The former Justice did not ensure Court money was accurately and completely collected, recorded, deposited and reported in a timely manner. Of the 105 vehicle and traffic tickets issued during our scope period, the former Justice did not adjudicate 82 tickets, either because he did not hold court on a regular basis or did not pursue those defendants who failed to appear. Since the appointed (interim) Justice took over, 48 tickets have been adjudicated and closed, including 32 of the former Justice's 82 cases. However, there is $1,790 in the bank that has not been accounted for in the accounting software and Court records. The interim Justice told us he is working on determining which cases the money should be associated with and/or whether it is from bank credits from returned bank fees. Additionally, the computerized bail list (showing bail moneys held by the Court) has not been updated to reflect the bail returned to defendants and is overstated by $4,775. The former Justice stated in his resignation letter that he was unable to perform the many administrative tasks of the Court because he did not realize that 80 percent of these responsibilities were administrative rather than judicial. Although the Board engaged a CPA firm to perform an annual audit of the Court for 2015, the CPA firm was unable to complete the audit due to the Court's sporadic and inadequate records.

The Board did not develop realistic budgets for its four major operating funds. This resulted in operating surpluses which contributed to a steady increase in fund balance levels over the last three years. Furthermore, Town officials have not developed a formal plan to use the accumulated balances or adopted a policy for the acceptable levels of fund balance to maintain. As a result, Town officials may have compromised the transparency of their financial operations and may have unnecessarily raised real property taxes.

The Board has not established adequate procedures for online banking or the security of electronic information. The Clerk conducts all online banking transactions and manages the Town's electronic information at his private accounting firm. However, the Town does not have an online banking policy or a written agreement with his accounting firm or any third party used for IT services to outline the Town's needs and expectations and level of service required. Further, the Board has not developed computer security and disaster recovery plans.

Town officials have not established a multiyear financial or capital plan or fund balance or reserve policy. The Board has adopted budgets that focus on the immediate needs of general governance and highway services. As a result, the Town operates with minimal unassigned fund balances. As of December 31, 2016, the general fund's unassigned fund balance declined to $28,606 (11 percent of 2017 appropriations) and the highway fund's unassigned fund balance has declined to $74,941 (7 percent of 2017 appropriations). The combined unassigned fund balance of approximately $103,500 may prove insufficient as a buffer for unexpected expenditures, revenue shortfalls or future highway equipment and capital needs. Further, the Town has not established any reserves for identified future expenditures.

Town officials have ensured that the Town properly bills, collects, records and deposits water fees. In November 2015, the Board adopted revisions to a local law regulating the Town's water supply systems. The local law includes regulations, property owner responsibilities, violations, fees, charges and penalties. The revisions increased the billing rates for water consumption effective January 1, 2016 and the residential and commercial billing categories from four to 14. The Town Comptroller (Comptroller) maintains the water billing software program and prepares the bills for all customers. She had to update the data for all 450 customer accounts to ensure the billing system would properly calculate water fees under the new rate structure. We commend Town officials for ensuring that Town employees properly bill, collect, record and deposit water fees.

Town officials did not adequately oversee the Town's financial operations and did not ensure that accounting records were properly safeguarded. In addition, the Town has accumulated excessive funds in the general town-wide fund. As of December 31, 2015, the unrestricted fund balance was about $288,000, or 84 percent of the next year's budget. By not using a portion of these resources to fund operations, the Board may have levied higher property taxes than necessary. Also, the Board has not developed a policy to govern the level of fund balance to be maintained or adopted multiyear financial and capital plans to adequately address the Town's long-term priorities. While the Board received monthly budget versus actual reports for revenue and expenditure accounts, it did not receive a detailed monthly statement of all money received and disbursed, information on cash balances by fund or bank reconciliations and bank statements. In addition, although the Board entered into a written contract with the accounting firm (Firm) performing financial services for the Town, the Supervisor did not appropriately monitor the Firm's work. The Supervisor was unaware of any safeguards the Firm had in place to protect the Town's data and he did not ensure that financial records were available for public inspection at the Town offices. Finally, the Board did not annually audit or cause an audit of the Supervisor's records.

Both Justices ensured that fines and surcharges collected were accurately reported to the Justice Court Fund (JCF) and the correct amount was turned over to the Supervisor each month. However, neither of the Justices ensured that monthly accountabilities were accurately completed because they did not ensure that all bank accounts were reconciled each month. In addition, although the Town's Budget Officer performed an annual audit of the Court records and reported the results to the Board, the Board did not communicate the audit results to the Justices. The clerks collect and record all financial activity using a transaction register. Each month they trace daily deposit totals from the transaction register to the bank statement. The clerks and Justices ensure that the total reported to the JCF matches the total collected and turned over to the Supervisor. Both clerks also perform a similar review for bail money received and disbursed. While this review helps ensure transactions are recorded, deposited and fines remitted to the Supervisor, this is not a complete accountability analysis. By comparing only current month activities, the clerks (and Justices) do not know whether or not their cash on hand is sufficient to cover outstanding liabilities, such as pending bail.

The Board needs to improve its oversight and ensure that the fire protection contract is in the residents' best interests and that emergency services are provided according to the contracts. The Town contracts each year with a fire company to provide fire protection for the Town's fire protection district. We found that a Town Board member also serves as the Deputy Treasurer for the fire company. As an officer of the fire company, the Board member is deemed to have an “interest” in each contract. Board member's interest in the contract is not prohibited by General Municipal Law since there is an exception for contracts with not-for-profit corporations. However, the Board member is required to disclose his interest in the fire protection contract. In addition, Town officials did not receive annual financial statements from the fire company and did not review response logs to monitor fire company operations to ensure services are provided according to the contract. The Town also lacks assurance that the emergency service providers are meeting contracted terms and performing services as agreed.

Town officials did not establish policies and procedures over the use of the Town's credit cards. The Town had a total of 24 credit cards during our audit period with total credit limits exceeding $101,000. The credit limits on the individual cards ranged from $1,000 to $20,000. Four of these credit cards had credit limits of $10,000 or more. These large credit limits increase the risk of significant invalid purchases being made and going undetected. Even though Town officials review the credit card statements on a monthly basis, a non-Town purchase would have already occurred.

The Board needs to improve its budget development practices. For the years 2013 and 2014, the Board appropriated more general fund balance than was actually available to finance operations. Using fund balance as a revenue source resulted in a fund balance deficit of $25,420 in 2014. Although the Board did not appropriate fund balance in the 2015 and 2016 general fund budgets, the Town's projected 2016 fund balance is a deficit of $35,285. In addition, although the Town increased the sewer rates in its two sewer districts in 2015, Sewer District 2 is in fiscal stress with a projected deficit fund balance of $7,667 in 2016. The 2017 budget does not provide for any remedy for the deficit fund balance. Although Sewer District 1 has a projected positive fund balance of $622 in 2016, it still owes the general fund $7,500 for an unanticipated pump repair. The 2017 budget does not provide funding to reimburse the general fund for the $7,500 advance. As a result, both Districts face financial uncertainty. Furthermore, the Board has not developed a multiyear financial and capital plan to address the Town's long-term priorities. The Town Clerk did not issue receipts when collecting property taxes, sewer fees and licenses, as necessary, and did not maintain adequate cash receipt records. She also did not deposit property tax moneys in a timely manner. For example, for the 2015 property tax levy collection, the Clerk deposited 19 of 38 deposits between two and eight days late, totaling $838,730 or 45 percent of total tax collections. The Clerk did not remit tax collections to the Supervisor on a weekly basis as required. The Clerk also did not perform monthly bank reconciliations and accountabilities comparing the available cash to the known liabilities. Finally, the Board did not audit or provide for an annual audit of the Clerk's records.

The Supervisor did not maintain complete and accurate accounting records and reports. He also did not adequately oversee the bookkeeper's work during our audit period. The lack of oversight and the bookkeeper's failure to record all transactions in a timely manner and prepare monthly bank reconciliations resulted in accounting records that were inaccurate and incomplete. As a result, the Supervisor was unable to provide the Board with sufficient monthly financial reports allowing it to adequately monitor and manage the Town's financial operations. The Supervisor also did not file the required 2013, 2014, and 2015 annual financial reports with the State Comptroller in a timely manner. In addition, the Supervisor did not ensure all deposits were made intact and in a timely manner. The bookkeeper was solely responsible for receiving and depositing collections with little oversight. For instance, the Supervisor did not examine and compare documentation of collections, such as duplicate receipts and cash journals with the detailed deposit slips and deposit receipts, to ensure collections were deposited intact and in a timely manner. In addition, the Supervisor did not require the bookkeeper to always issue duplicate receipts for all collections, prepare duplicate deposit slips for all deposits and make deposits within 10 days after receipt, as required by law.

The Clerk and the Justice did not maintain complete and accurate accounting records. As of April 11, 2016 we identified shortages of $106 and $471 for the Clerk and Justice, respectively. Because the Board did not perform an annual audit of the Clerk or Justice, these shortages were not detected.

We found that, generally, disbursements were properly accounted for, audited and/or certified, where required, and were for legitimate Town expenditures. However, we found significant control weaknesses with regard to the Town Clerk (Clerk) and the Firm's accountant who were able to make disbursements without the Supervisor's knowledge. We examined disbursements and wire transfers totaling approximately $617,000 (92 claim vouchers – $128,000, 30 wire transfers – $43,000, 17 interfund transfers between Town bank accounts – $412,000 and three payrolls – $34,000) and found that the Supervisor did not control the custody of his signature stamp and allowed the Clerk to affix his signature to checks.

Internal controls over the Clerk's office operations need to be improved. The Clerk did not have guidance that required her to issue duplicate receipts when receiving moneys or to perform monthly bank reconciliations. The Clerk did not issue press-numbered duplicate receipts for all transactions and did not perform monthly bank reconciliations. Furthermore, the Clerk did not submit a monthly report of all moneys received and disbursed to the Supervisor and did not make disbursements to the Supervisor and State agencies in a timely manner. The Board did not provide adequate oversight of the Clerk's financial activities and did not provide for an annual audit of her records. Finally, Town officials have not implemented policies and procedures for the sale of Town garbage bags and the Clerk does not maintain an inventory record of them; therefore, there is no assurance that all garbage bags are properly accounted for.

Bank reconciliations were not accurate and accountabilities were not prepared. The Justice's cash exceeded known liabilities for each of the 22 months in our audit period by an average of $15,700. In addition, the pending bail report was not accurate. Employees made 12 Town credit card purchases without receipts totaling $1,916. Disbursements were appropriate but were not always processed properly. Employees were not required to obtain prior authorization to make 204 reimbursed purchases totaling $9,078.

The Town annually operates a community pool and skating rink for seasonal periods. Although skating rink deposits were made timely in 2015 and 2016 and pool deposits were made timely in 2015, pool deposits were not made timely in 2016. Additionally, collection records were not adequate because they did not include the form of payment (i.e. cash or check). As a result, we were unable to determine if deposits were made intact. Furthermore, we found total deposits exceeded the amounts recorded as collected for the pool in 2015 and 2016. We also found that amounts included in individual deposits for 2015 skating rink collections did not agree with the associated collection records. Also, the Board did not properly allocate sales tax revenues. If a town contains a village and the village receives sales tax directly, the town must allocate all sales tax revenues to the part-town (PT) funds to eliminate the tax levy prior to allocating the revenues to the town-wide funds. During the period 2014 through 2016 the Board improperly allocated sales tax revenues totaling $130,615 to the town-wide funds without eliminating the tax levy in the PT funds, creating a taxpayer inequity.

The Board did not provide sufficient oversight of the Town's financial operations. As of December 31, 2016, the unrestricted fund balance in the general town-wide fund was about $1.2 million, or 273 percent of the ensuing year's budget. This was caused partly by the lack of a policy for the level of fund balance to be maintained. In addition, the Board did not adopt multiyear financial or capital plans to address long-term priorities. Further, the Board hired an accounting firm to perform bookkeeping and payroll duties without a written contract or proper oversight from the Supervisor and the Board did not perform annual audits of the books and records of officers or employees who received or disbursed money. Because the accounting firm kept the records off site, the Town's financial records were not available for public inspection during reasonable times as required by law. In addition, the Board did not receive necessary information such as detailed statements of money received and disbursed and the firm performed payroll duties without oversight. As a result of the lack of financial oversight, the Board levied higher property taxes than necessary and its ability to effectively manage the Town's finances was severely diminished.

The Justice did not deposit, record and account for Court moneys accurately and in a timely manner. In addition, the Board did not audit the Court's financial records and reports or ensure sufficient controls were in place to prevent or detect fraud or abuse. As a result, based on the records available to us, we found a cash shortage of at least $6,073 occurred during our audit test period, which was the final three years of the Justice's six-year tenure. We also found that the Supervisor's financial records were not complete and not sufficiently monitored. The Supervisor did not create or provide the Board with budget-to-actual reports or statements of cash flows to enable the Board to sufficiently monitor the Town's financial position. Furthermore, the annual report was not filed timely and the Board did not audit the Supervisor's books and records as required. As a result, the Board does not have the financial information it needs to effectively monitor the Town's operations which increases the risk that errors or irregularities could occur and not be detected or corrected in a timely manner.

As of October 2016, the Director Administration and Finance (Director) had issued credit cards to 57 employees. The cards had credit limits ranging from $500 to $90,000 with a combined total credit limit of $730,000, and eight individuals had credit limits in excess of statutory bidding thresholds and could make purchases without obtaining competition as required. Although the Director established credit limits for each card, he did not establish dollar limits for individual purchases, set daily limits or block certain types of vendors as required by the policy. As a result, cardholders can make purchases of any amount within their overall established credit limit from any vendor they choose, and the Town has little control over the volume and type of credit card purchases being made by employees. The Director and numerous department heads told us that employees are encouraged to use credit cards for virtually all purchases. Credit card purchases averaged $184,000 per month and totaled more than $3.8 million during the period January 2015 through September 2016. We reviewed credit card statements and supporting documentation for 1,135 credit card purchases totaling more than $607,000 made by five Town departments for a three-month period. We found discrepancies with 536 purchases (47 percent) totaling approximately $113,900 (19 percent).

The Board adopted unrealistic budgets for the general fund and highway fund during the 2013 through 2015 fiscal years. The Board overestimated appropriations by more than $925,000 (33 percent) for the general fund and $820,000 (33 percent) for the highway fund, and appropriated unneeded fund balance. The Board's budgeting practices made it appear that the Town needed to both raise taxes and use fund balance to close projected budget gaps. However, the general fund realized operating surpluses in each of the last three fiscal years, totaling $456,597. Therefore, none of the appropriated fund balance was used and the general fund's unrestricted fund balance increased for the period. In addition, the highway fund realized a $42,801 operating surplus during the 2013 fiscal year and operating deficits of $14,291 in 2014 and $8,354 in 2015, which were smaller than planned. As a result, the Town used less than 3 percent of the appropriated fund balance during those three years and the highway fund's unrestricted fund balance increased. While we found that the 2016 budgeted appropriations for the general and highway funds were more realistic than in recent years, we still project that the Board has overestimated appropriations, which will likely result in the Town not using the entire appropriated fund balance.