We reviewed 51 cash disbursements totaling $180,851 and found that they were generally supported by adequate documentation and appeared to be for proper School purposes. However, the Board did not ensure that the policies and procedures in the charter and bylaws were followed and at times allowed the Board Chair to control all aspects of the disbursement and purchasing processes. We also reviewed 48 purchases totaling $1.9 million and found that School officials did not seek competition for 39 purchases totaling $1.2 million. As a result, there is an increased risk that errors or irregularities could occur and that taxpayer dollars may not be expended in the most efficient manner.

As of July 31, 2017, the District reported four general fund reserve funds (health insurance, tax certiorari, employee benefit accrued liability and unemployment) with balances totaling approximately $10 million. The District was authorized to establish the health insurance reserve fund pursuant to a special act of the State Legislature and the Board has adopted a written policy for the health insurance reserve that addresses its purpose, optimal funding level, the conditions under which the reserve will be used and required periodic analysis. However, it has not adopted any policies for the other reserve funds. We analyzed the balances in each of these reserves and found the balances to be reasonable with the exception of the tax certiorari reserve. As of July 31, 2017 the tax certiorari reserve was overfunded by $4,547,927.

The Superintendent of Public Works and the Sheriff did not always procure goods and services in accordance with GML. We reviewed 35 purchase and public works contracts totaling nearly $6 million that the County entered into during our audit period that exceeded the competitive bidding thresholds to determine whether they were procured in accordance with GML. We found six purchase and public works contracts totaling $272,115 were not competitively bid as required. In addition, Department heads and/or their designee did not always ensure copies of purchase and public works contracts were on file or compared these contracts to the vendor invoices to ensure that the purchases are made in accordance with either the County's bid award documentation or when using contracts bid by other governments. For example, of the 35 purchase and public works contracts reviewed, we found three purchases from different vendors who overcharged the County a total of $11,343. County officials also did not always obtain quotations and bids in accordance with the County's policy. Finally, County officials did not always solicit competition for professional services. We reviewed the County's procurement of services from 10 professional service providers who were each paid in excess of $5,000 for a total of $1.5 million to determine whether their services were procured using RFPs. The County did not use RFPs to procure the services provided from nine of the professional service providers who were paid $1.05 million during our audit period, including $651,452 paid for insurance coverage in 2017 which was after the County's purchasing policy was revised in 2016.

The Board has not established policies and procedures to ensure that cash receipts are properly and adequately safeguarded. As a result, there is a lack of segregation of duties and supervisory review for the Clerk/Tax Collector's cash receipts. The Clerk/Tax Collector did not routinely issue duplicate receipts for Clerk's fees or record daily receipts in the check register. She also did not make deposits totaling $11,066 in a timely manner or in the same form (i.e., cash or check) as received; we found discrepancies totaling $11,680 between the cash receipts form shown in the Clerk's records and the bank deposit slips for 2016. Also, the Clerk/Tax Collector did not deposit 100 percent of tax collections or remit tax collections totaling $2,794,760 to the Supervisor in a timely manner. In addition, the Supervisor's monthly reports were inaccurate and the Code Enforcement Officer (CEO) did not ensure all building permit fees were properly calculated and supported or issue receipts for all building permit collections. Finally, the Board did not perform annual audits of the records and reports of officers and employees. Had the Board performed annual audits, it may have identified the inaccuracies in the Clerk/Tax Collector's records and the Supervisor's monthly reports that increase the risk of errors, fraud or misuse of assets occurring and remaining undetected.

The Board should improve its oversight of Town operations. The Town accumulated significant fund balance in the general and highway town-wide funds without clear plans to use this money. Town officials have not developed a fund balance policy, established any reserve funds or developed formal long-term capital or financial plans. As a result, the Board may have unnecessarily raised real property taxes. Furthermore, the Board and Supervisor did not establish and implement necessary controls over the disbursement process to safeguard Town money.

The Department established effective procedures to authorize and audit vendor claims. To ensure vendor compliance, the County adopted a corporate compliance program which included standards of conduct and a dedicated 24-hour hotline to report violations. All contracts contained terms for corporate compliance, holding providers to all County, federal, State and local laws, rules and regulations. Department procedures also require several levels of review and approval before a claim is paid. If claim documentation is inadequate, it is sent back for additional information and the entire approval process restarts. The Department's procedures will delay or stop payments of claims when the vendor provides inadequate documentation. We commend County officials for establishing an effective claims processing system and procedures.

The District employs a Head Custodian who oversees 16 custodial staff. The Head Custodian told us that he reviews the hours worked on time records. However, he did not sign-off on this review. In addition, he does not preapprove in writing overtime hours to be worked for custodial staff. While the overtime payments included in our gross pay review appeared to be reasonable, without these controls, there is an increased risk that the District could be paying for more hours than were actually worked or incurring higher overtime costs than necessary.

The Board did not provide adequate oversight for financial activities. The Board did not include in its bylaws, or adopt, policies and procedures for cash receipts and fundraising activities. Additionally, the Board did not establish a code of ethics or annually audit the Treasurer's records. Therefore, we verified that all deposits were recorded in the monthly Treasurer's reports. We also reviewed cash receipts relating to the Company's two fundraising events during 2016. The Company raised almost $60,000 from a tractor/truck pull and a raffle, where food and beverages were also sold. The Treasurer did not maintain detailed financial records for the fundraising events. Although a portion of the raffle money was misclassified as tractor/truck pull money, it appears that the total revenues were reasonable and that all fundraising revenues reported to the membership were deposited.

The Board and Town officials did not act in full compliance with relevant State statutes that govern the issuance of municipal debt. As a result they did not properly plan for the financing of capital projects. Had they better managed the finances of these projects, the Town could have saved approximately $10,200 in issuance costs related to the bonds and approximately $19,200 in annual interest on debt. Also, the Board did not adopt a bond resolution before issuing a BAN and the Town did not restrict unexpended BAN proceeds to repay the related outstanding debt. Finally, the cash balance in the sewer construction capital projects fund as of December 31, 2016 was approximately $130,000. Town officials were unsure of the source of some of the cash balance. A capital projects fund should not be used to account for excess cash.  

The Board has maintained general fund unrestricted fund balance close to the 4 percent statutory limit. The District's original budget variances were reasonable in total. However, the District made certain transfers to the capital projects fund each year that were not included in the original adopted budgets. For example, during 2015-16, the District transferred $1,311,000 to the capital projects fund. Even with these unplanned transfers, the District did not need to use any of the fund balance it appropriated as a financing source in its budgets from 2014-15 through 2016-17 because actual revenues were greater than expected and other budgeted appropriation accounts were overestimated. In addition, the District retained an annual average of $983,978 in the debt service fund over the past four years without using this money for debt payments. Finally, the Board has not adopted comprehensive multiyear financial or capital plans.

The Director improperly recorded administrative fee financial activity in the recovery fund (Fund). As of January 31, 2017, approximately $44,000 was improperly segregated during our audit period, and more than $13,000 was not used in a manner that furthers the Authority's purpose or was not properly approved for payment. Instead, these funds were used for lavish holiday parties for Board members, staff and their guests and for travel stipends for Board members. The administrative fee revenues, which make up the entire Fund's balance, should have been deposited in the general fund because they were generated by using the Authority's ability to issue debt and were not required to be segregated. The Board did not establish adequate controls to properly monitor the use of credit cards. On April 12, 1995, the Board authorized the Director's and Assistant Director's (Assistant) application and use of a credit card. While this did not authorize officials to obtain and use charge cards (which are different than credit cards), they in fact did obtain charge cards instead of credit cards. Charge cards generally do not have a pre-set spending limit and require the entire balance to be paid off each month. A card with no spending limit is an unnecessary risk. We reviewed all 123 charge card transactions from July 2015 through January 2017 and determined that 24 purchases totaling $5,247, or nearly 20 percent, lacked sufficient documentation and/or were for a purpose inconsistent with the Authority's corporate public purpose. We also identified exceptions with 35 charge card transactions totaling approximately $9,456 related to expenses for travel, meals, retirement parties and conferences.

The former Treasurers and former President who assumed the duties of Treasurer (Treasurers) did not maintain adequate records to account for all Company money received and disbursed. The Company's accounting records consisted of only three incomplete manual check registers for the Company's three checking accounts (general, bell jar and bingo). Also, the Treasurers did not maintain running cash balances in the manual check registers. Consequently, the Treasurers were unable to prepare monthly bank reconciliations. The Company also maintained a truck savings account. However, the Treasurers did not maintain a bank book or ledger to record deposits and transfers made to this account, or for the $1,160 monthly ladder truck debt payment automatically withdrawn from the account by the Company's bank. The Company also received foreign fire insurance proceeds of $3,946 in 2014 and $3,831 in 2015. These proceeds are to be used for the benefit of the members of the Company. However, the former Treasurers did not maintain any accounting of how this money was used and did not file the related required annual report with OSC. Due to the inadequate records, the Treasurer was unable to provide the Board with written quarterly and annual financial reports as required by the Company's bylaws. As a result, the Board could not monitor the financial activity and make sound financial decisions on the financial operations for the Company.

The student treasurers and faculty advisors of five extra-classroom activity (ECA) clubs did not maintain adequate supporting documentation for 28 remittances totaling $36,079. In addition, District officials are unable to ensure that students are adequately accounting for and remitting collections to the central treasurer in a timely manner. We reviewed collections totaling $69,110 for 10 ECA clubs. For two clubs, eight collections for prom tickets totaling $360 and three collections for yearbook sales totaling $165 were not remitted to the central treasurer. The student treasurers of 10 ECA clubs maintained adequate documentation for 78 disbursements totaling $95,765, which were for appropriate purposes and accurately accounted. Finally, the central treasurer properly accounted for 54 collections totaling $69,110 and 78 disbursements totaling $95,765.

District officials did not always obtain quotes when making purchases. We reviewed 30 purchases totaling $160,066 and found that 10 purchases totaling $11,714 did not have the required quotes. For example, the District paid $3,600 for air conditioning installation and maintenance services without obtaining the required quotes. In addition, purchases were not always requisitioned or authorized. Six of the 30 purchases reviewed, totaling $7,098, did not have requisition forms. For example, the District paid a vendor $4,274 for air conditioning duct cleaning; however, the District was unable to provide a completed requisition form. Although the purchase order contained the purchasing agent's signature of approval to purchase the items, there was no signature indicating that the Superintendent reviewed or approved the purchase. This occurred because District officials and employees involved in the purchasing process did not always enforce the District's policies and procedures.

The Village complied with competitive bidding statutes but did not obtain quotes. We reviewed four payments totaling approximately $257,600 that were subject to competitive bidding requirements and found that all payments complied with competitive bidding statutes and were for appropriate Village purposes. Quotes should have been obtained for the remaining 23 claims totaling approximately $125,600. Although the claims were for appropriate Village purposes, only five claims included evidence that Village officials obtained quotes from the vendors providing the goods and/or services. In addition, officials did not obtain quotes or the purchasers did not document their attempts for the remaining 18 claims totaling approximately $82,400. The adopted purchasing policy has not been recently updated and contains inconsistent quote requirements for purchases that do not require competitive bidding. Finally, the Board does not always audit claims prior to payment. From June 1, 2015 through May 31, 2017, we identified 66 check run dates when payments were made. However, the Village held Board meetings on only 33 of these dates. Any payments made on dates other than when regularly scheduled Board meetings were held were generally paid without Board audit.

The District's budgets included appropriated fund balance that was not used as planned to fund operations. The budgets overestimated appropriations by approximately $2.9 million or 6 percent from 2013-14 through 2016-17. As a result, the unrestricted fund balance increased to almost $2.26 million or 17 percent of the ensuing year's budgeted appropriations, exceeding the statutory limit by 13 percentage points. In addition, the tax certiorari and unemployment insurance reserves are overfunded.

The purpose of our audit was to determine whether FFI tax money was spent in accordance with special act legislation, city charters or other applicable laws, for the period January 1, 2014 through October 5, 2016.

District officials overestimated expenditures by a total of more than $15 million (6 percent) for fiscal years 2013-14 through 2015-16. Additionally, the District's unrestricted fund balance was within the year-end statutory limit for unrestricted fund balance because District officials appropriated a total of $11.4 million (annual average of $3.8 million) of fund balance at the end of 2013-14 through 2015-16. However, this appropriated fund balance was not always needed to finance operations because the District had a total of $2.5 million in operating surpluses in two of the three subsequent fiscal years. When adding back unused appropriated fund balance, the District's recalculated unrestricted fund balance was between 7.9 and 8.7 percent of the ensuing years' appropriations, which exceeded the statutory limit in these two years. The District also maintained five reserve funds with balances totaling $23.3 million as of June 30, 2016; four were overfunded. During fiscal years 2013-14 through 2015-16, the District appropriated $4.2 million from reserve funds to offset expenditures in the budget. However, the District returned $1.8 million (43 percent) to the reserves although it had additional expenditures of $1.2 million which could have been charged to reserves. Instead, it funded these expenditures through the general fund. Finally, reserves are funded at the end of each fiscal year from excess fund balance instead of being included in the annual budget presented to District residents. District officials did not ensure that the extra-classroom activity (ECA) funds cash receipts process was administered in accordance with the District's and Commissioner of Education's guidelines. Specifically, the central treasurer did not issue pre-numbered duplicate receipts for all funds placed in her custody, and did not always deposit funds in a timely manner and sign school deposit forms. Additionally, the Board did not appoint a faculty auditor to reconcile the central treasurer's records with the ECA clubs' records. The ECA clubs also did not issue pre-numbered receipts or maintain supporting itemized records for cash collected.

The Council has not adopted structurally balanced budgets. Instead, it has relied on debt to meet recurring operating expenditures. Although fund balance has improved during the audit period for the general, recreation and water funds, these funds still need to improve their financial condition. At the end of the 2016 fiscal year, the general fund had a positive fund balance of $995,299. This was largely because the general fund received $3.5 million from a one-time sale of a waterfront property. The water and recreation funds had cumulative deficits totaling $585,656 at the end of the 2016 fiscal year. Additionally, City officials use interfund transfers to meet normal operating expenditures. Further, interfund loans have not been authorized or paid back by the end of the fiscal year as required by General Municipal Law (GML). Finally, the City has not adopted a multiyear financial plan to address its deficits and improve its financial condition. The Council also has not established a claims auditing policy or designated an individual who is not involved in the City's purchasing or check signing process to audit all claims against the City prior to payment. We tested 20 claims totaling $1.3 million and found that 15 claims totaling $223,015 were not always adequately supported and did not adhere to GML bidding or the City's procurement policy quotation requirements. Finally, the City's payroll clerk performed incompatible payroll duties without any oversight. In addition, the Council has not designated an individual to certify payroll. We reviewed payments to 20 employees paid $1.1 million during the audit period to determine whether they were accurate. Additionally, we reviewed Council resolutions for 20 employees paid $433,258 during the audit period to determine whether they were bona-fide employees hired by the Council. Although we found no exceptions, there is an increased risk that errors and unauthorized payments with the processing of payroll could occur and remain undetected because payroll duties are not properly segregated.

The Board's procurement policy is not comprehensive. Although the Board's procurement policy identifies certain responsibilities and functions of School officials involved with the procurement process, it does not identify who is responsible to obtain, review and award procurement selection from competitive bids, requests for proposals (RFPs) or written/verbal quotes. Further, the policy requires a “reasonable effort” to obtain three quotes for the purchase of goods and services that are expected to exceed $10,000 annually. This language can be interpreted in many ways, since reasonable effort is subjective. Moreover, the policy does not define what type of quotes (written or verbal) will be obtained for purchases exceeding $10,000 annually, and does not identify the use of competitive bidding or RFPs. School officials did not always competitively procure goods and services. We reviewed payments made to 26 vendors totaling $306,935 to determine whether School officials used a competitive process, such as competitive bids, RFPs or written/verbal quotes to acquire goods and services. The School made payments to 12 vendors totaling $272,884 that either exceeded the policy's $10,000 threshold, or were payments in accordance with a contract that exceeded the $10,000 threshold and, therefore, required a reasonable effort to obtain three quotes. However, the School did not obtain required quotes from six vendors paid $112,611 (or 41 percent) for goods and services.