Although department supervisors review and sign timecards, there are no procedures to provide a review of timecards for office staff and supervisors. In addition, Village officials do not review the payroll clerks' payroll calculations or entered data for accuracy before payroll is finalized. Therefore, we reviewed payroll records for seven permanent full-time employees who were paid salary payments, totaling $145,307 for the period October 1 through January 1, 2018, which covered 14 payroll periods, to determine whether hours worked, as recorded by the time clock, were accurately reflected on the payroll registers, salaries and pay rates agreed with those authorized by the Board, leave time used was deducted from the leave balances and gross salaries were correctly calculated. Employee salary and rates paid generally agreed with those included in the adopted budget and leave was accurately deducted from employee leave balances. However, the Board did not audit and approve the building permit fees paid to the building inspector. In addition, the Board underbudgeted the amount paid to the building inspector by an average of $45,214 (113 percent) from 2015-16 through 2017-18. As a result, the budget did not reflect realistic appropriations for the building inspector's permit fees each year, based on recent trends.

The Supervisor delegated his financial responsibilities to another employee, the bookkeeper, and failed to provide oversight. The bookkeeper collects, records and deposits receipts and makes online transfers without oversight, including inappropriately making transfers directly from the bank accounts of the independently elected Town Clerk and Justice. She also performs Automated Clearing House (ACH) debits, initiates online bill payments and debit card payments without authorization from the Supervisor, prepares and prints checks from the check stock kept at her home, and records disbursements in a computerized accounting program on her personal computer. Although the bookkeeper completes monthly bank reconciliations, she does not provide the reconciliations and bank statements to the Supervisor or Board for review or provide adjusting/correcting entries to the Supervisor for approval. All online transactions, recording of financial transactions, and preparing of the monthly Supervisor's financial reports to the Board are performed on the bookkeeper's personal computer. As a result, we could not assess the control environment of this computer. Finally, the bookkeeper made numerous recording errors that she eventually corrected with unapproved adjusting journal entries. Because these errors were not timely identified or communicated to the Supervisor, the Supervisor's monthly financial reports presented to the Board were inaccurate and unreliable.

While School officials generally sought competition for purchases of goods and services that exceeded the $20,000 threshold, they did not regularly seek competition for purchases costing less than $20,000. We reviewed purchases that could have been made from a State contract vendor or may have benefitted from seeking other competition. While officials purchased books from the State contract vendor, our review of office supplies purchased from two vendors disclosed that the School was not using a State contract vendor for these purchases. School officials also did not establish adequate policies and procedures for credit cards resulting in the circumvention of purchasing policies and unnecessary waste. The School could save approximately $4,700 by purchasing items from government contracts and using the School's tax exempt status. Officials also should fully comply with Dignity for All Students Act (DASA) requirements. While a code of conduct is posted on the School website, the code is not distributed annually and does not include provisions prohibiting discrimination, procedures for reporting violations or the Dignity Act Coordinator's contact information.

Over the last three years, the school lunch fund incurred operating deficits totaling over $151,500, excluding transfers from the general fund totaling $166,000. Furthermore, because of interfund loans, the school lunch fund owed the general fund almost $376,000 as of June 30, 2018, which is unlikely to be paid back. As of June 30, 2018, unrestricted, unappropriated fund balance was approximately ($330,800). From 2015-16 through 2017-18, the cost-per-ME (meal equivalent) increased over 4 percent while revenue-per-ME increased 11 percent, excluding transfers from the general fund; however, the costs continue to exceed the revenues by 27 cents per ME as of 2017-18. We also prepared a meals per labor hour (MPLH) analysis for each cafeteria for 2017-18 and found the high school's MPLH was within industry standards while the elementary school's MPLH was below industry standards. We also compared milk purchased through the Capital Region BOCES cooperative bid for three months and found that the District could have saved almost $2,000 in those three months if the purchases were made through the Office of General Services (OGS) cooperative bid. We commend District officials for identifying opportunities to increase revenues while simultaneously increasing participation and sales. However, without doing periodic analyses of school lunch fund operations and ensuring officials are obtaining the best price for food and supplies, the school lunch fund's current level of reliance on general fund subsidies will continue.

District officials do not have a procedure in place to reconcile the gasoline inventory. Although logs are completed and tanks are secured, officials have not monitored delivery or usage by reconciling such activities. Further, each vehicle has its own manual gasoline use log but no one reviews them or reconciles the amounts used to delivery tickets for reasonableness. Because of these weaknesses, we compared the gasoline dispensed per the pump meter readings and usage logs to the gasoline purchased for the audit period. Between January 2016 and May 2018, the vendor delivered about 8,000 gallons costing roughly $17,000. Based on gasoline tank meter readings, District officials and employees pumped about 7,900 gallons of gasoline. However, only 7,440 gallons were logged - a difference of 460 gallons of unaccounted for gasoline. Using the District's average price of $2.02 per gallon, this unaccounted for gasoline inventory cost the District about $930. In addition, of the 456 manual gasoline log entries, 57 had errors or omissions (13 percent). Finally, had the District obtained gasoline using a New York State Office of General Services contract, it could have saved at least $2,660.

The Board has not reviewed the procurement policy annually or updated it as necessary, nor does the policy provide guidance for obtaining professional services. We found Town officials were generally unaware of the requirements in the policy. As a result, Town officials did not adequately safeguard highway assets, including scrap metal, which may have resulted in at least $1,700 in scrap metal proceeds being used for inappropriate expenditures. In addition, officials did not monitor highway fuel use, resulting in 531 gallons of gasoline totaling over $1,100 that could not be accounted for. Officials also did not competitively procure goods and services, including motor oil and tires, resulting in potential overpayments of $4,500.

The District's length of service award program (LOSAP) policy is not consistent with New York State General Municipal Law (GML) as the policy does not award points for certain activities in accordance with GML because the policy does not award the correct amount of points for certain activities, including: training courses, drills, elected/appointed positions, meetings and miscellaneous activities. In addition, although District officials established adequate procedures over LOSAP recordkeeping, they did not always ensure that records of individuals' activities under the point system were complete, accurate and properly documented. The 2016 and 2017 LOSAP records for 27 members did not sufficiently support 322 points awarded. Also, four members may not have earned the required 50 points to be credited for a year of service.

Based on the results of our review, we found that the significant revenue and expenditure estimates contained in the tentative budget were reasonable. However, our review disclosed certain findings which should be reviewed by the Board for appropriate action. We estimate the 2019-20 water and sewer collections will be approximately $4.3 million, which is $134,000 less than budgeted for water revenues and $256,000 less than budgeted for sewer revenues. The Village also faces potential increases in salary and wages for two expired collective bargaining agreements (CBAs) and the possibility of retroactive increases when these agreements are settled. We recommend that the Village Board consider the potential financial impact of the possible shortfall in water and sewer revenues as well as the settlement of the CBAs when finalizing the 2019-20 budget. Finally, the Village's tentative budget includes a tax levy of $12,281,362 which is $1,078,728 above the limit established by law. In adopting the 2019-20 budget, the Board should be mindful of the legal requirement to maintain the tax levy increase to no more than the property tax levy limit as permitted by law, unless it properly overrides the tax levy limit.

The Board did not segregate the Clerk-Treasurer's duties or ensure sufficient compensating controls were in place to oversee her work. The Clerk-Treasurer is responsible for all aspects of the financial and recordkeeping duties, including depositing money (e.g., real property taxes and sewer fees), writing checks, making bank transfers, processing payroll, recording transactions in the accounting records and reconciling bank accounts. The Board did not adequately oversee the Clerk-Treasurer's work, audit claims before approving them for payment or require annual audits of the Clerk-Treasurer's records and reports. We also identified various recordkeeping deficiencies, which impacted the Clerk-Treasurer's ability to provide the Board with timely and accurate financial reports. In addition, the Treasurer did not file annual financial reports (AUDs) with the State Comptroller's Office or the Board in a timely manner. Finally, Department of Public Works employees received payroll payments totaling approximately $4,000 over a six-month period that were not supported by timecards.

We reviewed 50 properties with assessment values totaling approximately $101.5 million that were granted property tax exemptions totaling approximately $33.2 million for 2017. We determined that eight properties (16 percent) with assessment values totaling approximately $15.8 million had exemptions totaling approximately $5 million for which $583,418 of the exemption amount was not properly granted. For example, the Assessor granted four woodland exemptions for rented agricultural parcels with $40,028 in assessed value that did not meet the woodland eligibility requirement. In addition, the Assessor granted three agricultural exemptions with assessed values of $543,390. Two of these exemptions lacked proper documentation and the remaining one was granted even though the 10-year exemption term had expired in 2013. Furthermore, we found that the Assessor did not grant a farm woodland (5.42 acres) exemption credit totaling $2,168 in assessed value to one property when she calculated the exemption amount.

County officials obtained professional services from 63 providers who were paid approximately $7.97 million from January 1, 2017 through July 23, 2018. We reviewed payments to all these providers and found that payments to 26 providers were for assigned counsel services and payments to 13 providers were for early intervention therapy. These services did not require competition because the rates paid are established by law and/or the State. Of the remaining 24 professional service providers, officials did not seek competition for aggregate purchases from nine vendors totaling approximately $746,000 or from 14 professional service providers totaling $2.7 million. Officials also allowed the credit card company to directly withdraw 25 payments totaling $77,615 from the bank account. Finally, the Legislature delegated its claims auditing responsibilities to the Clerk of the Legislature. We found that the Clerk of the Legislature did not audit 26 claims totaling $76,804 before payment and approved 25 claims totaling $50,439 that were not adequately supported.

Overall, the water fund had an operating surplus of $70,864 during the audit period. This overall surplus was due to the performance of three of the seven districts which obscured the operating deficits of the remaining four districts. These operating deficits were a result of Town officials regularly overestimating budgeted water sales revenue in these four districts. In addition, both sewer districts experienced operating deficits totaling $138,972 over the past five years. The operating deficits in the Wickham, Kings Estates and WVOTCP district were planned for each year; the operating deficits in Fairgrounds were unplanned. We project both districts will end 2018 with an operating deficit. Due to the repeated operating deficits caused by not charging the sewer equipment purchases to the sewer users, the overall sewer fund balance has decreased by $73,622 (25 percent) during the audit period. The deficit fund balance of the Fairgrounds Sewer District grew by $16,395 (72 percent) over the same period and we project that its fund balance will decrease further in 2018.

The school lunch fund had operating deficits averaging $67,000 from 2015-16 through 2017-18 and has been relying on subsidies from the general fund to support operations. Even with these subsidies, which were an average of $84,000, deficits occurred in two of those years. For the 2018-19 year, we project the fund will have another deficit totaling approximately $71,400. We calculated the cost to produce a meal was $8.80, while the revenue received per meal was $3.18, not including subsidies from the general fund. Therefore, the District is losing over $5 per meal. We compared the District's average daily participation (ADP) for breakfast and lunch to all other schools in Delaware County. We found that the District had the lowest ADP for breakfast and second lowest ADP for lunch. Furthermore, internal controls over cafeteria cash receipts could be improved.

The Chenango Valley Central School District is located in Broome County. Chapter 260 of the Laws of 2008 authorizes the District to issue debt in an aggregate principal amount not to exceed $3.5 million to liquidate the accumulated deficit in the District's general fund and food service fund as of June 30, 2008. New York State Local Finance Law Section 10.10(d) requires municipalities and school districts that have been authorized to issue obligations to fund operating deficits to submit to the State Comptroller each year, starting with the fiscal year during which the municipality or school district is authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, their proposed budget for the next succeeding fiscal year.

District officials implemented a well-designed system of internal controls over the claims audit process. Due to the District's well designed system of internal controls, we designed our testing to determine if these procedures were being followed consistently. We reviewed 110 claims totaling $414,749 of the 1,104 checks paid during our audit and found that the control procedures were followed for the selected claims to ensure they were adequately documented, were for appropriate purposes and were properly audited and approved prior to payment. There were no recommendations as a result of this audit.

The Board did not effectively manage and monitor the budgets for the general, water and sewer funds. As a result, total fund balance decreased significantly in the general fund between 2015 and 2017 by $2.89 million (68 percent). However, the decrease was due primarily to a significant one-time expenditure for the Town hall capital project, along with unbudgeted engineering and legal fees. Unrestricted fund balance of $2.7 million at year-end or 55 percent of the 2018 appropriations, remains excessive. Additionally, unrestricted fund balance in the water and sewer funds increased between 2015 and 2017 by approximately $830,000 (87 percent) and $1.9 million (54 percent), respectively, totaling $1.7 million and $3.8 million (92 percent and 136 percent of the 2018 appropriations), respectively. These increases occurred because the Board did not adopt budgets that included realistic estimates for revenues and expenditures and fund balance or establish written policies governing the unexpended surplus funds that the Town should reasonably maintain. Town officials informed us that the amounts in the water and sewer funds were going to be used for significant upgrades to these systems. However, because these funds are unrestricted, this intended purpose is not clear or formally established. Further, the Town has not adopted long-term plans to support maintaining such significant fund balance levels.

School officials did not always obtain competitive pricing in compliance with the School's procurement policy or publicly advertise for capital improvement projects. We reviewed 74 purchases totaling approximately $898,000 and found that School officials did not obtain quotes or use request for proposals (RFPs) for 27 purchases totaling approximately $214,000. In addition, School officials did not verify that the School received the awarded New York State Office of General Services contract (State contract) pricing for goods procured. We reviewed four purchases totaling $22,950 that officials told us were obtained using State contracts. We found that two purchases totaling $9,950 did not have the State contract award number written on either the purchase order or the check request, as required by the policy. In addition, for the remaining two purchases totaling $13,000, officials were unable to determine the specific State contract that was used. We contacted the New York State Office of General Services and found that the items purchased were not included in the State contract number listed on the invoice.

District officials should improve their accounting practices to accurately report fund balance. While the District's unrestricted fund balance was reported as being within the legal limit for the past five years, we found the unrestricted fund balance was actually underreported during this time period. District officials also overstated their encumbrances by at least $1.8 million, accrued liabilities by $988,921 and accounts payable by $172,539 as of June 30, 2017. As a result of these errors, the District's unrestricted fund balance was understated at year end for 2012-13 through 2016-17. After making adjustments to correct the errors noted, the unrestricted fund balance exceeded the statutory limit in each of the five years. As of June 30, 2017, the unrestricted fund balance exceeded the legal limit by approximately $2.5 million, or 4.3 percentage points. In addition, we found that the unemployment reserve, with a balance of $1.2 million as of June 30, 2017, was overfunded and had enough to pay for over 46 years of related appropriations.

We found that the Clerk-Treasurers did not maintain accurate and timely accounting records in the computerized accounting program. Both Clerk-Treasurers improperly recorded revenues and expenditures, which misstated actual results and impacted budgeting. For example, the former Clerk-Treasurer netted revenues against expenditures by over $70,000 in 2016-17, which, along with other errors, resulted in 2017-18 budget appropriations being overestimated by $118,890. They also did not record credit card receipts in a timely manner. The former Clerk-Treasurer did not maintain the accounting records using the modified accrual basis of accounting, but instead maintained them on a cash basis. As a result, the accounting records were not adequate for Village officials to properly monitor the Village's financial condition and operations. For example, the Board was unaware of the large number of unpaid water and sewer user fees (user fees) and their negative impact on the cash flow of the water and sewer fund until it approved the relevy of unpaid user fees on the next fiscal years' Steuben County real property tax bills. In addition, because the Clerk-Treasurers' accounting records were inaccurate, the Village's true financial position was unknown. As a result, the Board appropriated $170,000 in general fund balance to balance the 2018-19 budget, $50,754 more than was available. Finally, the Board did not perform, or contract with an independent auditor to perform, an annual audit of the Clerk-Treasurers' books and records.

District officials properly established the budget for the three school buildings and garage renovation project. In addition, District officials ensured that work was completed within the scope of the project. We reviewed 34 check disbursements totaling over $4.8 million for project claims paid during the audit period and determined they were supported by adequate documentation and properly audited. Finally, District officials established the necessary records to account for and monitor the building renovation project. There were no recommendations as a result of this audit.