The Mayor and Board did not properly manage the Village's financial condition because they did not consistently develop sound budget estimates. Further, they did not adequately monitor actual results against the budget. As a result, the unexpended surplus fund balances remained high while the Village's real property tax levy continued to increase slightly by 7 percent from 2007 to 2012. As of May 31, 2012, the general, water and sewer funds have accumulated significant unexpended surplus funds and have not established formal reserves for future repairs and capital needs.

The Board generally expended casino compact revenue during our audit period in accordance with the nature of the approved spending plans. However, expenditures totaling $38,322 were not adequately supported and a payment of $36,358 was not Board-authorized. Further, the records of moneys disbursed did not always distinguish expenditures by spending plan and intended uses.

We found that the County has a written plan for bridge maintenance and repairs. During our audit period, the County maintained average bridge ratings and a consistent level of funding for bridge maintenance, repairs, and replacements. However, we found the County does not track maintenance and repairs by bridge, which could make it more difficult to determine when it is more economical to replace rather than repair a bridge.

The County is fiscally stressed. While the Legislature and County management are aware of the County's financial position, and they have developed reasonable budgetary estimates for most major revenues and expenditures, the County's financial condition has declined over the last few years. For the years between 2007 and 2011, the County has spent $6.7 million more than they received; three of those five years have suffered operational deficits. Also, while the County does include a five-year capital plan in their adopted budget, they do not utilize a multiyear financial plan for estimating operating revenues and appropriations. In addition, the general fund balance is artificially inflated due to a $4.5 million Nursing Home receivable that is unlikely to be collected. Because of these shortfalls, County management has eliminated 188 positions over the last three years. These staff reductions could result in significant delays for necessary services and an increased workload for the remaining staff.

The Board is not able to routinely monitor actual revenues and expenditures against budgeted estimates throughout the year because the Supervisor does not maintain accounting records in a timely manner. As of December 2012, the Supervisor had not made postings to the accounting records since March 2012. Because the Supervisor did not maintain the accounting records in a timely manner, she could not prepare periodic financial reports necessary for the Board to compare actual revenues and expenditures to the budgeted amounts on a regular basis and make applicable budgetary amendments. As a result, the Town has realized negative fiscal trends in its general and highway funds over the past several years.

Although the County has not developed a written plan for bridge maintenance and repair, it has taken action in recent years to improve and maintain bridge ratings. We tested the flags issued during the last five years of our audit period to determine if the County complied with NYSDOT's response and action requirements. Of the 83 flags we tested, the County lacked sufficient documentation for nine flags. We could not determine if the County had responded to these nine flags in a timely manner. For the remaining 74 flags for which the County provided documentation, the County responded in a timely manner to 40 flags, and failed to respond in a timely manner to 34 flags. Of these 34 flags, four were red, which indicates that structural failure was a potential outcome before the next bridge inspection. The County's response to these four flags was an average of 37 days later (79 days) than NYSDOT's six-week response requirement.

We found the County does not track maintenance and repairs by bridge, which could make it more difficult to determine when it is more economical to replace rather than repair a bridge. Further, for the nine available and completed fiscal years from 2002 through 2011, the County had an average of 21. We examined all 89 flags issued during the period 2007 to 2011 to review for timely responses and/or actions on behalf of the County. Of the 89 flags reviewed, County officials could not produce sufficient response documentation for 72 flags. Therefore, we could not determine if the County had responded to these flags in a timely manner.

The District has inappropriately provided individual whole life insurance policies to its Commissioners and employees. The Board has adopted a personnel policy that includes a provision that any Commissioner or employee, except temporary and seasonal, will be provided with a life insurance policy that, after 10 years, will be transferred to them upon retirement.

We reviewed the general and highway fund budgets and found that overall, they were reasonable and supported, except for sales tax and fund balance estimates in the general fund. The Board has been adopting budgets that consistently underestimate sales tax revenues. In addition, on an annual basis, the Board appropriates fund balance as a financing source to balance the budget. However, the Town's operations generally resulted in surpluses, where revenues exceeded expenditures, due primarily to the underestimation of sales tax. Because of this, fund balance was not needed to finance operations. Due to the operating surpluses experienced by the Town, unexpended surplus funds have increased even further in the general fund.

We found that the County has a written plan for bridge maintenance and repairs. This plan addresses cyclical maintenance and it excludes bridges slated for major renovations or repairs from the cyclical maintenance. We tested the flags issued during the last five years of our audit period to determine if the County complied with the NYSDOT's response and action requirements. Of the 65 flags issued, County officials could not produce response documentation for five flags. Therefore, we could not determine if the County had responded to these flags in a timely manner. For the remaining 60 flags for which the County provided documentation, the County responded in a timely manner to 58 flags and failed to respond in a timely manner to two flags.

While the County does not have a written plan in place, it has implemented practices that have served to improve bridge ratings over an extended period of time and have maintained consistent ratings over the past 10 years. The County has reduced the number of deficient bridges in recent years, primarily by replacing and completely renovating six bridges each year. Additionally, the County does not track all maintenance and repairs by bridge, unless the bridge is being completely replaced or rehabilitated.

We found that the County does have a written plan for bridge maintenance; however, it has not been formally approved by the Legislature. This plan includes cyclical maintenance and corrective action programs. Additionally, we found the County does not track maintenance and repairs by bridge, which could make it more difficult to determine when it is more economical to replace rather than repair a bridge.

The District has experienced both planned and unplanned operating deficits in its general fund over the last two fiscal years. These deficits were caused by inaccurate budget estimates. As a result of the operating deficits, the District's fund balance has been depleted. Further, it is estimated that the District will experience a deficit fund balance of $8.2 million for the 2012-13 fiscal year, which is $800,000 more than the $7.4 million budget note issued to fund the deficit. District officials planned to use the proceeds from a property sale to retire the budget note. However, the sale was delayed due to a lawsuit filed with the State Education Department (SED). Unless these budgetary and cash flow problems are addressed, future District operations could be adversely impacted.

The Board did not properly segregate the Clerk-Treasurer's financial duties or provide oversight of her work, did not require the Clerk-Treasurer to provide monthly financial reports for monitoring the Village's financial condition, and did not ensure that the Village's annual financial reports were filed with OSC in a timely manner. Further, the Board did not conduct an annual audit of the Clerk-Treasurer's records and reports. Due to the lack of sufficient Board oversight and monitoring, the Village's actual financial activities varied greatly from the Board's adopted budgets. For example, found that 20 out of 43 of the 2011-12 adopted budget expenditure lines were over-expended by a total of more than $89,000 in the general fund, resulting in the general fund's total expenditures exceeding appropriations by approximately $55,900, or 50 percent of its budget. This significant variance was partially offset by general fund revenues, which exceeded the budgeted revenues by approximately $52,700 (excluding appropriated fund balance), leading to an operating deficit of approximately $13,200.

We found the County does not track maintenance and repairs by bridge, which could make it more difficult to determine when it is more economical to replace rather than repair a bridge. Further, for the nine available and completed fiscal years from 2002 through 2011, the County had an average of seven flags (the number of deficient bridges is generally higher for the years in which assessments took place). We examined all 48 flags issued during the period 2007 to 2011 to review for timely responses and/or actions on behalf of the County. Of the 48 flags examined, 31 lacked any documentation regarding a County response to NYSDOT, so we could not determine if the County responded timely. The County's response to these four flags was an average of ten days later (52 days) than NYSDOT's six-week response requirement.

The Board should improve its oversight of the District's financial activities. The Board has not adopted a code of ethics or procurement and investment policies as required by GML. As a result, the Board has not set appropriate expectations for District operations. We found the District has deposits and short-term investments in a credit union which is not a financial institution authorized by GML. As of December 31, 2012, the District had $585,045 (or 99 percent of the District's total cash on hand) in cash deposits and certificates of deposits at the credit union. The former Treasurer did not complete monthly bank reconciliations during the period January 1, 2011, through June 30, 2012, and the 2011 annual financial report filed with OSC was not accurate. Finally, prior to the current Treasurer taking office, the Board did not perform a thorough and timely audit of claims prior to payment.

We found that the County has a written plan for bridge maintenance and repairs. This plan addresses cyclical maintenance and it excludes bridges slated for major renovations or repairs from the cyclical maintenance. We tested the flags issued during the last five years of our audit period to determine if the County complied with the NYSDOT's response and action requirements. Of the 65 flags issued, County officials could not produce response documentation for five flags. Therefore, we could not determine if the County had responded to these flags in a timely manner. For the remaining 60 flags for which the County provided documentation, the County responded in a timely manner to 58 flags and failed to respond in a timely manner to two flags.

The Board did not provide sufficient oversight of the financial duties performed by the former Treasurer, allowing the apparent misappropriation of over $59,000 in Village funds without detection. This included over $46,000 of inappropriate cash disbursements and almost $13,000 of inappropriate payroll payments. This occurred because the Board allowed the former Treasurer to perform all cash disbursement duties with no oversight. The Board did not review the bank statements or the bank reconciliations. Further, the former Treasurer did not maintain accurate financial records. In addition, the Board did not audit and approve claims prior to payment and did not provide for an audit of the former Treasurer's financial records for the fiscal years ended February 28, 2011 and February 28, 2012. Further, the Board did not require the former or current Treasurer to provide monthly financial reports for monitoring cash flow and fund balance and, therefore, was unable to adequately manage the Village's operations and fiscal health. Finally, although the Board did not pass a resolution establishing a petty cash fund, the former Treasurer issued and cashed 36 petty cash checks that averaged approximately $340 each.

The District does not have adequate financial policies and procedures. While the Board has adopted purchasing and code of ethics policies, it has not adopted an investment policy, as required by statute. The Board also has not ensured that procedures are in place for financial recording and reporting. We found that the Treasurer did not submit monthly financial reports to the Board, but has filed the required annual financial report as of fiscal year 2011 with the OSC. The Board does authorize each claim for payment and indicates its approval by affixing each member's signature on the warrant. Finally, the Treasurer was not maintaining accurate cash balances for the District's checking and savings accounts.

We found that the Town could potentially save as much as $7,000 annually if it used assets that it already owns to process and print payroll checks in house rather than using a contractor to process payroll. In addition, Town officials cannot identify which of the two clerks performed a transaction because their system identifications were identical. Also, we identified 36 cases that were deleted from the Court's system; the reasons for the deletions were not documented. Further, 166 cases were not reported to the State Comptroller's Justice Court Fund. The Town also did not implement a comprehensive data back-up procedure. In addition, we found inappropriate use of the Town's computers at the highway department. Finally, Town officials did not ensure that user access rights were terminated upon separation from service, and users did not log off the system when they were not using it.