Determine whether districts are providing adequate oversight over transportation functions to ensure the safe transportation of students.

The Board did not annually audit the Clerk-Treasurer's records and report or conduct a thorough audit of claims. Furthermore, the Board did not develop and adopt adequate policies and procedures over procurement and purchase cards. In addition, the Board did not ensure investments were made in compliance with New York State General Municipal Law. For example, an investment in a leasing fund resulted in a loss of about $62,000 for the cemetery fund. Finally, The Board did not designate an official to certify payroll or develop proper IT controls.

The Board does not audit Library claims prior to payment. Instead, the Board designates two members to audit Library claims prior to the monthly meeting of the Board as a whole. A warrant, which is prepared by the account clerk, is then approved by the Board during its monthly meeting. As a result, all available Board members at the monthly meetings do not audit and approve or disallow each individual claim to ensure they are for legitimate Library expenditures, properly supported and comply with Board-adopted policies.

The Board did not adopt written policies and procedures for critical financial operations including budgeting, reserves, payroll processing, IT, and claims auditing. Moreover, the Board has not reviewed or updated its online banking, general fund balance, and cash receipts policies recently. The Board also did not update the procurement policy for legal competitive bidding thresholds that took effect in 2010. The failure to develop and periodically review and revise formal policies and procedures weakened the Village's internal controls.

The Board did not adequately segregate the Clerk-Treasurer's duties or implement compensating controls. It also did not conduct an audit of the Clerk-Treasurer's records and annual financial report. Village officials also expended $76,200 in real property taxes over the last 12 years for two unused properties that did not benefit taxpayers. Finally, a Trustee, as co-owner of a local hardware store, had a prohibited conflict of interest. She received a direct or indirect monetary benefit as a result of 59 contracts totaling $2,398 between the store and the Village during our audit period.

The Board adopted an acceptable use policy in July 2016. However, officials have not designed or implemented procedures to monitor compliance with the policy or determine the amount of employees' personal use. Town officials did not maintain an inventory of IT assets. The IT consultant has a list of computers and servers, which are maintained under the managed services agreement with the Town. However, this list does not include the computers in departments not covered by the service agreement including the Highway, Recreation, Youth Bureau and Senior Center. The Board and Town officials have not developed, adopted and implemented a breach notification policy or local law because they were unaware of this requirement. Employees were not provided with IT security awareness training to ensure they understand how they could help protect IT assets and computerized data. Finally, the Board and Town officials have not developed, adopted and implemented a written disaster recovery plan.

The Board underestimated revenues, overestimated appropriations and appropriated fund balance that was not used. Also, the balances in three reserves were excessive. Despite budgetary surpluses and excess fund balance, the Board increased the tax levy by a total of $4.4 million from 2014-15 to 2017-18. Based on our analysis of the 2017-18 adopted budget and year-to-date operations, officials budgeted similarly to previous years and the District will likely experience an operating surplus and fund balance will continue to increase and exceed the statutory limit. Based on our review of the preliminary 2018-19 budget, these budgeting practices appear to have continued. Although the Board took appropriate action to ensure salaries and pay rates were properly authorized and documented, District officials did not implement procedures to ensure employees were paid at the correct rates. For example, three teachers were paid stipends at rates not established by a collective bargaining agreement (CBA), employment contract or Board resolution and one teacher reviewed and approved her own time sheets.

District officials did not use competitive methods to select nine professionals paid a total of $849,696. Additionally, the Board did not consistently seek competition for external audit services. Instead, the Board retained the services of the same external audit firm for at least 10 years, without any attempt at seeking competition. The Board authorized attendance at 14 conferences during the audit period, with total costs not to exceed $107,342. District officials could have saved $3,562 if they had used federal per diem lodging guidelines, $480 if they did not exceed their travel policy maximum, $1,077 if they did not pay for unauthorized travel dates and $144 if they did not pay for unnecessary travel costs. Furthermore, District officials are not monitoring the use of District-owned cell phones to ensure that all expenses are reasonable and for necessary business purposes. Expenses for cell phones totaling $7,250 (23 percent) were not properly approved, documented or necessary. The District has not developed fuel inventory records. In addition, District officials cannot identify who is responsible for overseeing fuel supplies. No one is required to be present during fuel deliveries or to measure the tanks before and after deliveries and District personnel do not record periodic fuel measurements. As a result, no one is maintaining inventory records or fuel consumption records or reconciling for fuel remaining to account for use. As a result, officials could not account for 20 and 73 percent of the gasoline and diesel fuel inventories, respectively, totaling $4,433.

The Board adopted a purchasing policy that required District officials to establish written procedures for procuring goods and services not subject to competitive bidding requirements, such as professional services, and officials did so. However, the procedures were not sufficiently detailed and did not provide adequate guidance for employees or the purchasing agent. We reviewed the District's procurement of 14 professional service providers that were paid approximately $1.46 million during our audit period to determine whether officials used a process that ensured the prudent and economical use of public funds, such as competitive bids, requests for proposals (RFPs) or written/verbal quotes, while acquiring these services. We found that the District used competition, such as an RFP process, or obtained two or more written quotes when acquiring the services of three providers that were paid $935,000 (64 percent). District staff also properly documented why two vendors were paid approximately $59,000 (4 percent) when the acquisition of these services did not require any procurement methods. However, the District did not seek competition, or did not document the selection basis, when awarding contracts to the remaining nine vendors that were paid approximately $467,000 (32 percent).

The Board's continual appropriation of nonexistent fund balance has weakened the financial condition of the town-wide (TW) general fund and central water district. The Board also did not adequately manage the finances for a capital project to upgrade its transfer station. In addition, interfund services were not properly tracked and billed back to the appropriate fund, resulting in taxpayer inequities. The Board has not performed an annual audit of the books and records of most Town officials or employees who received or disbursed cash (with the exception of the Town Justice). Finally, the Board did not adopt information technology (IT) policies and procedures for breach notification, access rights, disaster recovery and backups, and has not provided IT security awareness training.

We reviewed 60 general fund claims totaling $298,123 and 10 extra-classroom activity claims totaling $2,705 to determine whether the claims audit process in place had verified they were properly supported, audited and approved before payment. We found the claims audit process was adequately designed and that it had been properly implemented. Because District officials established and implemented a well-designed system for processing claims, there were no recommendations as a result of this audit.

The Board and District officials did not properly manage fund balance and reserves. District officials overestimated appropriations by an annual average of $2.3 million. As a result, appropriated fund balance, which annually averaged $1.8 million, was not needed to finance operations. The Board and District officials also did not transparently budget to fund a capital reserve. The Board did not review all reserves and District officials did not prepare an annual report of reserves, as required by the District's policy. The unemployment insurance reserve is overfunded ($604,000) and the debt reserve is improperly restricting $245,000.

Village officials have not adopted realistic budgets and the general fund available fund balance has increased by $321,000 to $592,786 (or 167 percent of 2017 expenditures) from the beginning of 2014-15 through May 31, 2017. Conversely, from the beginning of 2014-15 through May 31, 2017, available water fund balance decreased by $36,000 (or 35 percent), to $67,400. Operating deficits occurred in the last two fiscal years because Village officials had unexpected pump repair costs and transferred $10,000 to the water fund's capital reserve at the end of each year. Finally, the Board has not developed any long-term multiyear financial and capital plans or established a fund balance policy.

The District experienced revenue shortfalls in tuition and State aid along with expenditure overruns in special educational costs during 2016-17. The combination of these events caused the total general fund balance to decrease by over $567,000 (39 percent) to $889,800 at the end of 2016-17. While officials acknowledged fiscal concerns, they did not realize the full extent and incorrectly projected the 2016-17 ending fund balance. Accordingly, District officials budgeted to use $300,000 of fund balance in the 2017-18 fiscal year, when only $226,400 was available to appropriate as the remaining fund balance of $663,400 was restricted in reserve funds. However, officials began taking corrective action during the 2017-18 budget development process to budget more conservatively. In addition, the cafeteria fund incurred operating deficits in the last three fiscal years totaling over $48,700. As of fiscal year ending June 30, 2017, fund balance decreased to ($57,300) and the cafeteria fund owed the general fund $65,400, which is unlikely to be paid back. These deficits occurred even after the general fund transferred $10,000 to the cafeteria fund each year from 2014-15 through 2016-17. Without adequately addressing the financial condition of the cafeteria fund, deficits and reliance on the general fund will continue, potentially impeding the general fund's financial recovery.

The Board has not adopted financial policies for investment, procurement, claims processing or written procedures concerning financial recording and reporting. The Board is not adequately monitoring the District's financial operations as monthly budget status reports, bank reconciliations, bank statements and cancelled check images are not provided or reviewed. The Board's lack of review of the Treasurer's records greatly diminishes its oversight of the District's finances and could lead to errors and misstatements that remain undetected and uncorrected. Additionally, the Board is not ensuring that the Treasurer is in compliance with applicable laws, rules and regulations. District officials explained they have discussed having an audit conducted but never followed through with having one done. Finally, the Treasurer has not submitted the District's annual update document (AUD) to OSC for fiscal years 2012 through 2016 as required by NYS General Municipal Law.

The Treasurer did not maintain accurate accounting records. For example, the Treasurer did not record collections totaling $10,517 that were deposited during the audit period. Company officials did not ensure that collections from donations and fundraising were adequately documented. The Treasurer paid claims totaling $14,405 without sufficient supporting documentation to allow officials to determine whether the expenses were for valid purposes. The Treasurer did not comply with the bylaws for 35 claims totaling $15,318 that required membership-authorization before payment.

The Board did not provide adequate disbursement process oversight. The Board did not ensure all disbursements were approved before payment, listed on an approved abstract and supported and for proper purposes. In addition, beginning on March 1, 2016, the Board directed the Village's attorney (attorney) to enforce the collection of $212,000 in delinquent real property taxes. Delinquent tax collections nearly tripled from 2015-16 through 2016-17, the first year the attorney began enforcement procedures. In 2017-18, delinquent collections nearly doubled the amounts collected in 2015-16. While these actions have helped reduce delinquent balances by 18 percent over the last two years, the balance as of February 28, 2018 is approximately 24 percent of the 2018-19 tax levy.

The Board has not adopted a cash disbursement policy. The Treasurer provides the Board with an abstract, or list, of claims and the corresponding claims and documentation each month for audit and approval. We examined 72 claims totaling approximately $524,000 paid during the audit period and determined that all of the claims were for appropriate District purposes and adequately supported. However, 24 claims (33 percent) totaling approximately $7,300 were not audited and approved before payment was made. Most of these claims were for reimbursement of meal allowances and mileage. While the Treasurer reviewed them, she did not know that the Board should have audited them prior to payment. Had the Board adopted an adequate written policy, the Treasurer may have had appropriate guidance on how to properly process these claims.

Determine if municipalities are utilizing resources to perform FSPM inspections of residential buildings with three or more dwelling units, at a minimum of every three years and confirming that known violations are corrected.

While the District has acceptable use policies, they are not monitored or enforced. In addition, the policies do not address connecting personal mobile computing and storage devices to the District's network. Connecting personal devices to the District's network can create security vulnerabilities and allow inappropriate access to District IT assets and data. Further, the District's staff acceptable use policy does not require cybersecurity training. In addition, the Board has not adopted other IT security policies addressing password management, protection of PPSI, wireless technology, remote access, sanitation and disposal of electronic media, user accounts, access rights, online banking and data backups. The Board did not develop a formal disaster recovery plan to address potential disasters. The IT Director maintained a hardware inventory for the District, however, it was not up-to-date at the time of our audit. Finally, the District has not implemented comprehensive procedures for managing, limiting, securing and monitoring user access.