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.

The Mayor and the Board did not conduct a thorough and deliberate audit of the claims presented for payment and therefore, did not ensure that disbursements were for proper Village purposes. The Board also did not adequately segregate duties of the Clerk-Treasurer or implement sufficient compensating controls. Finally, the Board did not conduct an audit of the Clerk-Treasurer's records for the 2011 fiscal year. As a result, Village funds were at risk of misuse.

The Board and the Mayor did not meet their fiscal oversight responsibilities. For example, they did not realize that they were required to annually audit the Clerk-Treasurer's records and reports, and therefore, did not audit any of the Clerk-Treasurer's receipt or disbursement records. In addition, they have allowed the Clerk-Treasurer and Deputy to perform all of the financial functions including billing, collecting, recording and depositing cash receipts, and printing and signing checks, without anyone verifying the accuracy and completeness of the work they perform. As a result, no one can be sure that all money received is deposited in a Village bank account and that all disbursements are for proper Village purposes.

The Board did not require the Supervisor to meet the fundamental financial responsibilities of his office. The 2012 accounting records were in disarray and the 2011 accounting records could not be produced for our review. No one can be sure that all moneys received were actually recorded and deposited, and that all moneys disbursed were for proper town purposes. Cash was not reconciled, and had large unsupported adjustments in an attempt to force the accounting records to agree to the bank balance. Furthermore, monthly and the last two annual reports were not consistently provided by the Supervisor to the Board, and the annual reports filed with OSC are over one year late. In addition, the Town's unaccounted-for water of 39 percent was substantially more than the Environmental Protection Agency (EPA) industry standard, costing the Town approximately $19,000 each year. In addition, water bills were calculated inaccurately.

We found no material issues in the accuracy and timing of deposits and the recording and accounting for the Court’s moneys. However, we found that the Justices did not perform monthly bank reconciliations and accountabilities and the Board did not provide effective oversight of Court operations through an effective annual audit.

The Board did not segregate the Clerk-Treasurer's duties or provide additional oversight as a compensating control, and did not properly plan or monitor the Village's finances. The Board did not institute compensating controls and did not audit the Clerk-Treasurer's records as required. Although our tests of financial transactions found no significant discrepancies, these control weaknesses place the Village at an increased risk of errors and irregularities. We also found that the Board did not develop a long-term financial plan or adequately monitor the Village's water fund. As a result, the water fund's year-end fund balance increased from $76,272 to $194,688 from fiscal years 2007-08 to 2011-12, and is now equal to 168 percent of annual expenditures. Village officials have not addressed the intended use of these excess funds and have not reviewed water rates to assess their reasonableness.

During the last two fiscal years the Town's financial condition has improved. This improvement has been primarily the result of hiring a bookkeeper who has enhanced the development and monitoring of the annual budgets adopted by the Board by helping the Board overcome a lack of established budgetary guidance. In previous years, the Board adopted budgets which included inaccurate revenue and expenditure estimates and appropriated fund balance that was not available. We found that the Board has not adopted formal policies, and the Supervisor has not developed detailed procedures, for ensuring that financial duties are adequately segregated or that sufficient review and oversight procedures are in place. The Board also did not perform an audit of the water department and did not maintain adequate documentation of its audit of the records and reports of the Supervisor, Town Clerk, or Town Justice. Furthermore, the Board has not established policies and procedures related to acceptable use, online banking, breach notification, or disaster recovery. Additionally, there is no system in place for monitoring IT activity or changes in the system, maintaining a computer inventory, or sanitizing computer equipment before disposal.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. Village officials appropriately monitored the revenues and expenditures in the water fund to ensure the continued improvement of the water fund's financial condition as was recommended in the budget review report issued in April 2012. The Village's proposed budget complies with the property tax levy limit.

Based on our review, individual significant revenue and expenditure projections in the tentative budget appear reasonable. However, this tentative budget, as well as those from the last five years, is likely to produce an operating surplus. As a result, fund balance appropriated as a financing source is unlikely to be used and the District's fund balance will continue to increase. The District's tentative budget complies with the property tax levy limit.

Based on our review, individual significant revenue and expenditure projections in the proposed budget appear reasonable. The District's proposed budget complies with the property tax levy limit.