The Board conservatively estimated revenues and appropriations for the 2015 through 2017 general and highway fund budgets. Further, the Board did not fund reserves or request fund balance analyses for budget development because it did not adopt fund balance, reserve or budgeting policies that established the levels of fund balance to be maintained. In addition, rather than actively monitor the budget during the year, the Board did not make budget amendments and transfers until year-end. As a result, from January 1, 2015 through December 31, 2017, the fund balance of the general fund grew by $159,501 or 52 percent. During the same period, the highway fund balance grew by $291,740 or by over three times. As of December 31, 2017, the general and highway fund balances were the equivalent of 78 percent and 30 percent of 2017 expenditures respectively. These increases were the result of operating surpluses in each of the years. In addition, the Board did not adopt multiyear financial and capital plans.

District officials did not effectively ensure the accuracy of employee salaries and wages paid. We found that two teacher assistants were not paid the correct pay rates. The collective bargaining agreement (CBA) for teacher assistants required a 1.75 percent salary increase for its members in 2017-18. However, one teacher assistant received the same salary for 2016-17 and 2017-18 (20 months) and did not receive any increases, as required by the CBA. Although the other teacher assistant received an increase, the District Clerk miscalculated the increased biweekly salary as $1,161 instead of $1,172. As a result, these two employees were underpaid by nearly $800 in 2017-18. Furthermore, because the Director did not periodically review or reconcile the accrued leave records, we found 16 discrepancies between her records and the leave tracking system for 11 of the 33 employees tested (33 percent).

District officials did not always procure goods and services in accordance with Board policy. Officials properly sought competition for 10 purchases totaling $1.2 million that exceeded General Municipal Law's bidding requirements. However, officials did not provide documentation that they obtained quotes prior to making three purchases totaling $18,174. Finally, officials were unable to provide documentation supporting their selection of four professional service providers paid a total of $76,781.

We attempted to trace the 53 assets to their locations to determine whether they were in the District's possession and appropriately tagged. While we were able to locate and identify 39 of these assets, we were unable to locate 14 assets totaling $17,402 because either the asset was in the possession of a teacher on summer vacation, lacked a serial number and inventory tag or had a serial number that did not agree with the invoice. None of the 39 assets valued at $242,673 that we located were tagged. Officials told us that the provider comes to their location every five years to tag the assets and their next visit is scheduled for 2019. The process of tagging assets only once in five years is inadequate. Computer equipment, for example, is valuable when it is new and should be tagged as District property. However, by the time it is five years old it is of little value leaving little point to tagging it as District property. Additionally, because the Business Administrator was unaware that the policy assigned the business office as property control manager, a current up-to-date asset list was not maintained. Although we did not find any indication of fraud, without an accurate and up-to-date asset list officials cannot be sure that assets are protected against loss or unauthorized use and that the District is not incurring unnecessary insurance costs.

Cash receipt and disbursement duties were not adequately segregated and mitigating controls were not implemented. The Treasurer performed all cash receipt and cash disbursement duties. Fundraising revenues of more than $8,400 were deposited between 26 and 59 days after collection. More than $2,000 from the chicken barbeque was deposited over two months later, while more than $6,000 from food sales was deposited three weeks after it was collected. Therefore, the Treasurer had more than $8,400 located at her home during this time. The Treasurer told us that she was waiting for the membership to decide which account should receive the money. Finally, meeting minutes did not always contain adequate information regarding bills approved for payment.

The Board has not updated its purchasing procedures since 2010 to ensure that the procedures are still appropriate and the policy is enforced. As a result, District officials did not always comply with the District's purchasing policy. We reviewed 93 invoices totaling $134,876 and found that 12 invoices totaling $14,088 did not have the required quotes. For example, the District paid one invoice totaling $975 for printing services without the required two quotes. In another instance, office furniture was purchased totaling $2,404 without obtaining quotes. District officials and employees involved in the purchasing process did not always enforce the District's policies and procedures, and did not document their reasons for not soliciting written quotations.

The District's credit card policy states that receipts for all credit card purchases must be attached to a requisition form and submitted to the Board. We found that District officials did not establish effective procedures that ensured credit card claims were properly supported and for appropriate District purposes. Of the 240 credit card purchases totaling $69,465 made during our audit period, 60 purchases totaling $10,306 (15 percent) did not have adequate supporting documentation attached to the claims. In addition, the credit card policy did not establish written policies and procedures for monitoring gasoline credit card use. As a result, we found that of 389 gasoline credit card purchases, totaling $18,849 for over 6,000 gallons of unleaded gasoline, 195 purchases totaling $9,686 (51 percent) did not have original receipts.

The Board did not adequately segregate financial duties and did not provide sufficient oversight or compensating controls such as designating someone to review bank reconciliations and other supporting documentation. The Board also did not adopt any policies outlining the cash receipt duties of the Clerk and Treasurer and has not implemented sufficient monitoring procedures for the cash receipt process. In addition, the Treasurer, Clerk and a Board member shared passwords accessing the computerized central accounting records and the water and sewer program. Finally, the Board did not annually audit the Treasurer's books and records.

The School does not provide or require employees to attend any cybersecurity awareness training. In addition, our review of 11 District computers identified personal Internet use on seven computers including activities such as online shopping, personal email, web searches for non-School related subjects such as job openings and real estate, and signing on to a non-School guest network. We also found that virus protection was installed and available on all 11 computers in our sample. However, one computer did not have the installed virus protection activated and two computers had not been scanned for viruses in 30 and 44 days, respectively. Finally, School officials have not established a classification scheme for personal, private and sensitive information (PPSI). As a result, they have not assigned a security level to that data. School officials do not know what PPSI has been retained, where it is located, who has accessed it and whether it has been disposed of.

The Clerk-Treasurer and Deputy Clerk-Treasurer perform all of the cash receipts and disbursements duties, such as billing water and sewer rents, collecting and depositing receipts, recording transactions, processing payroll, preparing and disbursing checks and reconciling bank statements. Although the Mayor periodically reviews the accounting records and the Board receives monthly budget-to-actual reports, no one reviews bank reconciliations or canceled check images to ensure all disbursements made were Board-approved and for proper Village purposes. Furthermore, there is no routine review of cash receipts activity by someone independent of the collections process. Lastly, the Board did not annually audit the Clerk-Treasurer's annual financial report and supporting records. Finally, the Clerk-Treasurer has accrued compensatory time in excess of the 80-hour maximum, worth approximately $23,600. Furthermore, the two employees ineligible for comp time accrued over 90 hours of comp time, approximately $1,900 at their current pay rates.

Although the Board annually adopted energy program guidelines establishing rates and eligibility criteria, Board of Public Utilities (BPU) management did not implement procedures to ensure that all rebates and credits were accurately processed in accordance with these guidelines and management did not provide sufficient oversight. Twenty-six applications for energy rebates totaling $127,000 did not have sufficient technical documentation attached and 25 totaling $150,876 did not have required documentation to clearly identify the type and/or quantity of materials purchased. Finally, recycling credits were not processed accurately resulting in 1,004 customer accounts being under credited by $2,050 over a six-month period.

The Town granted a total of 1,421 agricultural, veteran and senior citizen exemptions on the 2017 assessment roll, collectively reducing the taxable assessed values for the Town, County and school districts by a combined total of more than $86 million. The total exempted value for these categories is almost 8 percent of the Town's 2017 assessed value used for levying the 2018 County and Town taxes and the 2017-18 school taxes. Of the 167 granted exemptions we reviewed totaling $13.3 million, we found 54 (32 percent) of the exemptions, valued at more than $6.6 million, lacked one or more pieces of supporting documentation to verify the eligibility of these exemptions and/or were incorrectly calculated. For example, all 23 properties we reviewed receiving an agricultural exemption, totaling $6.2 million, lacked one or more pieces of supporting documentation to verify the eligibility of the exemption.

Payroll duties were not adequately segregated due to the Village's limited staff. Also, the Board does not collectively set and approve pay rates and salaries for part-time employees and the Superintendent. Instead, the Mayor sets these pay rates. We also determined the Clerk did not deduct required health insurance contributions totaling $5,392 from the Superintendent's gross pay for the period March 2016 through February 2018. As a result, the Village incurred additional costs by paying the Superintendent's portion of the premium. The Superintendent also did not maintain his leave accruals according to the compensation agreement and employee handbook. Finally, the Clerk did not maintain adequate accounting records and failed to provide financial information to the Board.

The Treasurer's duties are not properly segregated. The Treasurer is permitted to perform all financial duties with no oversight and, in some instances, without a claims audit. District officials do not review bank statements and canceled check images or certify payroll. The Board and District officials did not provide adequate oversight over disbursements. We reviewed 46 non-payroll disbursements totaling $531,934 and determined 19 (41 percent) totaling $233,492 did not include any Board members' initials to indicate they were audited. The remaining 27 claims totaling $298,442 that had initials did not include dates to determine when the claims audit had occurred. We also reviewed 76 payroll transactions totaling $113,485 and found the Principal had not certified any of them. Finally, the Board did not comply with Local Finance Law (LFL) when authorizing $220,000 of borrowing using a line of credit. School districts are not authorized by LFL to borrow by establishing a line of credit with a bank.

The Board adopted insufficient credit card and meal reimbursement policies and did not enforce the procurement policy. The March 2017 credit card bill included a $288 charge for the Supervisor's personal cable bill. In May 2018, during our audit, the Supervisor reimbursed the Town for this personal credit card charge. The Board approved 19 vouchers totaling over $10,800 without sufficient supporting documentation. We also question the appropriateness of 31 vouchers totaling over $1,300 for food, drinks and tableware.

The County's financial condition has been deficient for a number of years, including our audit period (fiscal years ending December 31, 2014 through 2017). We project that the County will end 2018 in a similar position based on the four-year trend and information available at the completion of our fieldwork. The County's financial condition has improved slightly over the audit period as evidenced by the gradual decreases in the amounts of annual short-term debt and interfold advances used to address cash flow shortages. However, this improvement was largely the result of one-time revenues or fund balance increases that are unlikely to recur. Without identifying ways to significantly reduce expenditures or increase recurring revenues, the County will continue to have significant cash flow concerns that necessitate the use of short-term debt and interfold advances, and limit its ability to restore fund balances to reasonable levels. For example, the County's combined funds' available fund balance as of December 31, 2017 totaled only $1.9 million or .13 percent of gross expenditures.

District officials did not seek competition for professional services obtained from seven providers who were paid a total of $172,184 in 2016-17. In addition, District officials did not require written quote documentation for purchases from 11 purchase contract vendors totaling $91,585 and four public work contract vendors totaling $27,319 in 2016-17. Finally, the Board did not appoint an independent claims auditor. The appointed claims auditor is not independent because she is a current District employee serving as a secretary in the District office and as the extra-classroom activities treasurer. Within these other duties, the claims auditor enters requisitions and receives goods which makes her directly involved in the purchasing process and in conflict with Education Law.

The District has maintained its unrestricted fund balance at the 4 percent statutory limit for the last three completed fiscal years (2014-15 through 2016-17). However, during the past two years, the District's total fund balance has increased nearly $1.66 million, or 43 percent (from $3.88 million to $5.54 million). The District allocated most of the fund balance increase to its reserve funds (restricted fund balance), which have increased 65 percent or $1.50 million (from $2.31 million to $3.81 million) during the same period. Fuel inventory reconciliations were not documented or reviewed. The secretary performs periodic fuel inventory reconciliations. She stick measures the two fuel tanks and then compares the readings for both diesel fuel and gasoline to the system's balance. However, the secretary did not retain system reports used to perform the reconciliations or document the results of the reconciliations. In addition, District officials do not regularly review fuel usage reports for reasonableness to help ensure that fuel was used for District purposes.

Although the Board received monthly budget-to-actual reports, it did not request or review monthly cash flow reports or assign a library official to review the supporting documents (e.g., bank reconciliations, bank statements or canceled check images). As a result, the Board has limited means of knowing whether transactions are properly recorded. The Board also did not audit all claims prior to payment. The Board has not adopted a policy to address the accrual and use of compensatory time for management confidential employees and guidelines instituted by the Director have not been clearly communicated to the Board or Library staff. In addition, based on our testing, Library officials did not always follow the collective bargaining agreement or employee handbook for vacation accrual for employees, and management confidential employees received vacation accrual benefits that were not Board-approved.

District officials balanced the best interests of students and program costs when they decided to keep certain special education classes in-house or to use Sullivan County Board of Cooperative Educational Services (BOCES) services. We found that District expenditures were $607,000 less by providing classes in-house. In addition, the District regularly participated with the Downsville Central School District (Downsville CSD) in a special education student exchange program (sharing) where each district sent students to the other to attend special education classes. From 2014-15 through 2017-18, Downsville CSD officials sent 18 more students to the District for classes than the number of students they accepted from the District. This has not created additional expenditures for the District, because the Downsville CSD students were placed into existing classes. Finally, the District reduced expenditures by approximately $364,000 or 44 percent over the past four years by sharing the Superintendent's position with Downsville CSD and by approximately $156,000 or 36 percent over the past three years by sharing the Business Official's position with Livingston Manor CSD.