Town officials did not effectively manage the Town's financial condition. The Board has not established goals for the level of unrestricted fund balance to be maintained, which contributed to the appropriation of imprudent amounts of fund balance. From 2013 through 2015, officials used one-time financing sources to fund recurring expenditures, adopting budgets that were not structurally balanced by appropriating fund balance totaling $567,500. As a result, the Town's four major operating funds (town-wide general, part-town general, town-wide highway and part-town highway) have experienced combined operating deficits in each of the past three years, totaling more than $310,000. These operating deficits caused the combined unrestricted fund balance for the four major operating funds to decline by $141,067, from $228,376 as of December 31, 2013 to $87,309 as of December 31, 2015. The combined restricted fund balance (reserves) for these funds declined by $40,493 during the same period.

The Justices did not accurately and completely collect, record, deposit, disburse or report Court money in a timely manner. Neither Justice properly pursued collections for those cases where defendants failed to appear in Court. Over 230 Vehicle and Traffic Law (VTL) cases from 2011 through June 2016 remained outstanding. Based on the Town's average dismissal rate and average fines for adjudicated VTL cases, we estimate these outstanding tickets equate to approximately $33,000 in unearned revenues for the Town. In addition, although the current Justice properly updated and closed cases previously entered into the accounting software by the former Justice, she did not record new cases in the accounting software. The current Justice did not deposit money in a timely manner. The current Justice filed six of the seven monthly reports to the Justice Court Fund (JCF) late, by an average of 62 days. Furthermore, neither Justice properly reported closed cases to the Department of Motor Vehicles (DMV). During our audit period, 55 cases were reported to JCF as closed, while five were reported to DMV as disposed.

The Board could improve its fund balance management. Over the past 20 years, the Board accumulated money in the general fund in anticipation of an appeal of pending tax assessment cases. During this time, the general fund balance grew to more than $2 million at the end of 2008 in anticipation of having to pay significant sums for successful appeals. However, the appeals were settled in the Town's favor and the general fund accumulated fund balance totaled almost 4,600 percent of the 2008 tax levy of $45,391, (the equivalent of 46 annual tax levies). The Board has taken some steps to reduce its significant fund balance over the last 10 years. For example, a significant portion of the general fund balance (approximately $1.2 million) was used for infrastructure improvements. The Board authorized and constructed a new Town hall complex and a new highway garage in 2009 and 2010 using fund balance as the financing source and reduced the tax levy by nearly 95 percent from 2005 through 2009. Since then, the Board has adopted general fund budgets that included planned use of fund balance. However, the Board increased real property taxes to finance operations and its conservative budgeting practices nullified the Board's plan to spend fund balance as intended. As a result, general fund balance totaled $623,000 at the end of 2016, more than 950 percent of the tax levy and approximately three times actual expenditures that year. From 2014 through 2016, Town officials appropriated an average of $79,000 in general fund balance each year and spent a total of $25,800. This resulted in a 4 percent decrease in overall general fund balance over these years.

The Town lacked effective procedures to ensure water and sewer charges were accurately billed, collected and enforced. Town officials did not implement adequate compensating controls to reduce the risk involved in concentrating key water and sewer district financial responsibilities with the secretary. Although the Board generally adopted water and sewer rates, no one reviewed or approved the quarterly billing registers to ensure all water and sewer customers were properly billed. As a result, customers were not billed in accordance with the Board-established rates, resulting in customers being underbilled by $1,703. Delinquent customer accounts did not always include late payment penalties in accordance with Board policy.

The Justice should improve controls to ensure Court money is adequately safeguarded. Because the Court uses electronic case files in lieu of paper files, the original tickets issued by police officers, correspondence and supporting documentation are scanned into the electronic case files. The Court's actions on the tickets are documented by directly importing data from the Court's accounting software into the case files that are stored on the Court's computers. The Justice and the clerk access the case files by entering their own respective passwords on the Court's computers. The Justice's adjudication is documented in the case files through the use of comment boxes. However, both the Justice and the clerk have the ability to modify or delete these comments without the original data being documented in the case file.

We found that, as of May 31, 2015, a total of $5,681 in documented collections received during the audit period had not been deposited into a Court bank account. Further, the Court did not report collections totaling $5,999 to the Justice Court Fund, and some collections were deposited up to 14 days beyond the required 72 hours. Additionally, as of May 31, 2015, Justice Smith's fine and fee account had a cash shortage of $3,250 and his bail account had an unidentified balance of $152, and Justice Durant's fine and fee account had a cash shortage of $3,060 and his bail account had an additional cash shortage of $250. These discrepancies occurred because the Justices did not ensure that bail records were accurate and complete, and bank reconciliations and accountability analyses were not performed for the Court bank accounts. Further, the Justices did not establish policies and procedures for enforcing unresolved traffic tickets, and did not compare pending-ticket reports from the DMV to their caseload activity. The Board also did not audit the Justices' records as required, which could have helped identify the missing funds and other deficiencies found during our examination.

The Clerk-Treasurer did not accurately and completely account for, record and report all financial transactions in a timely manner. The inaccuracies prevented the Board from making informed financial decisions. Consequently, the Board was unaware of the Village's true financial position and adopted unrealistic budgets. In addition, the lack of accurate accounting records also increases the risk of loss or unauthorized use of Village funds. Because the Board did not perform an annual audit of the Clerk-Treasurer's books and records, these errors and deficiencies went unidentified and uncorrected.

We found that the Board did not provide adequate oversight to safeguard Department assets. The bylaws do not adequately segregate financial duties and instead assign them all to the Treasurer. They also do not provide for mitigating controls such as requiring someone other than the Treasurer to review and reconcile the bank account statements to the accounting records. Additionally, we found the financial provisions in the bylaws confusing and contradictory. For example, one section states that all purchases must be approved by an elected Department officer, then says approval is required for purchases over $25. Other sections set different approvers and differing amounts. Additionally, Department officials did not follow the purchasing requirements outlined in the bylaws. The bylaws are limited, and the Board has not developed any additional policies and procedures over financial operations to provide guidance in areas such as cash receipts and disbursements, purchasing and prior approvals, credit or debit card use or sufficient accounting records, reconciliations and reviews. Finally, the Board does not conduct an annual audit of the Department's records, as required by the bylaws. As a result of the Board's inadequate oversight, various control weaknesses put the Department's assets at greater risk of loss or theft.

The Treasurer, also serving as the purchasing agent, has the ability to submit requisitions, creating a situation where purchases could be requested, approved and received by the same individual. Although the Deputy reviews purchase orders (POs) for appropriateness, the reviews are subsequent to the purchase. Therefore, we reviewed 100 POs issued during our audit period, totaling $7.4 million, to determine whether they were independently authorized and for appropriate purposes. Except for minor discrepancies which we discussed with District officials, POs were independently authorized and purchases were for appropriate District purposes. However, the review of the Treasurer's purchases should occur prior to the purchase and by an individual in a higher position of authority that does not report to the Treasurer.

We found that the Board could improve its oversight of the District's financial operations by updating District policies and procedures and then monitoring financial activities more closely to ensure that District personnel are adhering to its policies and procedures. The Board appointed a purchasing agent who presents them with purchasing recommendations. However, he does not provide the Board with the required quotes. When we asked the purchasing agent for this information, he stated that he does not retain the documentation. The District should have obtained multiple quotes in accordance with the purchasing policy for 11 purchases costing between $3,000 and $20,000, totaling $67,365. The District's procurement policy incorrectly exempts the District from seeking competition for professional services, with the exception of its statutorily-required annual audit – for which the policy appropriately requires a competitive request for proposal (RFP) at least every five years. We also found that the Board had not established a credit card policy that specifies authorized users, credit limits, types of purchases allowed, any required prior approval and documentation required to support each purchase. The District has not established written information technology (IT) policies or procedures for granting user access rights, has not developed formal back-up procedures or adopted an information breach notification policy. Finally, the Board had not adopted written procedures or proper internal controls over hall rentals.

The City's significant revenue and expenditure projections in the proposed budget are reasonable. The City faces potential increased salary costs when one of its expired collective bargaining agreements is settled. The City continues to budget minimal amounts for contingencies, which provides limited flexibility to address revenue shortfalls or unforeseen expenditures. The City's proposed budget complies with the property tax levy limit.

The County of Rockland, located in the downstate area and bordered by Orange, Putnam and Westchester counties, was authorized to issue debt not to exceed $96 million to liquidate the accumulated deficit in the County's general fund as of December 31, 2012. Additionally, Chapter 468 of the Laws of 2013 requires the County to submit to the State Comptroller each year, starting with the fiscal year during which it was authorized to issue obligations and for each subsequent fiscal year during which the deficit obligations are outstanding, its proposed budget for the next succeeding fiscal year. The significant revenue and expenditure projections in the proposed budget are reasonable. The County's proposed 2018 budget complies with the tax levy limit.

The Board did not provide adequate oversight of the Village's financial condition. The general fund's financial condition has been erratic, declining from $31,800 in 2014-15 to a $2,380 deficit in 2015-16 and then increasing to a surplus of $65,800 in 2016-17. Moreover, the general fund's reliance on water fund loans could adversely affect the water fund's financial condition in the next four years. This was driven primarily by the Board's reliance on fund balance as a financing source. The Mayor and Board also did not segregate the Clerk-Treasurer's duties over billing, cash collections and disbursements, or implement compensating controls over her incompatible financial duties. As a result, the Clerk-Treasurer did not always collect water rent and tax penalties or consistently enforce them. In addition, the Clerk-Treasurer disbursed payments before the Board approved them. Consequently, the Board has limited assurance that funds were used for legitimate Village purposes.

District officials did not establish effective procedures that ensured credit card claims were properly supported and for appropriate District purposes. The District has two credit cards, and the Commissioner, Chief, Secretary-Treasurer and fire personnel in travel status are authorized to use them. We tested all 22 credit card claims totaling $17,692 consisting of 38 purchases made during our audit period for both credit cards. We reviewed the claims packets that included the monthly credit card statement and supporting documentation. We found five purchases totaling $3,519 that did not have sufficient supporting documentation included with the claims packets but were still approved for payment by the Board. More specifically, these claim packets lacked itemized receipts. In addition, the Secretary-Treasurer did not reconcile monthly credit card statements to individual receipts. Finally, the District incurred $116 in late fees and $112 in finance charges because payments were not made timely.

The Town of Deerpark, located in Orange County, issued debt totaling $868,000 to liquidate the accumulated deficit in the Town's general fund as of December 31, 2008. New York State Local Finance Law requires all municipalities that have been authorized to issue obligations to fund operating deficits to submit their preliminary budgets for the next fiscal year to the State Comptroller for review while the deficit obligations are outstanding. Based on the results of our review, we found that revenue and expenditure projections in the proposed budget are reasonable. The Town's general fund balance has continued to increase for the past five years, from $898,669 to $1,459,107 (62 percent). This is a result of overestimating expenditures and underestimating revenues. The Town's preliminary budget complies with the property tax levy limit.

Contrary to Town Law, the Board does not have a current written contract with the East Kingston Fire Company (East Kingston) to provide fire protection services for the East Kingston Fire Protection District (District). The last written contract with East Kingston was in 2003. Without a written contract establishing levels of and provisions for service, Town officials were unable to access East Kingston's financial records to determine whether the amount being paid was appropriate and necessary. Town officials told us that the Town rarely received any financial records from East Kingston to be used as a basis for determining the amount that should be paid annually for fire protection services. The Supervisor provided us with documentation indicating that the Town has been attempting to gather information regarding East Kingston's actual expenditures, staffing levels and training for the past two years to assess whether it is capable of providing the services the Town is paying it for. Because the Town did not enter into a contract with the District, the District is working under the premise that East Kingston would assist the District if it needed help.The lack of a written contract between the Town and East Kingston has limited Town officials' recourse when East Kingston does not provide the expected fire protection services to Town residents. By not ensuring that the Town has a valid contract with provisions for reviewing the service provider's operations, the Board has not fulfilled its oversight responsibility and may put Town residents at risk of loss of property, life and finances.

The Board and Company officials did not provide adequate oversight of Company financial activities. The Board did not segregate the Treasurer's incompatible financial duties or provide any oversight of the Treasurer's work, such as reviewing monthly bills or the Treasurer's records. As a result, the Treasurer was able to inappropriately make $69,084 in unauthorized withdrawals and disbursements from September 2007 through 2014 without detection. The Treasurer withdrew $51,228 from the Company's bank account and made $4,100 unauthorized credit card purchases without Company approval or detection. The Treasurer also wrote $13,756 unauthorized checks that included $6,547 in unauthorized payments to herself, $4,735 in checks written to cash, $1,650 check disbursements for personal expenses and $825 in unauthorized payments to her husband, the Chief. We referred these audit findings to OSC's Division of Investigations. After we concluded our fieldwork, the Treasurer pleaded guilty in Columbia County Court to Falsifying Business Records in the First Degree and was sentenced in August 2017.

District officials have generally established effective payroll-related policies and procedures. However, they have not established formal and adequate policies and procedures related to the processing of payroll outside of normal pay dates such as when employees do not submit payroll information in a timely manner. Additionally, District officials did not develop policies or procedures related to the periodic review and reconciliation of payroll withholdings, deductions and contributions, to ensure accuracy. This review would include bi-weekly (or semi-monthly), quarterly and annual payroll reports.

Except for minor discrepancies, which we discussed with District officials, we found that claims were for appropriate purposes, adequately documented, properly audited and approved before payment. We commend District officials for establishing effective procedures for processing claims. Establishing and adhering to effective claims auditing procedures decreases the risk that errors or irregularities in processing and paying claims could occur and not be detected in a timely manner.

The Board did not ensure the Village's accounting records were current, complete and accurate, and that purchases were made in accordance with the procurement policy. For example, the Board has been aware that the Village's cash accounts have not been accurately reconciled since November 2011 when the Clerk-Treasurer took office and notified the Board that there were issues with the accounting software and the records. However, these issues are still occurring and the accounting records are not properly reconciled to the bank statements. Furthermore, the Village's procurement policy is outdated and the current process does not comply with the procedures outlined in the policy. As a result, the 27 disbursements totaling $356,000 that we reviewed did not have purchase requisition forms in accordance with their procurement policy and four of those were for services totaling $45,250 that did not have any documentation to support the rationale for the vendors chosen.