave limits. Four of the six employees' leave balances we reviewed exceeded the policy's maximum allowed limits. As a result, there is an increased risk that District employees could receive, use, or get paid for more leave than the amounts allowed in the District's policy.