The Board did not audit and approve claims after the transactions occurred and prior to the Treasurer paying those claims. The Board did discuss many purchases prior to those purchases being made, thus ensuring that the goods purchased were for District purposes. However, without auditing the claims prior to payment, the Board could not be sure that the amounts paid were aligned with its previously established expectations. In addition, the payroll vendor has access to a District bank account with a significant amount of District cash. Finally, District officials could not account for more than 50 percent of fuel delivered to two of the three District fire stations.

We found that the District established adequate internal controls over Business Office operations. Board policies and written procedures have been developed and adhered to by staff for cash receipts and disbursements, payroll, purchasing, and claims processing. Furthermore, District officials had developed appropriate segregation of duties amongst Business Office staff where possible and also implemented various reviews of the work performed as mitigating controls.

The Board did not ensure that disbursements were made for authorized District purposes. The Board did not adequately segregate duties or implement sufficient compensating controls. The Treasurer performs all aspects of the cash disbursements process including preparing the monthly abstracts; printing, signing, and mailing the checks; and preparing the bank reconciliations. The Treasurer also is responsible for performing online bank transfers. The Treasurer performs all of these duties without sufficient oversight by the Board. While the Board approves all claims that are presented for audit, no one verifies that all checks disbursed were approved by the Board. The Treasurer does not provide check numbers to the Board and no one compares canceled check images to the Board-approved abstracts.

We found significant problems with the accounting for and reporting of capital project activity as well as the use of certain debt proceeds. The Administrator did not maintain capital project records in a manner that readily provides information about actual resources committed and expenditures incurred throughout the course of each project, which often span two or more fiscal years. Rather, the Administrator recorded certain capital project activity in the sewer fund, together with routine sewer operations, which are budgeted for annually by the Board. The commingling of all of these resources and transactions in the sewer fund does not allow for capital activity to be appropriately monitored against project authorizations approved by the Board as well as for compliance with legal requirements related to debt proceeds.

Over the last five years, the District's tax levy only had an average change of 1.09 percent. However, District officials' conservative budgeting practices generated $15.8 million in net operating surpluses. As a result of these operating surpluses, the accumulated fund balance exceeded the statutory maximum of 4 percent of the ensuing year's budget. To reduce the fund balance and stay within the 4 percent limit, District officials transferred moneys to the District's reserves and have continuously increased the amount of fund balance appropriated which has gone unused for the last four years. As a result, the District's general fund's fund balance increased to $48,661,075 as of June 30, 2012. In addition, the District did not solicit proposals for approximately $2.7 million in professional services for a capital improvement project (CIP), as required by the District's policy. Finally, we found that the expenditures for architectural services were not properly supported.

Based on the results of our review, we found that the significant revenue and expenditure projections in the preliminary budget are reasonable. The District's proposed budget complies with the property tax levy limit.

We identified significant revenue and expenditure projections in the adopted budget that are not reasonable and could result in an increase in the County's accumulated deficit. Specifically, the 2013 budget lacks provisions for decreasing the general fund deficits. In addition, the County could potentially face a shortfall in revenue if the County does not receive the projected amount of sales tax revenue. If the Town of Orangetown does not reimburse the County for tax certiorari moneys during the 2013 fiscal year, the County will have an additional revenue shortfall of $2 million. If property is not sold, the County will experience a revenue shortfall of $2.4 million in 2013. It is unlikely that the $550,000 contingency appropriation will be sufficient to cover the annual average $2 million of uncollected taxes. The 2013 budget appropriation of $158 million for personal services appears to be insufficient. The County budgeted salaries as if no employees were taking the early retirement incentive that will be offered in 2013 and then accounted for a savings of $4.3 million in a separate budget account as a negative expenditure amount.

The Board did not meet the fundamental expectations of their financial oversight responsibilities. The Supervisor paid claims without Board audit. Moreover, key financial duties were performed by the Supervisor's bookkeeper, and the Justice's clerk without sufficient oversight from the Supervisor and Justice, respectively. The Clerk also performed all aspects of collecting and recording taxes and fees paid to her office. All of these duties were performed during 2011 without the Board performing their required annual audit.

County officials developed budgets containing unrealistic estimates, and maintained substantial fund balances that were not substantiated by formal and transparent plans for their use. The Board's adopted budgets for the past five years (2007 to 2011) included overestimated expenditures by approximately $28 million and underestimated revenues by $8.8 million, and generated operating surpluses totaling $21 million. The County also maintained reserves totaling $10 million as of December 31, 2011, with no plans in place for the use of these balances.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. The District's proposed budget complies with the property tax levy limit.

The Town does not have complete, accurate, and up-to-date accounting records, nor have monthly bank reconciliations been performed during our entire audit period. The Supervisor has not filed the required AUD with OSC for the past three years. As a result, the Board could not properly monitor and manage Town operations.

We audited certain moneys collected by four of the seven departments within the City responsible for collecting and/or depositing City moneys; the Finance Office, Public Transportation Office, Water Department, and the City Clerk's Office. Except for minor discrepancies, which we discussed with City officials, we determined that cash receipts collected by the Finance and City Clerk's Offices were adequately accounted for. However, unless City officials improve their recordkeeping practices, the risk will remain increased that all moneys due to the City will not be received, recorded and deposited properly.

The Board and Town officials did not adequately monitor the Town's financial operations and take timely action to maintain the Town's financial stability. The fund balances in the Town's major operating funds fluctuated significantly over the last four years primarily because the Board over-appropriated fund balance in the budget and allowed the budget to be overspent. In addition, duties relating to the Town's financial operations are not adequately segregated. The Supervisor is responsible for preparing and disbursing checks, preparing monthly bank reconciliations, recording cash disbursement entries into the accounting records, and preparing monthly reports to the Board, without the Board providing for an independent review and verification of her work. The Board also has not instituted controls to compensate for this lack of segregation of duties, such as reviewing bank statements, cancelled checks, and reconciliations.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget for the general, electric, library, and parking funds are reasonable. The water and sewer funds' tentative budgets are not balanced and include a deficit of more than $203,000 and $220,000, respectively, or approximately 7 percent in each fund. Village officials told us they recognized the deficits and planned to raise water and sewer rates to make up the difference. The Village's tentative budget complies with the property tax levy limit.

Based on the results of our review, except for certain matters, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. However, the Village has very limited fund balance and has proposed a limited contingency account. The Village should consider increasing the contingency appropriation in its adopted 2013-14 budget. A contingency account of 5 percent of appropriations ($94,000) would give the Village some flexibility in dealing with unexpected events. Any amounts not needed during the year would help to rebuild the general fund balance. The Village's tentative budget complies with the property tax levy limit.

The Executive Director did not ensure that disbursements were for proper DIBID purposes. He did not ensure that claims for payments had sufficient supporting documentation that would provide proof that they were for valid DIBID expenditures. We found that six of the 20 checks we tested, totaling $3,316, did not have sufficient documentation. Although DIA officials provided explanations for these expenditures, which appeared to be reasonable DIBID expenditures, without proper supporting documentation such as receipts, invoices, or bills attached to the claims, taxpayers do not have any assurance that these monies were used for valid DIBID purposes.

The Town does not reconcile the amount of money collected with the amount of trash disposed at the transfer station. We found that over a three-month period in 2012, the weight of the solid waste the Town paid to dispose of at the Franklin County landfill exceeded the amount of trash accounted for as being received at the Town's transfer station, resulting in approximately $10,000 in missing revenues. We also found weak internal controls over cash receipts and poor monitoring of solid waste received at the transfer station. One individual is responsible for weighing the solid waste to determine the amount owed from the customers, collecting fees, issuing receipts, and recording the collections. Additionally, duplicate receipts were not prepared for moneys received at the transfer station and no weigh slips were retained. The absence of the weigh slips and cash receipt records makes it impossible to determine if the proper amount of disposal fees were charged to customers and that all moneys collected were subsequently turned over to the bookkeeper in the Supervisor's office.

The Supervisor does not maintain timely or accurate accounting records for the Town. Therefore, the accounting records do not support the AUDs filed by the Supervisor for 2010 and 2011. Also, since the majority of the Town's funds are co-mingled into one checking account, bank reconciliations are prepared by the bookkeeper to balance with the Town's cumulative cash balance versus the cash attributable to each individual fund. Furthermore, the Board does not receive all the financial information it needs to monitor the Town's financial operations.

This is a follow-up on an audit released in 2010. Based on our limited procedures, it appears that the Village has made limited progress in implementing our recommendations. Of the eight audit recommendations in the original report, two recommendations were implemented, four recommendations were partially implemented and two recommendations were not implemented.