The Board did not adopt policies and procedures for acceptable computer use and granting, revoking, modifying and monitoring individual access rights to the networks through Active Directory. In addition, the Board has not adopted a comprehensive disaster recovery plan or policies and procedures for password security management. The Board also has not implemented a process to address the deactivation of user accounts. The Authority's Active Directory has 19 network user accounts, seven (37 percent) of which are inactive. In addition, the Board did not provide users with security awareness training to help ensure they understand security measures necessary to protect the network. Authority officials did not ensure that the server was in a secure location and did not maintain an inventory of its software. Finally, three employees use the Authority's financial application and share one user account.

Before leasing buildings, the Board usually hires an outside firm to perform a rent analysis based on the cost per square foot in comparison to other buildings in the area. Based on these analyses, SANY was receiving a fair price for the leased buildings at the beginning of the leases. However, the Board did not explore other options such as determining whether purchasing the buildings would have been more cost effective than leasing them. We performed a cost analysis of the four buildings that were leased during our audit period. Our analysis compares the cost of lease payments with 4 percent annual increases over a 15-year period, with the cost of purchasing (including loan interest) and renovating the buildings. Assuming the cost of completed and future renovations are accurate, we estimate SANY could have achieved savings of nearly $3 million from August 2014 to June 2032 by acquiring and renovating the buildings rather than leasing them.

The Treasurer relinquished most of his duties to the Secretary, even though the bylaws state that holding dual offices is not permitted. The Secretary performed the majority of the financial activities and therefore, the duties were not properly segregated and no compensating controls were put in place. The Board and Directors do not receive formal, detailed reports of cash receipts and disbursements, nor are bank reconciliations consistently prepared and provided for review. In addition, the Board has not filed the required Internal Revenue Service (IRS) Form 990 for tax-exempt organizations. Finally, the Department is not properly reporting payments, as required by law, made to an individual, as an employee or an independent contractor, who provides custodial/maintenance services. The Board approved 21 payments totaling approximately $7,500 to this individual for the period January 1, 2016 through July 31, 2017. However, there was no documentation detailing the individual's duties and compensation, such as a signed contract, or a determination regarding this individual's status as an employee versus an independent contractor.

The Board has not established written policies for cash receipts, and Library officials have not established procedures to record all receipts at the time of collection and ensure individual accountability for all fines and fees received. Library personnel collect money for fines, copies, faxes, donations, memorial books, used books and DVDs. During our audit period, the Library deposited about $25,000 of these cash receipts. However, Library officials could not determine whether these deposits represented all receipts collected during that time period, because the Library has weak controls over the collection and recording of receipts. During our audit period, Library employees waived about $21,000 in Library fines, which represents about 75 percent of all fines levied. A privately contracted payroll vendor has access to the Library's bank account to withdraw funds for payroll and fees. Finally, the Board does not audit claims before disbursements are made.

Each year, the Board appropriated over $1 million more in fund balance than was needed to finance the budget. This led to a negative or low unrestricted fund balance in fiscal years 2014-15 through 2016-17, which made the District's financial position appear worse than it actually was. Although the Board appropriated significant amounts of fund balance each year, it did not need to use most of the fund balance because it overestimated appropriations by an average of $1 million annually (10 percent), or a cumulative total of about $3.1 million from 2014-15 through 2016-17. These overestimations were spread throughout the budget. In addition, the District has retained over $425,000 in the debt service fund and has not used the fund to pay off the related debt. Finally, the District has not developed a multiyear financial plan to address its financial condition.

The Council and City officials did not develop adequate information technology (IT) policies and procedures to address acceptable use, sanitization and disposal and breach notification. In addition, the City relied on an IT vendor for IT services and technical assistance, as needed. Although the City has a retainer services agreement (agreement) with the IT vendor, the agreement does not sufficiently define the roles and responsibilities for each party or include the type of services provided. The agreement also does not address confidentiality or protection of personal, private and sensitive data. City officials also did not provide IT security awareness training for City employees. The Council did not develop a disaster recovery plan. Finally, City officials did not maintain an inventory of the City's IT equipment, including computers and hard drives or installed software applications.

The Board's 2018 adopted budget for the town-outside-village (TOV) highway fund includes plans to spend $110,000 of fund balance to finance recurring expenditures. However, this is almost $23,000 more than what is available. Since 2015, the Board has budgeted for, and used, TOV highway fund balance to finance budget shortfalls in the TOV highway fund. This practice has caused the total TOV highway fund balance to decrease by 59 percent to $87,500 as of December 31, 2017 (or 13 percent of TOV highway fund expenditures). Conversely, the town-wide (TW) fund balance more than doubled during the same period. This occurred because the Board was not aware of the fiscal stability of any of the Town's funds. Although the Supervisor provided the Board with monthly budget-to-actual reports and bank statements, he never provided the Board with balance sheet reports, including fund balance levels. Additionally, the Supervisor has not filed the annual update document (AUD) with the Town Clerk or OSC since 2008. Furthermore, the Board did not perform an annual audit of the accounting records or reports of the Supervisor. Our previous Report of Examination included similar findings.

The Board could improve its fund balance management. While Town officials have taken steps to reduce excessive fund balance levels over the last several years, town-wide (TW) and town-outside-village (TOV) fund balances grew by 28 percent and 79 percent, respectively, from 2014 through 2017. As of December 31, 2017, TW fund balance exceeded 300 percent of annual TW expenditures, while TOV fund balance exceeded 200 percent of annual TOV expenditures. While revenue variances were generally reasonable, budgeted appropriations exceeded expenditures by an annual average of $104,500 (19 percent) in TW funds and $81,000 (31 percent) in TOV funds. The Board's budgeting practices, combined with maintaining significant fund balance levels, may place an unnecessary tax burden on Town residents.

Based on the results of our review, except for certain items, we found that the significant revenue and expenditure estimates contained in the proposed budget were reasonable. While the Council submitted a corrective action plan for the 2017-18 budget review and did implement certain corrective actions, the Council and City officials have not implemented certain other corrective actions that the Council indicated would be undertaken. For example, Council and City officials should restore the contingency appropriation to at least the previously recommended levels. The City also currently faces pending litigation relating to the North Union Street capital project that may require additional funds of approximately $1.3 million, the City estimates, to cover projected costs. The City's proposed budget does not include any appropriations for these potential costs. Additionally, as of May 31, 2017, the City reported seven completed capital projects with deficit balances totaling approximately $900,000 that may require money from the general fund to close out, which could result in a further reduction of general fund balance. Furthermore, the City's outstanding debt has grown by 36 percent in one year, increasing from approximately $33.4 million as of May 31, 2016 to approximately $45.3 million as of May 31, 2017. Finally, in adopting the 2018-19 budget, the Council should be mindful of the legal requirement to maintain the tax levy increase to no more than the tax levy limit as permitted by law, unless it obtains the proper voter approval to override the tax levy limit.

The three Justices did not prepare monthly bank reconciliations or accountabilities. Therefore, we prepared bank reconciliations from January 1, 2016 through May 31, 2017 and conducted a cash count and accountability analysis on June 14, 2017. We found that errors went undetected and uncorrected. In addition, the Court did not ensure timely adjudication and reporting of vehicle and traffic cases. We reviewed the TSLED pending ticket report for the period January 1, 2016 through June 21, 2017 and identified 2,069 pending tickets, of which 245 (12 percent) were referred to the Scofflaw Program because of nonpayment or no appearance at Court.

The Board adopted a resolution designating the Board President and another Board member to audit claims on its behalf and evidence their audit by signing the warrant. The Board President told us he reviews claims to ensure they contain adequate supporting documentation and are for legitimate purposes, and then signs the warrant to evidence his review. He acknowledged, however, he does not review every claim. Rather, the Board President reviews specific claims only when questions arise such as unrecognized vendors or unreasonable or high dollar amounts as shown on the warrant. In addition, he acknowledged that he reviews claims after several warrants have been generated. Therefore, claims are paid prior to audit. The Board President communicates the results of his review and any findings to the rest of the Board during its meetings. District officials indicated that the second Board member appointed to audit claims serves as a back-up and does not routinely audit claims. Therefore, all 100 claims we reviewed, totaling $1,517,352, were paid prior to audit.

District officials accurately paid employees' salaries and wages in accordance with Board-approved contracts, resolutions and CBAs. We commend District officials for establishing a well-designed system for processing payroll to ensure employees are accurately paid the salaries and wages to which they are entitled.

District policies require student treasurers to be directly involved with extra-classroom activities (ECA) funds and activities. However, we found that faculty advisors were completing required documentation, such as deposit and disbursement forms and maintaining the ledgers, instead of the student treasurers. We reviewed 45 disbursements totaling $27,237 and 45 deposits totaling $19,853 in the Treasurer's records and student treasurers' ledgers. We found all were accurately recorded in the Treasurer's records, but 19 deposits totaling $9,954 and 14 disbursements totaling $9,194 were not accurately recorded in student treasurers' ledgers. In addition, five clubs were not maintaining ledgers and instead relied on the Treasurer's reports as a substitute for their own records. In addition, faculty advisors did not ensure student treasurers issued duplicate press-numbered receipts or admissions receipts when collecting cash at fundraisers or during events. Finally, disbursements did not always have adequate supporting documentation attached or required signatures but were for appropriate ECA purposes.

Although the District's unassigned fund balance exceeded the statutory limit from 2014-15 through 2016-17, unassigned fund balance as a percentage of ensuing year's appropriations decreased by 2 percentage points (from 6.9 to 4.9 percent). District officials adopted reasonable budgets over these years (with average revenue variances of less than 3.7 percent and average expenditure variances of less than 6.4 percent), which included appropriated and subsequent use of fund balance. From 2014-15 through 2016-17, District officials used unassigned fund balance totaling $1.3 million. As a result, the amount of unassigned fund balance that exceeded the statutory limit declined significantly during each of these years (from 2.9 to .9 percentage points). In addition, the District's real property tax levy has remained relatively stable during these years. Finally, the debt service fund, employee benefit accrued liability reserve (EBALR) and retirement contribution reserve were not used as budgeted and overfunded by $5.7 million as of June 30, 2017.

Library officials told us that the Board does not review claims, except in rare cases when a claim listed on the warrant appears unreasonable. The Board reviews and approves the warrants without auditing each individual claim to ensure that the claims represent legitimate Library expenditures. We found that eight of 19 claims reviewed totaling $75,163 required soliciting competitive pricing. However, Library officials did not have documentation available to show they obtained the required number of quotations or proposals for five purchases totaling $27,129.

The Board has not developed realistic budgets and has not adequately monitored the budgets. As a result, from 2014 through 2016, fund balance in the general fund declined from about $478,000 to $51,000 (89 percent) and declined in the Sleepy Hollow sewer district fund from $31,503 to $3,521 (89 percent). The highway fund also had a deficit unrestricted fund balance during this period of as much as $66,491. In addition, the Board has not adopted multiyear financial and capital plans. Finally, the Board did not adopt IT breach notification policies and procedures, back-up procedures and a disaster recovery plan.

Neither the Justices nor the Court clerks prepared monthly bank reconciliations or accountabilities. Instead, the Court clerk kept an annual check register in a computerized spreadsheet that detailed deposits and checks. The register inaccurately noted when checks cleared. Therefore, we performed reconciliations of the Justices' bank statements with their records of bail for pending cases, cash books and Justice Court Fund reports for the period January 1, 2013 through June 12, 2017 and found errors that went undetected and uncorrected. Finally, as of February 28, 2017, there were 426 (31 percent) pending cases before the Court that were not adjudicated within 60 days and eligible for referral to the Scofflaw Program. The clerks referred 205 pending tickets between May 16, 2017 and August 9, 2017, but 221 tickets were not referred as of June 12, 2017. When we brought this to the Court clerk's attention, she referred 168 of the 221 tickets to the Scofflaw Program during our fieldwork.

Town officials appropriately sought competition for nearly $1.4 million in purchases that were over the competitive bidding thresholds. However, Town officials did not consider the aggregate amount to be expended for storm water remediation projects that totaled $401,510 over a two-year period. In addition, they did not seek competition for three professional service contracts totaling $332,262. Finally, Town officials did not comply with the procurement policy requirements for obtaining quotes and documenting emergency and sole source determinations for 10 purchases totaling $82,928.

The Clerk did not regularly issue duplicate receipts for fees collected. We reviewed collections made during the months of January, August and September 2016 totaling $10,709 and found that the Clerk did not issue duplicate receipts for eight collections totaling $533. In addition, on three occasions, the Clerk did not deposit collections totaling $1,995 within three business days of collections exceeding $250 as required. Finally, the Board is not annually auditing the Clerk's books, records and documents.

The Board and District officials did not properly manage finances, ensure budgets were realistic or properly plan for and use fund balance. Officials overestimated appropriations each year by an average of $3.7 million (12 percent). These budgeting practices resulted in the District's unrestricted fund balance exceeding the 4 percent statutory limit by 13 to 16 percentage points. Furthermore, when unused appropriated fund balance is added back, the recalculated unrestricted fund balance exceeded the statutory limit by amounts ranging from $7.2 million to $7.6 million, or 23 to 25 percentage points. As a result, the tax levy was higher than necessary. Additionally, four reserves totaling approximately $1.6 million were overfunded and a debt reserve ($493,000) was not being used as required.