The Board did not develop accurate budget estimates for the general fund and did not properly monitor and control actual activity against those estimates. The Board has over-estimated revenues for the years 2008 through 2012 by an aggregate of more than $126,000, which is more than a 12 percent average shortfall. As a result, at the end of 2012 the Town had a fund balance deficit of $3,586. In addition, Town officials cannot ensure that cash disbursements are only made for proper Town purposes. While the Board reviewed all claims that were presented to it for audit, it approved claims totaling $6,183 that did not describe the goods purchased clearly or at all. Further, because Town officials have not established controls over fuel inventories, no one can be sure that fuel purchased by the Town is used only for Town vehicles and equipment.

County officials have not established policies and procedures to monitor the Microenterprise Development Loan Fund (MDLF) Program. Although the County's contract with the Business Development Corporation (BDC) requires quarterly and annual reporting, BDC provided untimely and insufficiently detailed activity reports. County officials did not have sufficient information to address delinquent balances for nine loans totaling $24,847. For the Children with Special Needs program, we found that client files were not always available or complete. We reviewed the files for the 224 children that were available and found that the County did not maintain one or more pieces of required documentation in the files for 19 of these children, for whom the County paid claims totaling $161,482. We also reviewed 16 transportation claims totaling $100,566 and found exceptions with five claims totaling $85,654. Finally, the Legislature has not established policies and procedures relating to the security of data and assets, including user access, a formal disaster recovery plan, and IT security awareness training for users of the County network.

During the four-year period 2009 through 2012, the Board did not prepare District budgets in the format prescribed by OSC or prepare budgets based on reasonable estimates. Due to the continual overestimating of expenditures, the District generated operating surpluses totaling $2,520,795 from 2009 through 2012. In addition, the District did not calculate its statutory spending limits correctly for 2009 through 2013, resulting in budgeted appropriations that exceeded the statutory limit by as much as $21,500 in 2010, 2012, and 2013. Finally, the Board did not receive complete and accurate financial information from the Treasurer. Therefore, the Board did not always have the necessary information to effectively monitor the District's budget.

The District's budgets from fiscal years 2008 through 2012 were unrealistic. Total expenditures during this period were approximately $777,000 less than appropriations. These unrealistic budgets caused total fund balance to increase significantly. At the end of 2012, total fund balance was nearly double the ensuing year's appropriations, and total fund balance is projected to remain above 100 percent of the subsequent year's appropriations through 2031. The District continues to raise taxes unnecessarily even though it has excessive fund balance. These actions are not in the best interest of District taxpayers.

School officials routinely purchased school equipment and furnishings from a limited group of four vendors that were affiliated with one another. The required number of quotes was not always obtained, and quotes were sometimes dated after the purchase was made. School officials did not document verbal quotes, making it impossible to verify that the lowest quote was used or that the School paid the correct amount. School officials also received quotes for school equipment and furnishings from vendors that did not specialize in such items, and did not attempt to identify more suitable vendors that could have offered more competitive prices. As a result, we question the prudence of $383,390 in purchases which the School likely could have obtained at lower prices. In addition, some of the purchased items were in fact resold to the School after an affiliated vendor purchased the items online and marked up the price. Had School officials purchased these items either directly from the original vendor or through State contract, they could have saved $5,220 on total purchases of $54,940. We also identified $5,500 in contractual discounts due to the School from its vendor of student information system software and training. Finally, The Director of Operations does not ensure all student information is recorded accurately prior to billing their school districts, and does not verify the accuracy of the year-end reconciliation of the School's student information system with billings, which should identify any moneys that the School owes to the resident districts (over-billings) or vice versa (under-billings).

The District's non-instructional employees generally earn a fixed number of days of leave time each year for vacation, illness or personal use, and, in some cases, receive cash payments for a portion of those days that are unused at retirement. However, it appears the leave time records for 12 employees were inaccurate, with balances that exceeded or were less than the amounts allowed by 578.96 days, valued at $94,480, and 26.7 days, valued at $2,148. When leave time records are inaccurate, the District is susceptible to compensating employees at unauthorized amounts. In addition, the former Superintendant was overpaid by $11,083 at retirement for 17.5 vacation days to which he was not entitled and a former employee was entitled to an additional $13,773 at retirement because he was not paid for 56.25 sick days earned. In addition, 26 claims totaling $83,562 contained no documentation to indicate they were audited by the claims auditor and 17 claims totaling $41,226 were not audited until after payment.

The Justice was absent for the majority of our audit period; during this time, the Court operated with three temporarily assigned Justices. We found that important recordkeeping functions were not performed to ensure accountability over the Court's records. Specifically, the Justice and assigned Justices did not review bank statements or reconciliations, and did not review system activity to detect and correct errors. We also found that assigned Justices did not maintain separate bank accounts to track incoming Court moneys, and the Justice and assigned Justices did not personally submit their monthly reports to JCF or ensure that the monthly reports were submitted timely to OSC. In addition, the Board does not ensure that a timely annual audit of the Court's books and records is performed.

The Board has retained excessive levels of fund balance. Fund balance as of December 31, 2012 totaled approximately $229,000 which represents 260 percent of next year's budgeted appropriations. District officials told us that approximately $189,000 of this fund balance was for a reserve fund established approximately 17 years ago. District officials were unable to provide us with formal documentation of the establishment of this reserve fund. Furthermore, even if this money was reserved, the current unrestricted, unappropriated fund balance is still excessive at 44 percent of next year's budgeted appropriations. In addition, the Board does not conduct an annual audit of the Treasurer's records or contract with an independent auditor to perform such an audit to ensure that District funds were used for legitimate District purposes.

We found that the Justices, and the Court Clerk, did not prepare monthly accountabilities of Court assets and liabilities and former Justices did not properly close out their accounts. Our audit disclosed that one of the former Justices had a shortage of $1,026 and the other former Justice has unidentified funds of $699. In addition, pending tickets were not always enforced in a timely manner and dismissed tickets were not always reported to the JCF. Therefore, the Town may not have collected all fines and fees to which it is entitled. Finally, the Board did not conduct an effective audit of the Court's records and did not properly segregate the Court Clerk's duties or establish compensating controls.

The President did not ensure disbursements were made for proper company purposes. The President allowed the Treasurer to pay bills without evidence of Company approval for the majority of the transactions we tested. Seventy-six payments totaling $27,600 of the 100 disbursements we tested had no evidence of company approval. Nine of the 40 checks totaling $8,700 and 20 of the 60 debit card transactions totaling $7,500 had no documentation available to identify the purposes of the payments. These deficiencies occurred because the Treasurer performed all duties related to cash disbursements without adequate oversight.

During 2011, the County paid $230,686 for inmate healthcare services for inpatient and outpatient care. We reviewed 59 vouchers totaling $93,038 for inmate healthcare services and found discrepancies with 18 claims totaling $88,540. These discrepancies occurred because County officials did not have adequate procedures to review invoices for inpatient hospital services provided to County inmates and verify that the correct Medicaid Diagnostic Related Group (DRG) rates were used.

During the period January 1, 2011, to October 31, 2012, City Departments other than the Treasurer's office collected and reported cash amounting to $3.6 million. Each Department used a different process to collect, report and remit cash to the Treasurer. No one maintained general ledger accounting records or performed formal bank reconciliations for the Clerk's bank account. Each of the other Departments we reviewed procured and issued its own duplicate or triplicate receipts for cash transactions without maintaining a log of these receipts. Certain Departments issued permits, which were the supporting documentation for several of these cash transactions that were generated from standard computer forms and printed on multi-use paper with numbers that were handwritten. Furthermore, one of the Departments did not maintain logs of the permit numbers issued.

The Board has not properly monitored budgets and managed fund balance in the general fund. The Board has consistently relied on fund balance to fund operations, which has depleted Town resources. Although fund balance has rebounded some in 2012, there has been a steady decline of 69 percent in reported unassigned fund balance since 2008. Further, the Board did not approve budget amendments for the 2012 budget until January 2013, one month after the budget lapsed.

The District procured goods and services in accordance with its policy and the statutory requirements. We reviewed 36 claims totaling $1,199,894 that were subject to the District's procurement policy during the period July 1, 2011 to January 31, 2013, and found only minor issues which were discussed with District officials.

The Board did not establish adequate internal controls over the billing, collection and accounting for water and sewer rents. For example, the Board did not properly segregate the duties of the water clerk. As a result, the water clerk billed, collected, recorded, deposited and adjusted water and sewer bills with only limited oversight. The Board also did not ensure that large meters were tested and calibrated on a regular basis to help ensure that bills, especially those for the Village's largest customers (the correctional facility and other municipalities), were accurate. We analyzed water usage trends and noted that they were inconsistent. Finally, the water clerk did not deposit moneys intact or timely or issue duplicate receipts to provide accountability for set-up fees paid by new customers. As a result, there is high risk that errors or irregularities could occur and go undetected.

Based on our limited procedures, it appears that the City has made some improvements. Of the three audit recommendations, one recommendation was fully implemented, one recommendation was partially implemented, and one recommendation was not implemented.

The Board and Town officials did not properly manage the financial condition of the town-wide general fund. The Board did not adopt structurally balanced budgets; instead, budgeted expenditures were consistently under budgeted and reliance was placed on non-recurring revenues such as fund balance appropriations and inter-fund loans to fund recurring operating expenditures. Consequently, the Town's financial position has declined over several years, but has shown some improvement in 2012.

Town officials did not verify that they received the correct State contract prices for the four loaders they purchased in 2011, 2012 and 2013. Town officials did not obtain the relevant State contract price lists, apply the appropriate contract discounts, or compare the resultant prices with the invoice prices. Therefore, Town officials cannot demonstrate that they are paying the correct prices for the loaders. As a result, the Town was overcharged $10,563 by the vendor for two loaders.

We found the City's procurement policy was not reviewed by the Council annually, as required by law, or consistently followed by City officials. The Board of Public Utilities (BPU) did not seek bids for purchases from six vendors who were paid $387,763 and the City did not seek bids for purchases from one vendor who was paid $65,864. In addition, BPU officials did not seek competition, such as using requests for proposals (RFPs), when procuring $596,763 in professional services from five vendors, and could not provide written agreements with two of those vendors. We also found that purchases totaling approximately $83,569 were made without requesting quotes, as required by the City and BPU purchasing policies. The City has also failed to segregate duties or provide adequate oversight of the cash receipt process. Users of the six electronic collection systems can collect, record, prepare deposits and make adjustments in the system with minimal or no oversight. In addition, City and BPU officials could not provide a reasonable explanation for 47 missing receipts. Utility customer accounts and payments were adjusted and parking fines were dismissed without supervisory approval and had no supporting documentation. Finally, we found that cash collections were substituted with personal checks.

Town officials did not always properly plan and finance the acquisition of capital assets and projects. The Board did not have a formal multiyear capital plan or a long-term financing plan in place. Instead, Town officials relied on annual requests from department heads seeking to fulfill their immediate capital needs and primarily issued debt to finance the capital expenditures they approved. As a result, over a ten-year period the Town's outstanding debt more than doubled, from $9 million in 2002 to over $18 million in 2012. Without a formal comprehensive plan to guide the Board's decision-making process, there is limited assurance that the purchase, maintenance, or replacement of capital assets is in the best interest of the Town.