The extra-classroom activity (ECA) clubs had receipts totaling $849,946 during the audit period. We reviewed 71 cash receipts totaling $520,743 out of 253 cash receipts totaling $647,245 collected by 10 clubs and remitted to the central treasurers for deposit during our audit period. All of these collections were accurately accounted for in the central treasurers' ledgers and deposited intact. We found that three clubs accurately accounted for collections in the student treasurers' ledgers and maintained supporting documentation for 27 transactions totaling $194,666. While five clubs maintained the cash ledger and deposit summary sheets, they did not maintain supporting documentation, such as duplicate press-numbered receipts or sales records, for 37 cash receipts totaling $236,912. In addition, two clubs did not maintain any records for seven cash receipts totaling $89,165. Finally, while three student treasurers maintained adequate records for both years, we found the following discrepancies with the seven other student treasurers' records.

The Board and District officials should improve budgeting practices to ensure that budgets are realistic and take action to address the reasonableness of fund balance. We compared budgeted appropriations and estimated revenues with actual operating results for fiscal years 2014-15 through 2016-17 and found that, while revenue variances were generally reasonable (underestimated by less than 1 percent), appropriations were overestimated by more than $5.7 million, or an annual average of $1.9 million (6.75 percent). Because the Board overestimated appropriations, it appeared the District needed to use appropriated fund balance to close projected budget gaps. The Board annually appropriated an average of $1 million of fund balance as a financing source in the 2014-15 through 2016-17 budgets, which should have resulted in planned operating deficits equal to the amount appropriated and decreased fund balance. However, due to overestimated appropriations, the District realized annual operating surpluses, and fund balance increased by more than $2.1 million (52 percent). As of June 30, 2017, unrestricted fund balance totaled more than $3.3 million and was 11 percent of the 2017-18 budgeted appropriations, exceeding the statutory limit by more than $2.1 million, or 7 percentage points. Based on our analysis of the 2017-18 adopted budget and year-to-date operations, the District will likely experience an operating surplus and not use appropriated fund balance. Therefore, fund balance will continue to increase and exceed the limit.

We compared the District's budgeted revenues and appropriations with actual results of operations for the 2014-15 through 2016-17 fiscal years. While revenue estimates were realistic, the Board significantly overestimated appropriations for recurring expenditures. Although total appropriations were only overestimated by approximately $1.3 million or 2 percent during this time, we found this occurred because the District expended more than $4.5 million for non-recurring expenditures that were not included in the adopted budgets. These expenditures offset appropriations that were significantly overestimated in the adopted budgets. Without these expenditures, total appropriations in the adopted budgets would have been overestimated by approximately $5.8 million or 11 percent during this time. In addition, during the same three-year period, the District's budgets included appropriated fund balance totaling more than $1.3 million, which should have resulted in planned operating deficits in the same amount. However, because the District overestimated appropriations in its budgets, it realized an operating surplus of $68,070 in the 2014-15 fiscal year and $1,362,314 in the 2015-16 fiscal year despite appropriating fund balance to finance operations during those years of $700,000 and $370,000, respectively. In addition, although the District realized an operating deficit of $610,752 in 2016-17, which was $379,048 more than the planned deficit, this occurred because the District made a $3 million interfund transfer from a capital reserve to the capital projects fund to finance a project that was not included in the adopted budget. As a result, none of the appropriated fund balance was actually used during the 2014-15 through 2016-17 fiscal years. The District's budgetary practices contributed to an increasing level of unrestricted fund balance that was in excess of the statutory limit. The District's tax levy has remained the same over the past three fiscal years. However, had District officials been aware of the general fund's increasing unrestricted fund balance, the Board could have reduced the tax levy.

Three Board members attended a conference in Orlando, Florida, scheduled for January 16 to 18, 2017. Two Board members incurred a combined cost of $5,982 at a nearby resort for lodging expenditures. The District's travel procedure is to have the District administrator make travel arrangements for conferences. District officials told us that the administrator did not make the travel arrangements for this trip. Instead, the trip was booked through a travel agency. An invoice from the travel agency identified the two Board members, one with a resort stay from January 14 to 19 for $3,230 and the second with a resort stay from January 14 to 18 for $2,752. The invoice, attached to the credit card statement and the claims was approved by the Board. However, the invoice was not itemized and did not provide any other information regarding these charges. The other Board member, who attended the conference from January 15 to 18, used the conference-recommended hotel and paid total lodging expenses of $489 (a conference rate of $145 per night plus tax). We requested that the District obtain itemized receipts for the resort charges. The District administrator obtained two emails from the travel agency which identified the resort package cost of $3,230 and for $2,752 for the two Board members and their spouses. The resort website indicates that the package includes hotel accommodations and tickets to theme parks. Instructions for the District's expenditure form states that theme park charges are not covered travel expenditures. As of the end of fieldwork, District officials had not provided the itemized receipt for these charges.

Although claims were supported by adequate documentation and for appropriate purposes, they were not always audited and approved before payment. The Treasurer printed and signed checks before the claims auditor audited and approved the corresponding claims. For example, the claims auditor did not audit and approve claims for five disbursements totaling $14,020 before payment, as required by New York State Education Law. These five disbursements were for the payment of a hotel room for a conference, reconstruction of the cafeteria solarium and the purchase of sports uniforms and transportation supplies. This occurred because the Treasurer prepared and issued checks for these claims before the biweekly claims audit to meet payment deadlines. In addition, the claims auditor did not audit and approve claims for 20 disbursements totaling $16,105 before payment, as required. These 20 disbursements were for various purposes, such as payments for school supplies, services rendered by individuals and a hotel room for a conference.

During our audit period, the District paid 31 claims, totaling $16,091, for conference and travel related expenditures. The Board did not ensure that 28 of these claims, totaling $12,986, were properly authorized and/or adequately supported before payment. Conference and travel expenditures totaling $8,396 were not authorized in advance by the Board, as required by District policy. Nineteen conference and travel expenditure claims, totaling $5,080, did not contain proof that the member or employee attended the conference or training. Finally, the District reimbursed travelers a total of $244 for mileage and parking that were not supported by the claims documentation.

District officials have established adequate procedures to ensure that retiree health insurance contributions were accurately billed, collected, recorded and deposited. We reviewed contributions for 40 retirees, totaling $33,139, and noted minor deficiencies, which we discussed with District officials. We also found that contributions paid to the District were largely deposited timely and intact. We commend District officials for designing and implementing controls that properly safeguard the billing, collection, depositing and recording of retiree health insurance contributions.

District officials need to improve budgeting practices to more effectively manage fund balance. From 2014-15 through 2016-17, the District reported unrestricted fund balance within the 4 percent statutory limit. Although the Board appropriated an average $3.6 million of fund balance annually to finance operations, the District did not need or use it because appropriations were overestimated. Instead it realized annual operating surpluses and not a budgeted operating deficit. If the District had budgeted more realistically and not unnecessarily appropriated fund balance, unrestricted fund balance would have exceeded the statutory limit by $3.3 million, or 6.1 percentage points, as of June 30, 2017. When unused appropriated fund balance is added back, the District's recalculated unrestricted fund balance as a percentage of the subsequent year's budget ranged from 10.1 to 11.2 percent over the three-year period. Extra-classroom activity collections were remitted to the central treasurers with a deposit form documenting the activity's name, type of fundraiser, composition and total amount to be deposited. The deposit forms were signed by the applicable student treasurer, adviser and central treasurer. We reviewed 24 remittances totaling $52,736 made by eight clubs and found that all were supported by a properly authorized deposit form, accurately accounted for in the central treasurers' ledgers and deposited intact and timely. However, our review of the student treasurers' independent records for the same remittances found the records were not adequate for 16 remittances totaling $33,833. Although the student treasurers prepared deposit forms that were remitted to the central treasurers, they did not maintain adequate records for collections, such as receipts or other documentation supporting the sources, dates and amounts of collections.

The head mechanic did not maintain a fuel inventory. The tanks were not stick measured and the tank meters were not in proper working order. The computerized fuel system did not track fuel tank levels because the head mechanic did not know how to program the system to activate the tank level feature. Vehicle fuel inventory records are not maintained. Vehicle mileage records are not compared to fuel consumption. Storage tanks are not adequately secured or inspected. Fuel purchases are not compared to fuel usage records.

District officials need to improve budgeting practices to effectively manage the District's financial condition. The District generated annual operating surpluses averaging more than $1.4 million over the last three fiscal years. As a result, total fund balance increased 35 percent: from $12.4 million as of June 30, 2015 to $16.6 million as of June 30, 2017. While approximately $5.1 million of fund balance was restricted in reserve funds at the end of the 2016-17 fiscal year, $11.5 million was unrestricted. During the period, unrestricted fund balance exceeded the statutory limit by $3.6 million to $7.6 million, or 6.5 to 13 percentage points. The Board appropriated fund balance averaging $1.4 million in the adopted budgets for the three years examined. However, with each year resulting in an operating surplus, none of the appropriated fund balance was actually used. With unused appropriated fund balance added back, the District's recalculated unrestricted fund balance ranged from 12.5 to 19.8 percent of the subsequent year's budget.

District officials need to improve budgeting practices to more effectively manage the general fund balance. The District has accumulated unrestricted fund balance of more than $2.4 million as of June 30, 2017, or 11.7 percent of the 2017-18 budgeted appropriations and exceeded the statutory limit by about 7.7 percentage points. While District officials appropriated fund balance annually to finance operations, none of the appropriated fund balance was used for operations for the 2013-14 through 2015-16 school years. Although District officials appropriated fund balance each year to finance operations, the fund balance was not always used because the officials consistently overestimated appropriations. By including significant amounts of appropriated fund balance that was not needed to finance operations, the Board made it appear the District has less unrestricted fund balance than it actually had. In effect, it is a reservation of fund balance that is not provided for by statute and a circumvention of the statutory limit allowed by New York State Real Property Tax Law. When the amount of appropriated fund balance that was not used is added back, the unrestricted fund balance exceeded the 4 percent statutory limit by amounts ranging from 8.2 to 14.8 percentage points.

District officials did not ensure that employees, at least annually, receive cybersecurity awareness training. According to officials, they provided their employees with verbal and written reminders and specific directives regarding data security and computerized information. We also examined 5,551 enabled network user accounts (2,764 on one system and 2,787 on another system) to determine whether they are in accordance with industry best practices. We found 3,118 user accounts (56 percent) that had not been used in over six months. After we brought this to their attention, District officials said they disabled or deleted all of the 2,764 unnecessary user accounts from the one system. For the other system containing 2,787 user accounts, during our audit, District officials said they disabled or deleted 20 accounts and that most of the unused accounts belong to current and former students.

The Board members did not have a fund balance policy or include an estimate of fund balance when they submitted their budget to the Town. As of December 31, 2016, the District's unrestricted fund balance totaled more than $1.3 million, or about 83 percent of 2017 budgeted appropriations. In contrast, unrestricted fund balance at the end of 2014 was more than $878,000. The budget remained at about $1.6 million each year. We compared the District's budgeted revenues and appropriations to the actual results of operations for 2014 through 2016. Revenue estimates were reasonable and generally close to the actual revenues received. However, the Board overestimated appropriations each fiscal year. Overestimated appropriations totaled $535,816, or about 12 percent of actual expenditures for the three year period, an annual average of $178,605. District officials did not have a multiyear financial plan to address the use of fund balance and reserves to fund operations. The District did not develop a policy or written procedures for the maintenance of leave accrual records or formally authorize the leave accrual benefits to be earned and carried over for each employee. As a result, District officials paid $15,747 for 635 hours of leave benefits that were not authorized by the Board.

Cash controls over fundraising activities need to be improved to ensure that amounts collected are properly recorded and deposited. During our audit period, Department officials held 26 fundraising events. While two members counted cash collected at fundraisers, they did not record and certify the amounts collected on cash reporting forms before submitting money to the Treasurer. Further, Department officials did not use tickets or any other form of receipt to track sales at fundraisers. Although the Treasurer periodically reported revenues from fundraisers at monthly meetings, Department officials did not compare amounts reported to the Treasurer's deposits. The membership also did not approve all disbursements as required by the bylaws. Finally, Department officials did not provide adequate oversight of the Treasurer's duties.

The Treasurer did not file accurate annual financial reports with OSC. We identified improper accounting practices and related recording and reporting inaccuracies reflected in the accounting records and monthly reports to the Board, and in the AUD. The Treasurer inaccurately recorded capital reserves and operating fund expenditures. In addition, the Board inappropriately authorized the use of capital reserve funds for non-capital expenditures. The Board has not developed and adopted multi-year financial and capital plans or written policies and procedures to govern the level of fund balance and capital reserves to be maintained. The Board did not conduct or contract for an annual audit of the Treasurer's and Justice's books and records. The Village's procurement policy did not require solicitation of quotations or proposals for procuring professional services. We found that the Village did not seek competition for 30 payments totaling approximately $276,000, made to seven (64 percent) of the 11 vendors tested. The Village also did not have or provide a written contract to support eight payments made to three of the 11 vendors.

We reviewed 10 contracts with budgets totaling approximately $16 million during the audit period, nine of which were required to submit performance reports. All nine agencies submitted the reports, and eight met all requirements. However, the remaining agency − responsible for providing training, education, technical assistance and applied research services to individuals with disabilities and their families − did not submit verification backup. This agency received approximately $1.4 million in 2016 and $347,718 in the first quarter of 2017. Because Department officials did not obtain and review the supporting documentation, they could not be assured that reported numbers were legitimate or the agency performed as contracted.

During our audit period, the Committee and the Board approved one local business loan for $5,040, which was less than 1 percent of available loan funds. Instead of using the UDAG repayments as outlined in the Bolton Community Development Program (BCDP) manual, the Board authorized loaning approximately $4.5 million from the community development (CD) fund for six Town capital projects. Although the Board approved all six loans by resolution, these loans were not consistent with the adopted BCDP manual. The six loans to Town funds for capital projects ranged from $150,000 to $2 million and were authorized at an annual interest rate of 1.385 percent for terms ranging from 8 to 29 years. Further, while the loan to the local business was governed by the BCDP manual, the Board did not develop any formal plans or policies, as recommended by the United States Department of Housing and Urban Development (HUD), to guide officials in approving the use of the repayments for Town capital projects. The CD fund's loan activity is not adequately recorded in the accounting records and reported to Town officials and the public. We found that all six loans made from the CD fund to other Town funds during our audit period totaling $4.5 million were recorded in the accounting records as a one-time transfer of funds from the CD fund. These loans to Town fund balances are tracked off the books in separate amortization schedules and not included in the accounting records as a receivable in the CD fund and a liability in the borrowing fund.

Our review disclosed the following issues which should be reviewed by City officials for appropriate action. The Yonkers Public School District's budget request is $604.8 million for appropriations. The District has appropriated all of the $24.1 million projected unassigned fund balance at the end of the 2017-18 year; however, this appropriation must be approved by the Board of Education and City Council before it can be used. If the fund balance is not approved or available at year end, the District could have a $24.1 million budget gap. In addition, the District's budget request does not include an appropriation for textbooks, and underestimates the appropriations for personal services and unemployment reimbursements. The City also continues to rely on nonrecurring revenue, such as specialized State aid and fund balance, to balance its budget. Revenue estimates for metered water sales, sales tax and income tax surcharge may not be achievable. The City will incur additional debt and interest costs by bonding the cost of tax certiorari claims instead of financing them through the operating budget. The appropriations for overtime (firefighting and police) and workers' compensation insurance could be underestimated. Finally, the City's proposed budget does not include a contingency appropriation.

The Board did not adopt a financial plan for the maintenance of a reasonable level of fund balance or for the funding and use of reserves. As of December 31, 2017, unrestricted fund balance was 9 percent of 2018 budgeted appropriations. In addition, the District maintained two capital reserves: an equipment reserve and a building reserve. Both capital reserves have been in place for over 15 years. From January 1, 2016 to December 31, 2017, the reserve balances increased by $470,000. The District funded the reserves from budgeted appropriations and added more funds near fiscal year end from the annual operating surplus. The District's 2018 adopted budget included funding of $150,000 for the equipment reserve and $20,000 for the building reserve. In total, these amounts represent 27 percent of 2018 budgeted appropriations. The District's real property tax levy has also increased by $35,500 from 2016 to 2018 (6 percent). The District also realized an operating surplus in 2016 ($112,755) and 2017 ($61,500). Although the capital reserves make up a significant amount of the total fund balance, the Board has not adopted a multiyear financial plan to address the District's operational and capital needs.

The Board did not adopt individual budgets and the Supervisor did not maintain separate accounting records for each water district. Instead, the Board adopted one operating budget that combined all water operations. In addition, the Board adopted two sewer district budgets, even though it established four sewer districts, and the Supervisor maintained one set of accounting records for all sewer operations. As a result, the Board and Town officials cannot monitor each district's financial condition to determine if each district is self-sufficient. The Supervisor did not account for revenues and expenditures associated with improvement areas in the general fund as required by New York State Town Law. Instead, the financial activity associated with improvements is incorrectly combined with the Town's special districts and the intermunicipal activity. Finally, the Supervisor did not separately account for the revenues and expenditures from the intermunicipal agreements with neighboring towns, to ensure that revenues cover operating costs.