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.

District officials did not seek competition for the services of 16 of 20 professional service providers who were paid $1.42 million. District officials sought competition for three service providers paid $144,297. The remaining service provider paid $380,169 was procured through the New York State Education Department. We also found that the District did not have written agreements signed by the Board or Board resolutions for eight professional providers who were paid a total of $739,464 during the audit period. Officials also did not obtain quotes for goods and services for 19 purchases totaling $70,634, as required by the District's purchasing policy. Finally, officials did not ensure that purchases of goods and services totaling $22,899 were made with prior approval, resulting in confirming purchase orders.

We found that tax collections were recorded properly and deposited intact but were not always remitted to the appropriate parties in a timely manner. During the 2017 and 2018 tax collection cycles, the Clerk did not make weekly payments to the Supervisor or monthly payments to the County Treasurer as required. For example, in 2017 the Clerk did not make payments to the Supervisor in the first, third or fourth weeks of January even though there were tax collections during these weeks. In 2018, the Clerk made weekly payments to the Supervisor, but these payments did not include interest and penalties collected as required. Instead, the Clerk remitted interest and penalties to the Supervisor with one single payment at the end of the collection cycle. In a similar fashion, the Clerk did not make monthly payments to the County Treasurer as required. Instead, the Clerk remitted collections due to the County with two checks: the first dated in March and the second dated in April. In addition, cash receipts totaling $238,321 were deposited between one and 15 days past the required date of deposit. Finally, the Board did not perform an annual audit of the Clerk's records, as required.

Town officials did not have a comprehensive hardware inventory and can more effectively and efficiently manage software. Town officials did not adopt a comprehensive online banking policy or adequately segregate online banking duties. We also found Town officials did not regularly generate or review audit trails or exception and change reports and did not develop a data classification process. In addition, the Board did not adopt a comprehensive disaster recovery plan. As a result, the Town has an increased risk that its IT data and components may be lost or misused and that the Town will be unable to resume critical operations if a system failure occurs.

The Board did not effectively manage fund balance. From 2014 through 2016, budgeted appropriations exceeded expenditures, resulting in the accumulation of excess fund balance in the general fund. Budgeted general fund appropriations exceeded expenditures by an annual average of 15 percent for the last three years. As a result, as of December 31, 2016, the fund balance in the general fund had increased 75 percent, to over $482,000, from approximately $275,000 in 2014. The Supervisor told us he recognized the fund balance was high but did not realize how much it had increased. He told us the Board plans to use about $200,000 of fund balance for Town Hall repairs and renovations in 2018. However, this will not result in a significant reduction in fund balance levels. We project the Town will end the 2017 fiscal year with another operating surplus; this time totaling almost $100,000, which will further increase fund balance. Moreover, the Board has not developed a fund balance policy or comprehensive multiyear financial and capital plans specifying the Town's objectives and goals for using the accumulated funds.

We reviewed all 269 claims paid during the audit period totaling $216,953 ($148,192 during 2016 and $68,761 from January 1 through June 30, 2017) to determine whether the claims were adequately supported, properly authorized and approved before payment and for valid purposes. Except for minor exceptions which we discussed with District officials, all of the claims were supported by sufficient documentation and for appropriate purposes. However, the Board did not approve 80 claims totaling $101,707. Additionally, the Board did not subsequently approve eight claims totaling $3,459 that were properly paid in advance of audit.

The Board has not established written policies and procedures for cash receipts, cash disbursements and fundraising activities or adopted a code of ethics to guide officers and members regarding expected standards of conduct, as required by General Municipal Law. Additionally, the bylaws provide limited guidance on the Board's responsibilities and the Treasurer's duties. The Board did not ensure fundraising money was always reconciled and deposited intact. Company officials did not keep any supporting documentation for 16 disbursements totaling $2,415 that were valid expenses. Additionally, two cash payments totaling $4,500 were paid to a vendor from fundraising proceeds and a change fund before deposit. While these payments were legitimate expenses, the practice of paying vendors in cash circumvents good business practices by weakening accountability over both revenues and expenditures.

The District did not present a District-wide capital improvement project (Project) to the public in a transparent manner. The scope was not set forth in a detailed project plan and District officials could not provide documentation to support the total estimated cost approved by the voters. Finally, the Board did not receive adequate financial reports to properly oversee and monitor the Project. Because the Project's actual cost ended up being below the maximum amount authorized by the voters, District officials had an opportunity to spend approximately $8.8 million less when the bids came in with estimated costs significantly less than anticipated. However, District officials decided to complete additional work and expand the project scope without informing the voters.

School officials did not maintain accurate, complete and supported leave accrual and use records. We reviewed leave records for all 13 full-time administrative and maintenance employees, including three employees who left School employment during our audit period, and five instructional employees. We found discrepancies with nearly all these leave records. The sign-in and sign-out sheets did not agree with the leave request forms, leave time records or related leave reports. As a result, we question the accuracy, completeness and reliability of these records. We compared the sign-in sheets to a list of active employees and identified 235 days when employees appeared to be absent because they did not sign in. We compared these absences to the leave request forms provided by the Business Manager and found 22 instances when an employee did not sign in at the front desk but had properly submitted a leave request form. However, the Business Manager did not record these absences in the employee leave records. As a result, leave records for these employees and the recorded leave balances were inaccurate.

Authority officials had not established adequate procedures over solid waste and recycling charges to ensure customers were accurately charged and the corresponding amounts collected were deposited in a timely manner and intact. Although the Board adopted a cash handling procedures policy (policy) to provide guidance for employees involved in the billing and collection of solid waste and recycling charges, the policy was inadequate because it was not comprehensive and the procedures included were not always adhered to. In addition, 50 solid waste and recycling rates that were charged to customers during our audit period were negotiated by the Director without an independent review and Board approval. Consequently, customers were charged varying rates for disposal of the same type of waste. We also found that one of the Board-adopted rates was not accurately setup in the system. As a result, the Authority lost revenues of $17,413. Further, Authority officials did not disburse host community fees to the Towns of Constable and Westville in accordance with the host community agreement. Based on the agreement, officials underpaid $19,585 in host community fees to both these towns for waste received during the 2014-15 and 2015-16 fiscal years, a combined underpayment total of $39,170. In addition, because the agreement has been in place since March 2009, if similar miscalculations were performed in previous fiscal years these Towns are likely entitled to additional host community fees.