Department officials did not properly assess County fees or adequately monitor and enforce fee collection. We reviewed 35 cases (20 open cases and 15 closed cases) during our audit period to determine whether the Department followed local law and policy requirements for assessing supervision and alcohol and drug testing fees and enforcing collection of restitution and fees. These cases had court ordered restitution totaling $52,670 and fee assessments totaling $12,280. Our testing disclosed weak monitoring and enforcement of unpaid fees, instances where Department staff did not follow the policies, and numerous errors in the financial records. Officials did not establish adequate cash receipt and disbursement procedures. We reviewed all 210 cash receipts for July 2017 totaling $22,283 and found that they were deposited in a timely manner. However, the payment deposit reports were not signed by both the finance manager or clerk and receptionist for four days (21 percent of the 19 days tested). In addition, two receipts recorded on the manual log were $80 more than the amount recorded in the financial system and deposited. Finally, officials did not disburse more than $60,000 in restitution payments to crime victims. Department officials told us that they have not disbursed money from the victims trust account (VTA) since 2012 when they began using their current financial system because there are no procedures in place for disbursing these payments to victims. As a result, the VTA has $60,363 that remains idle while other victims' court-ordered restitution, some over 25 years old, remain unpaid.

Due to the District's well designed system of internal controls over claims processing, we performed limited testing to determine if these procedures were being followed consistently. We reviewed 79 of the 4,439 claims totaling $122,475 and found that control procedures were followed for all claims selected ensuring they were adequately documented, for appropriate purposes and were properly audited and approved prior to payment and in a timely manner. There were no recommendations as a result of this audit.

The Board adopted a fund balance policy in June 2011, which requires the Library to maintain unassigned fund balance at a minimum of 20 percent of general fund operating expenditures to guard against temporary revenue shortfalls or unpredicted expenditures. The policy also requires the Library to establish a plan to replenish unassigned fund balance should it fall below the minimum. However, the policy does not set a maximum for unassigned fund balance and does not address the other categories of fund balance reported by the Library, such as assigned or committed funds. From 2012-13 through 2016-17, the Library maintained unassigned fund balance of over 50 percent of operating expenditures, and as high as 65 percent, without a rationale to support the amounts in excess of the policy minimum of 20 percent, or the conditions under which excess funds will be used including a timeframe for using them. As of June 30, 2017, the level of unassigned fund balance totals almost $3.3 million, which represents 51 percent of the Library's operating expenditures, or 2.5 times the amount established by policy.

The District needs to improve its claims audit process to help ensure all claims are adequately documented and properly audited and approved before payment. The Board appointed a claims auditor to assume its powers and duties to examine and approve or disapprove claims. The claims auditor did not review the detailed, supporting documentation for all 17 health insurance claims paid during the audit period totaling $8.1 million. Although the Business Manager reviewed detailed support, the claims auditor was required to conduct an independent and thorough audit of the claims. In addition, the claims auditor did not audit and approve any of the 38 scholarship payments paid totaling $9,485 for 2016-17. Although the scholarship committee reviewed and approved the awards, the claims auditor was required to audit and approve the scholarship payments.

Total taxes collected for the years 2009 through 2014 were $8,890,255, of which $8,471,675 were collected by the Tax Collector (Collector) and $423,757 were collected by the District's bank. The Collector recorded that she collected $94,713 in cash. However, the Collector remitted $92,323 in cash collections to the Business Manager for deposit, resulting in a shortage of $2,390. The shortage occurred because the Collector did not record certain payments made by check and substituted the checks for the cash recorded but not remitted to the Business Manager for deposit. The Collector did not provide the Business Manager with sufficient records to identify these discrepancies when she turned over the collections for deposit or maintain sufficient records of collections. Furthermore, the Collector recorded $22,805 of cash payments for taxes due after the date that penalties would be assessed but did not record or remit the associated penalties. Because the Collector did not maintain accurate and complete records, we could not determine whether $456 of penalties that should have been paid for those taxes were actually collected. Additionally, the Collector accepted payments made by check after the date that penalties would be assessed but did not record the payment of penalties. Due to the lack of adequate records, it is unclear whether residents paid penalties in cash and the Collector did not record or remit them or whether the Collector waived penalties for those residents.

Based on the results of our review, except for certain matters, we found that the significant revenue and expenditure projections in the proposed budget appear reasonable. However, the City's fund balance policy states that the water, sewer and refuse funds should maintain unrestricted fund balance at a level needed to maintain positive cash balances throughout the year. City officials did not provide evidence that they prepared cash flow estimates for 2019, which would have allowed them to determine if unrestricted fund balance levels in these three funds were adequate. The Common Council also needs to consider whether the contingency appropriations are adequate if collective bargaining agreements are approved and unanticipated retirements occur. Finally, the proposed budget includes a property tax levy which is the maximum levy that the City can impose without the Common Council needing to override the tax levy limit.

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

Although the Board adopted a purchasing policy that required using competition for purchases not subject to bidding requirements, the purchasing agent and claims auditor did not always ensure that purchases were made in compliance with the requirements. District officials made 40 purchases, of 77 reviewed, totaling approximately $184,000 without always obtaining or documenting price quotes as required by the purchasing policy. District officials told us that employees generally obtained quotes prior to making purchases but did not retain the required documentation. For nine purchases totaling $37,000, officials told us that they thought there was only one vendor capable of providing the item or service. However, they did not check whether there were other vendors selling the same products and services.

The District’s enrollment increased during the years prior to 2015-16 from an average of 384 students in 2012-13 to 465 in 2015-16. This resulted in additional revenue totaling $6.1 million. During this same time period, the District reported an operating surplus in each of the five years allowing the District to resolve the majority of its deficit. This was primarily due to the increase in students. While the District expenditures increased during their period of growth, they have remained relatively stable from 2014-15 to 2016-17. The operating surpluses allowed the District to reduce the fund balance deficit of $7.5 million to a deficit of $437,000. In an effort to meet SED regulations regarding maximum student teacher ratios, the District has begun reducing the number of students they are accepting. The average number of students for the 2017-18 fiscal year was 411 which will result in a corresponding reduction of revenues. For the 2017-18 fiscal year, the District adopted a budget of almost $26 million, which is consistent with expenditures for the past three years. As a special act district with no fund balance to rely on, there is a risk that the decreasing revenue without a corresponding reduction to expenditures may prevent the District from making a full financial recovery or cause the District financial condition to deteriorate.

The Board needs to improve its monitoring and oversight of the sewer fund’s financial condition. The Board routinely adopted budgets that were not reasonably estimated. This caused three years of operating deficits, which required the Board to make interfund transfers and temporarily borrow cash from the general fund to support sewer fund financial operations. While the Clerk-Treasurer prepared and provided monthly budget-to-actual status reports on the sewer fund’s activities to the Board, she did not include a cash flow analysis. In addition, because the Board did not annually audit the Clerk-Treasurer’s financial records, it did not identify errors or inaccuracies in the records. Finally, the Board did not develop and adopt multiyear capital and financial plans or receive comprehensive financial reports. Information about cash flows and comprehensive multiyear financial and capital plans, along with the statutorily required annual audit, would have provided the Board with better information to evaluate and manage sewer fund operations.

The Board did not effectively manage unrestricted fund balance. From fiscal years 2013 through 2017, the Town’s general fund balance increased by $624,571, from $292,780 to $917,351 (213 percent). The Town’s unrestricted fund balance grew from 19.54 percent of the ensuing year’s budgeted appropriations at fiscal year-end 2013 to 53.49 percent of the ensuing year’s budgeted appropriations at fiscal year-end 2017. Fund balance increased because the Town experienced operating surpluses, mostly in fiscal year 2015. While the Town experienced minor operating surpluses in the preceding and following fiscal years, it incurred a $355,158 operating surplus in 2015. The Town received $159,441 more in revenues and incurred $195,717 less in expenditures than anticipated. Further, contingency funds totaling $377,000 were left unused in fiscal years 2013 through 2017, significantly contributing to operating surpluses. The Board adopted a fund balance policy that allowed for unexpended surplus funds of up to 70 percent of annual expenditures. The policy was not comprehensive and did not define the time periods or means for which fund balance will be used and replenished. Finally, the Board also has not formalized comprehensive multiyear financial and capital plans specifying the Town’s objectives and goals for using accumulated funds.

The Board did not develop adequate information technology (IT) security policies and procedures. The Board has not adopted IT security policies addressing password management, breach notification, protection of PPSI, wireless technology, mobile devices, remote access, sanitation and disposal of IT equipment, user accounts, online banking and data backups. School officials did not provide IT security awareness training to employees. The Board did not develop a disaster recovery plan. The Board adopted inadequate IT service provider contracts. School officials also did not maintain IT software inventory records or implement strong access controls.

The Village Clerk/Treasurer and Deputy Clerk/Treasurer performed incompatible duties. As a result, they controlled all aspects of their respective cash functions with little or no oversight. The conflicting nature of duties assigned to these two key staff created areas of significant weakness in the internal control structure and there was no evidence of Board review to reduce the effect of those weaknesses. In addition, competition was not sought for 14 professional services totaling $926,188. The Village also did not enter into written agreements with five professional service providers who were paid a total of $169,330. We examined 23 purchases from the various Village departments, totaling $205,128, during 2015-16 and 2016-17 and found that Village officials did not solicit quotations for 11 of the 23 purchases totaling $102,543. Water rates were not clearly documented resulting in underbillings totaling $4,065 and overbillings totaling $7,620 for 494 bills during the eight quarters we reviewed. Finally, the Board did not adopt a comprehensive information technology policy.

Based on the results of our review, we found the significant revenue and expenditure projections in the proposed budget are reasonable. In addition, the City’s proposed real property tax levy complies with its tax levy limit. However, the Council has not yet approved the fees needed to realize the estimated revenues in the newly established refuse fund for solid waste management and bulk refuse collection fees. These fees are necessary to finance the City’s solid waste and recycling collection and disposal (waste and recycling) services. In addition, the minimal contingency appropriation in the proposed refuse fund budget provides the City with a limited amount of flexibility in the event of unforeseen circumstances that may require additional funds. The City’s capital plan for the purchase of equipment and vehicles for the general and refuse funds also remains unfunded through the proposed budget and instead will be financed by issuing debt. City officials should also consider the potential financial impact of the settlement of any of the City’s five expired collective bargaining agreements (CBAs) in 2019.

Based on the results of our review we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The Town’s 2019 tentative budget complies with the property tax cap levy limit.

The Board overestimated appropriations by an average of approximately $1.9 million annually from 2014-15 to 2016-17, which resulted in accumulation of excess unrestricted fund balance.

The Board did not segregate payroll duties or properly certify payrolls. In addition, the Board did not implement policies and procedures over payroll. For example, direct supervisors did not review or approve 244 of 309 timecards (79 percent) totaling $171,092 and timecards lacked documentation. The Secretary did not document the reasons for adjustments of 151 of 158 payroll hours (96 percent) totaling $4,451. Commissioners or direct supervisors did not approve 178.25 of 196 overtime or double-time hours (91 percent) totaling $7,833.

We found that access to the District’s financial application was not properly segregated. The Treasurer along with eight BOCES employees who provide support services have administrative rights to the financial application. The District did not have adequate bank agreements for online transactions, online banking transactions were not adequately secured and online banking users had excessive permissions. In addition, the web-filtering software did not enforce the District’s Internet-use policy. As a result, employees accessed websites such as shopping, personal email and social networking that did not always comply with the District’s Internet use policy. Finally, while District officials established a disaster recovery plan, it did not address critical business processes for District-wide operations such as disruptions to its IT environment; it only addressed business continuity for the District’s financial application.

The Board did not appoint a Treasurer to oversee financial operations as required by Village Law. The Board also did not seek competition for six professional services totaling approximately $559,311 and professional service providers did not have written agreements. Village officials also paid $155,640 to four vendors for capital improvements ($62,200), sewer repairs ($34,840), park rehabilitation ($21,262) and general maintenance ($37,338) without competitively bidding. The Board did not grant annual vacation leave in accordance with its policy. As a result, 14 current employees’ vacation leave exceeded the maximum amount they were allowed to carryover to 2017 by more than 4,510 hours with an estimated value of $213,058. Finally, officials did not monitor assets or properly safeguard information technology (IT) assets.

The amount collected for water operations in 2017 was approximately $213,000 less than the cost of water services. As a result, the general fund had to advance funds to the water fund to cover its operational costs. This advance and similar advances in prior years occurred because the water fund’s collections have historically not been sufficient to sustain operations. As of December 31, 2017, the water fund owed the general fund $340,000 for accumulated advances that had not been repaid. The Board also does not review or approve billing adjustments. The Budget Officer made billing adjustments in 2017 for water for $184,025 and for sewer for $44,121 due to inaccurate beginning meter readings. Furthermore, three town employees perform administrative duties (billing, recording and collecting) for the water and sewer funds. However, none of these employees’ salaries or related benefits are charged to the water or sewer funds. As a result, the water and sewer funds do not pay administrative costs for services they receive from the general fund. Finally, we reviewed all customer accounts for 2017 and determined that customers were overcharged for water and sewer penalties in 2017 by $8,654.