District officials did not ensure that District funds were expended in the best interest of taxpayers or as permitted by statute. District officials did not adequately plan or use a competitive process when procuring goods and services for the recent capital improvement project (CIP) with an estimated cost of $80,000. As a result, the District has spent $149,490 on the uncompleted CIP. In addition, services and materials totaling $41,790 were rendered by and paid to a construction company with close ties to the District. Furthermore, renovations to the truck bay for the exclusive use of the members and expenditures totaling $22,010 for a storage building on Department property were not permissible by law. Finally, the Board entered into a poorly written memorandum of understanding (MOU) with the Department, which has caused the District to operate outside its authority.

The Trustees need to improve their monitoring of cash management. The Trustees have not adopted an investment policy, which resulted in excess cash balances of $38,097 that were not covered by the Federal Deposit Insurance Corporation (FDIC) insurance. Additionally, the Trustees did not develop procedures to ensure that deposits were made timely and intact, resulting in cash receipts, totaling $13,322, being deposited anywhere from 11 days to 21 days after receipt. Although we found all deposits to be intact, the failure to deposit Trustee receipts in a timely manner increases the risk that moneys received will not properly accounted for, that moneys could be lost or stolen, or that the Trustees will lose interest that could have been earned if moneys had they been deposited timely.

Town officials need to improve internal controls over cash management. Although the Board implemented a policy to segregate cash functions, the policy was inadequate and did not effectively segregate the Town Clerk's (Clerk's) duties. Deposits in the Clerk's office were not timely or intact (i.e., in the same form as received). Cash collected totaling $1,288 was not deposited and cannot be located by Town officials. Further, there were several instances where supporting documentation was missing and duplicate receipts were not properly maintained. We performed an audit of each of the Town's 15 computers using an audit software application. Users on each of these computers were in the local administrators' group and could therefore install unauthorized software or alter the computer configuration, increasing the risk that Town assets and data may be lost or compromised. Finally, although data is backed up in the Clerk's office and Finance Department, the backups are not taken off-site to a secure location because Town officials have not established backup procedures that would require users to take them off-site.

The Board has not established adequate internal controls over the School’s IT system to ensure the School’s computerized data and assets are safeguarded from internal and external threats.

The Board did not adopt structurally balanced budgets or monitor the budget during the year. Generally, the Board's estimates of surplus fund balance to be appropriated in the budgets exceeded the amounts actually available. As a result, the general fund balance declined by $82,000 from 2008 to 2012. Consequently, the general fund had to borrow money from the highway fund in 2012 so it could pay its obligations. In addition, four of the five Board members did not receive budget status reports during the year. As a result, budget amendments were not made until the last Board meeting of the year, after the over-expenditures had already occurred. The general fund ended 2012 with a cash balance of $15,630.

The Clerk's cash receipts records were unreliable. The Clerk did not make deposits and remit moneys to appropriate agencies in a timely manner. She also inappropriately intermingled $340 in personal funds with her Clerk financial activity to cover a cash shortage. Further, the Clerk did not adequately account for dog licenses issued. These discrepancies occurred because duties within the Clerk's office were not properly segregated and the Board did not provide adequate oversight over her work. In addition, the Board did not adopt a procurement policy and the Highway Superintendent did not routinely obtain quotes prior to purchasing goods and services. The Board did not provide an adequate review of claims prior to approving them for payment, which resulted in over $14,000 in duplicate/over payments to four vendors. Furthermore, Highway Department inventory records for consumables such as fuel and auto parts were not adequate. Because of the Highway Superintendent's lack of controls over the Town's fuel inventories, we could not determine if 5,000 gallons of unaccounted-for fuel, valued at $15,000, was unauthorized usage or if the usage was for appropriate Town purposes and merely not recorded in the records.

The Board did not fulfill its fiscal oversight responsibilities because it did not audit each claim listed on the abstracts. It also did not annually audit, or cause to be audited, the financial records of the Clerk-Treasurer. As a result, the Board does not have adequate assurance that all payments are for valid Village purposes, and it has limited ability to identify and correct errors or irregularities.

We found that revenues from resident school districts, School meals and field studies are properly billed, collected, recorded, and reported. However, the School has not developed procedures to segregate the collecting, recording, and reconciling of School meal and field study revenues. moneys received are held by the Coordinator of School Operations (CSO) who also prepares the deposits and reconciles the bank statements without independent review of the deposits or reconciliations.

An account clerk and the Deputy Town Clerk (Deputy) performed virtually all of the Supervisor's financial duties without his proper oversight. The Deputy also routinely performs the fiscal duties of the Clerk's office. The Town Clerk and Supervisor have functions that serve as checks against one another that do not exist unless they are performed by separate individuals. Additionally, the Supervisor did not submit adequate financial reports to the Board and the Board did not perform an annual audit of the Supervisor's records and reports, as required by law. As a result, the Board was not aware that the Supervisor's account clerk used inappropriate accounting methods that concealed the true financial condition of certain Town operating funds. We also found that the Clerk did not record tax and water payments when they were received and did not indicate the form of payment received in the water and sewer records. Finally, the Clerk did not disburse and report Clerk fees, real property taxes and other moneys received in a timely manner.

The District does have adequate financial policies and procedures. The Board has adopted purchasing, investment, and code of ethics policies, as required by statute. The Board also has ensured that procedures concerning financial recording and reporting were developed. The Treasurer submitted monthly financial reports to the Board and has filed the required annual financial report with the Office of State Comptroller. The Board does authorize each claim for payment and indicates their approval by affixing their signatures to the claims, and the Board minutes indicate the approval to pay these claims. In addition, the Board contracts with an independent auditor to perform an annual audit of the Treasurer's records.

We found that the Board did not provide adequate oversight of District financial activities. The Treasurer did not provide accounting information to their independent public accountant (accountant) in a timely manner. As a result, the Board did not receive timely audit reports from the accountant. The independent audit report for 2009 was not issued by the accountant until December 23, 2011. Furthermore, due to a lengthy delay in the Treasurer providing a listing of fixed assets to the independent auditor for 2010 and 2011, the District did not receive the audit reports for these two years until March 1, 2013. The District did not file the AUD in a timely manner for 2010 and 2011. We found that the 2010 and 2011 AUD were filed 576 and 276 days late, respectively. However, the District filed the 2012 AUD on time.

The Board did not adopt detailed policies and procedures for its budget preparation process and the routine monitoring of the budget against actual operating results during the year. As a result, the Board adopted budgets with inaccurate estimates of revenues and expenditures. Further, activity in established reserves has not, in all cases, been in accordance with Board authorizations. The Board and the Clerk did not establish adequate internal controls to ensure that the money the Clerk collected was recorded and deposited in an accurate and timely manner. In addition, deposits were not always made timely. The Clerk also does not provide monthly reports timely to the Supervisor, or perform a monthly accountability of cash to liabilities. Finally, the method of providing ambulance services to the Town is unclear. The Town has not entered into any contract with a volunteer ambulance squad or individual volunteers to provide an independent ambulance service. Because the Town owns the vehicles and facilities used by the ambulance service, it would appear that the Town is using volunteers to provide a direct town ambulance service.

We found that the Town's accounting records and records were not properly maintained. As a result, officials have not received the accurate and timely information necessary to evaluate the water fund's fiscal health and take appropriate corrective action. Specifically, at the end of the fiscal year 2011, the Town reported a fund balance of $520,771 in its water fund. However, upon reviewing the general ledger trial balance and supporting documentation, we found the water fund balance was overstated by at least $271,264. The majority of this overstatement was the result of $242,581 of capital project funds that were recorded in District 2. At the end of 2011, the Town recorded a fund balance of $285,936 for District 2. However, after all adjustments, the District's fund balance was a deficit of $209,317. In addition, we found weaknesses in internal controls over the billing and collection of water user charges. While our testing only identified concerns over the lack of assessing of fees for estimated billings, which could have generated an additional $22,500 in revenue for the water districts, the lack of adequate segregation of duties and independent verification or review increase the risk that errors and irregularities could occur and go undetected.

The Court's parking ticket collection rate exceeded 85 percent during fiscal years 2010 through 2012. Despite the high collection rate, the Court still had $1.89 million in cumulative unpaid parking tickets outstanding as of May 31, 2012. This included 10,599 unpaid parking tickets totaling $851,906 that have been outstanding for more than five years and 9,526 unpaid parking tickets totaling $1,039,460 outstanding for less than five years. Town officials stated that they are in the process of removing some of these parking tickets. However, as of August 28, 2012, they still remained on the unpaid parking ticket record. Town officials stated that parking ticket revenue is not included in the budget as a revenue source, nor are parking ticket receivables recorded, because of the uncertainty of collection.

The Village/Town's parking ticket collection rate exceeded 90 percent during fiscal years 2008 to 2012. Despite the high level of collection, the Village/Town still had $1.17 million in cumulative unpaid parking tickets outstanding as of May 31, 2012. This included 12,792 unpaid parking tickets totaling approximately $720,703 that have been outstanding for more than five years and 7,187 unpaid parking tickets totaling $450,260 outstanding for less than five years. Village officials stated that they are in the process of removing some of these parking tickets. However, as of July 25, 2012, they still remained on the unpaid parking ticket record.

The Board did not provide adequate oversight of the fiscal duties of the Clerk-Treasurer. The former Clerk-Treasurer did not create or maintain cash journals, general ledgers or subsidiary revenue and expenditure ledgers and did not provide a monthly budget-to-actual report. In addition, the Board has not audited, or caused to be audited, the Treasurer's records since at least 2007. An effective audit of the Clerk-Treasurer's records and reports would have identified the serious deficiencies in the accounting records. Also, the former Clerk-Treasurer did not complete monthly bank reconciliations and she paid claims before they were audited and approved by the Board. Finally, the Board did not take sufficient action to ensure the sale of unneeded Village-owned property to the Mayor for $500 was in the best interest of the taxpayers. In addition, if the value of the property was greater than $750, the Mayor would have had a prohibited interest in the contract for the sale of the property.

The Board did not establish procedures to ensure that the correct prices were obtained when purchasing goods through New York State Office of General Services (State) contracts. The Board did not verify that they received State contract pricing for nine purchases and overpaid approximately $5,500 for four of these purchases. In addition, the Board did not ensure that Village officials followed the Village's procurement policy or statutory bidding requirements. Village officials purchased three loaders totaling $271,491 without soliciting competitive bids.

The Board does not have a written agreement with one of the Town's IT service providers and cannot be assured the Town is receiving IT services that meet the Town's needs and expectations. Although the Board has adopted a breach notification policy, it has not designated responsible parties to implement the policy, nor educated Town officials and employees on the existence of the policy. In the event that private information is compromised, Town officials and employees may not understand or be prepared to fulfill their legal obligation to notify affected individuals. Finally, the Town does not have a disaster recovery plan.

We tested 36 claims totaling $214,207 made from June 1, 2011, to December 31, 2012, for compliance with GML and the Village's procurement policy. The policy-required checklist was not attached to any of these 36 claims. The use of the checklist will increase the likelihood that the individual making the purchase will adhere to GML or the procurement policy. Furthermore, 21 of the 36 claims did not comply with GML or the quote requirement of the Village's procurement policy.

Due to the consistent appropriation of fund balance as a budgetary funding source, the County's fund balance in the general fund decreased 68 percent from fiscal year 2007 to 2011. During that period, the unexpended funds remaining at year end declined from an $11 million surplus in 2007 to a deficit of $1.7 million at the end of 2011, leaving the County with no financial cushion for managing unforeseen events. The County has relied on short-term debt issuances in recent years for cash flow, which will cost the County $260,742 in interest payments. Lastly, the Board has not developed policies and procedures for determining and maintaining an adequate level of fund balance, and has no written multi-year plans to address long-term financial and capital needs.