Not all assets were not tagged as District property. New assets were not added to the inventory list. When assets are not properly tagged or added to inventory records timely, they are more susceptible to loss or theft and District officials do not have assurance that all property can be accounted for. In addition, the contractor-generated asset list did not correspond to District's Information Technology (IT) Department's asset list.

Because monthly bank reconciliations are incorrect and not reviewed for accuracy and monthly accountability analyses are not prepared, errors and irregularities occurred and remained undetected for several months or years. Specifically, unidentified funds of $1,963 have remained on deposit, disbursements did not match liabilities each month and interest earned has not been properly transferred to the Village. In addition, the bail bank account had a balance of $1,590 as of May 31, 2017, and Court officials could not determine the source of the funds. Finally, the Court did not properly record and deposit $1,400 in funds received during the audit period.

The Board and Village officials did not adequately segregate the code enforcement officer's (CEO) duties related to cash receipts, which resulted in the CEO performing incompatible duties, including collecting cash, recording receipts and preparing bank deposits. The Building Department did not always issue pre-numbered receipts. Money was not always remitted in a timely manner. Financial reports were not prepared and submitted to the Board.

The Council did not provide adequate oversight over the City's hydroelectric power operations. The Council did not adopt policies and procedures which adequately govern certain procurement practices, including requests for qualifications or proposals or energy performance contracts (EPCs). The Council also did not adopt formal long-term financial plans or develop adequate capital plans related to their hydroelectric power facilities. City officials and IT staff did not ensure compliance with the Council-adopted acceptable use policies. Computers are not regularly monitored or reviewed to ensure that all software installed served an appropriate business need and was legally obtained. Furthermore, administrative rights are granted on the majority of the City's computers. As a result, five of the 25 computers reviewed had nonbusiness appropriate software applications installed that included games, a browser rewards application, adware and multiple pre-installed entertainment applications. This may be exposing the City's computers to unnecessary risk, such as hacking or other malicious events.

The County overpaid municipalities $1.4 million in sales tax distributions from 2010 to 2016. In addition, the Clerk did not properly reconcile a County bank account for the Department of Motor Vehicles (DMV) resulting in an unaccounted for balance of $162,875. The Treasurer also did not properly reconcile the general fund bank account resulting in an unaccounted for balance $36,091. The adjusted bank balance in the sewer fund accounts had approximately $500 more than the general ledger cash balance.

The Board needs to improve its oversight of the claims process to make sure that transactions are accurate, properly supported and for legitimate purposes. During the audit period, the entire Board did not audit claims. Instead, the Director reviewed and initialed the claims then forwarded them to a Board-designated Trustee who audited all claims. The entire Board subsequently reviewed and approved the abstracts, which included a list and description of claims, the amounts claimed, the check date and number and vendor name. Any Trustee (other than the Trustee auditing the claims) could request to review individual claims, if there were questions about unfamiliar vendors or unusual claim amounts on the abstracts. After the Board approved the abstracts, the Treasurer signed the checks and paid the claims.

The Clerk collected approximately $4.9 million in real property taxes during the audit period, which were properly remitted to Fire District officials, the Supervisor and County Treasurer. However, our review of these collections disclosed that real property tax receipts totaling $1.9 million were not deposited within 24 hours of receiving these funds, with the longest timeframe between receipt and deposit of 21 days. We compared the date Clerk fees were received with the date they were deposited and found that 181 receipts totaling $16,861 were deposited more than three business days after exceeding the $250 threshold, with at least one deposit made 16 days late. We also identified $781 in fees, which the Clerk recorded and did not deposit. Finally, while the Board conducted an annual audit of Clerk records as required, its review was inadequate.

District officials accurately paid and provided benefits to employees in accordance with Board-approved contracts. We used a combination of manual and computer-assisted auditing techniques to review payroll records for all employees paid during the audit period and identify high-risk transactions. District officials established effective payroll-related policies and procedures by segregating duties and providing adequate oversight. We commend District officials for effectively designing and implementing policies and procedures that ensure the accuracy of compensation paid and benefits provided to employees.

The Board could improve its management of the Town's financial condition. Conservative budgeting practices have contributed to substantial operating surpluses. Therefore, the Town has accumulated excessive fund balances in both the townwide and town-outside-village general and highway funds. Although the Board appropriated portions of the accumulated fund balance as a financing source in the following year's budget, because of operating surpluses and accounting errors, the Town has not used appropriated fund balance as an actual financing source. The bookkeeper, as Budget Officer, inappropriately allocated sales tax revenue, resulting in taxpayer inequities and inaccurate accounting records which severely diminished the Board's ability to provide appropriate fiscal oversight. In addition, the Board has not adopted a multiyear financial plan to aid in the appropriate use and reduction of the Town's excess fund balance. Further, the Board has not performed or secured an adequate annual audit of the books and records of Town officials and employees who received or disbursed money. The Clerk's receipts and tax collections were not adequately safeguarded, increasing the risk of fraud and theft. The Clerk did not maintain a cash book to chronologically record all individual receipts on a daily basis and deposit all cash receipts intact or in a timely manner. Additionally, the Clerk did not remit taxes timely. Furthermore, the Clerk did not conduct a monthly accountability of cash with the amount in the bank and related liabilities. The Board was unaware of these inappropriate practices because they did not conduct an annual audit of the Clerk's records.

Student treasurers did not issue duplicate press-numbered receipts or prepare adequate accountabilities for all collections. When student treasurers do not maintain and submit adequate documentation to support collections, District officials cannot ensure that students are adequately accounting for all collections and remitting them to the central treasurer in a timely manner. The central treasurer made disbursements without adequate supporting documentation and proper documentation of approval. When payments are made without adequate supporting documentation, District officials cannot ensure that the disbursements are made for appropriate purposes. Finally, student treasurers did not maintain independent ledgers documenting collections and disbursements.

The Council did not adopt policies and City officials did not implement effective procedures for granting, revoking, modifying and monitoring access rights to the City's network and financial system. The Council also has not adopted adequate information technology (IT) security policies and City officials do not have formal procedures to address disaster recovery, disposal of electronic devices, data back up and password security management. The Council did not ensure cybersecurity awareness training was provided to personnel who use City IT resources.

The Board was not aware that the District's procurement policy did not specify documentation requirements and the number of quotes required. As a result, District employees did not consistently use competitive methods to procure goods and services and did not monitor credit purchases. Also, credit purchases are not properly authorized, controlled and monitored. We also found that claims totaling $728,341 were paid without sufficient documentation. Finally, the District overpaid $5,844 for fuel.

The Board has not established adequate policies and procedures governing separation payments. The calculations for separation payments made to two employees during our audit period were incorrect, resulting in inappropriate payments totaling $1,271 for additional leave accruals that were not earned. The Town also paid $17,500 to a retiring employee to cover the subsequent year's health insurance premiums, with no documented Board approval. Additionally, separation payments totaling $50,128 were paid from an “Employee Benefit Reserve” in 2016, which was not appropriately established. Furthermore, payments for health insurance premiums are not authorized expenditures to be paid from such a reserve. The Board also did not establish policies and procedures governing the financial operations of the water and sewer districts; did not enter into inter-municipal agreements with the Village of Waterloo (Village) for water and sewer services provided to the Town; and did not require regular and adequate reports from the Village to monitor the financial operations of the water and sewer districts. Town officials also did not prepare formal water reconciliations to determine unaccounted-for water, which totaled 26.8 million gallons (30 percent) from January 1, 2015 through June 30, 2016, which is three times the federal goal for acceptable water loss. From 2013 through 2016, three water districts and both sewer districts experienced net operating deficits, ranging from a total of $11,742 to $82,676. Two districts incurred a continually growing deficit fund balance over the four-year period. The Board hired a consulting firm to analyze unaccounted-for water and was provided a report in 2015 with numerous recommendations to improve operations, most of which have not been addressed.

We found that the records maintained by the County Clerk and Surrogate's Court were up-to-date and complete, and we noted no material discrepancies. We also found that the Commissioner established adequate procedures, maintained appropriate records and properly reported court and trust funds and abandoned property to the State Comptroller as prescribed by statute.

Board members have not provided adequate financial oversight, which may be caused by their lack of training and understanding of their fiscal responsibilities. The Board did not audit District claims. Even though the financial duties are concentrated with the Treasurer, the Board did not receive or review bank statements or cancelled check images, review bank reconciliations or perform an annual audit of the Treasurer's records to ensure the accuracy of the monthly financial reports. The Board also did not ensure that the Treasurer prepared and filed the District's annual report for the 2012 through 2016 years. In addition, instead of paying a mileage allowance or reimburse actual expenses to the Department's chiefs for the use of their personal vehicles when responding to fire calls, the Board inappropriately allowed each chief to use 25 gallons of fuel every month (300 gallons annually). Finally, although District officials stated they had two reserve funds totaling $174,522 as of January 1, 2017, the Board did not establish the capital and repair reserves in compliance with General Municipal Law.

The Town did not follow the contract provisions when it billed the New York State Department of Parks, Recreation and Historic Preservation (Parks) for operation/maintenance and debt service costs for the joint transmission system. Although the contract required operation and maintenance costs to be billed based on each entity's (Parks, Town and the Village of Youngstown) proportionate share of sewer flow, the Town billed Parks based on water consumption. Furthermore, the Town billed Parks for certain debt service costs in a manner that appears to be inconsistent with the contract. We estimate that Parks was inaccurately billed by approximately $152,900 for operation and maintenance, debt service and a repair to a lift station.

The Board reviews and approves the abstracts without auditing the individual claims. Without a thorough and deliberate examination of each individual claim and the supporting documentation, the Board does not have enough information to determine whether the claims it approves are appropriate and legitimate. While Village Law authorizes certain claims to be paid in advance of audit, 10 of 18 claims totaling $163,725 were not authorized for such payment under Village Law. Village officials ensured that leave accruals and payments were recorded and calculated accurately.

We found that the records maintained by the County Clerk and Surrogate's Court were up-to-date and complete, and we noted no material discrepancies. We also found that the Commissioner established adequate procedures, maintained appropriate records and properly reported court and trust funds and abandoned property to the State Comptroller as prescribed by statute.

District officials need to improve budgeting practices to effectively manage the District's financial condition. The District's budgeting practices included appropriating fund balance not needed to fund operations and adopting budgets that overestimated appropriations by an average of about $874,000 (13 percent) from 2012-13 through 2016-17. As a result, unrestricted fund balance increased to $2.9 million on June 30, 2017, or 37 percent of the ensuing year's budgeted appropriations, exceeding the statutory limit by 19 to 33 percentage points from 2012-13 through 2016-17. Furthermore, the retirement contribution reserve may be overfunded.

Although the Board has developed a procurement policy and written procedures, the policy and procedures do not provide guidance on seeking competition for professional services, require documentation of actions taken or identify the individuals responsible for making purchases. As a result, eight professional service providers were paid $178,027 and 25 vendors were paid $353,418 without seeking competition. In addition, the Town has no policies or restrictions for Internet use. We also found numerous instances of personal Internet use.