District officials did not always use competitive methods when procuring goods and services. The District did not use competitive bidding for purchases totaling $64,405 from two vendors. In addition, the District made payments totaling $231,174 to 20 vendors without obtaining the required number of quotes as required by the District's purchasing policy. The Board did not follow its own procurement policy because at the District's organizational meeting each year, the Board appointed specific vendors to provide goods and services for the year, without obtaining competition. As a result, the Board does not have adequate assurance that these goods and services were procured in the most economical manner. In addition, officials did not ensure that the District was incurring only necessary overtime costs. There is also no documented prior approval of overtime by a Board member for employees. Therefore, the Supervisor assigns his own overtime without Board approval.

The District does not provide or require employees to attend any formal cybersecurity awareness training. Employees do not comply with the District's acceptable use policy. Controls over personal, private and sensitive information (PPSI) collected, processed, transmitted and stored have not been developed. The District does not have service level agreements for services provided by Orange-Ulster Board of Cooperative Educational Services and Mid-Hudson Regional Information Center which could lead to confusion over roles and responsibilities of each party.

The Board did not establish adequate budgets and set long-term plans. The Board's financial planning was impaired, in part, because the Supervisor did not provide sufficient historical information or projections during the budget process. The Board also did not establish a level of acceptable fund balance or properly use money in the town-wide highway equipment reserve. As a result, there is an increased risk that unforeseen events could affect the Board's ability to provide necessary services.

We found that the significant revenue and expenditure projections in the tentative budget are reasonable. The Town's 2018 tentative budget complies with the property tax cap levy limit.

Significant revenue and expenditure projections in the proposed budget appear reasonable. City officials did not provide evidence that they prepared cash flow estimates for 2018, which would have allowed them to determine if unrestricted fund balance levels in the water, sewer and refuse funds were adequate. The Common Council needs to consider whether the contingency appropriations are adequate if collective bargaining agreements are approved and unanticipated retirements occur. The Common Council should ensure that the appropriation for police overtime is reasonable when adopting the final budget. The Common Council may need to increase sewer rent rates or decrease appropriations when adopting the final 2018 sewer fund budget. The City's proposed budget is in compliance with the property tax levy limit.

Significant revenue and expenditure projections in the proposed budget are reasonable. The proposed budget includes estimated revenues of $3.45 million for refuse and garbage fees to finance the City's waste and recycling services, but the Council has not yet authorized or approved a combined waste and recycling fee to realize the estimated revenues. All six of the City's collective bargaining agreements (CBAs) have expired and the City faces potential significant increased salary and wage cost when these agreements are settled. The City's proposed budget is in compliance with the property tax levy limit.

College officials need to improve safeguards over personal, private and sensitive information on College websites, applications and servers and ensure the data stored is adequately secured and protected against unauthorized use, access and loss. While College officials have taken steps to safeguard computerized data, we found unnecessary user accounts that were not disabled or removed and inadequate protection of server room equipment. Furthermore, the Board did not establish policies and procedures regarding breach notifications and disaster recovery plans. As a result, there is an increased risk that computerized equipment and data could be subject to unauthorized access and potential loss.

District officials did not always submit Form SA-16 promptly to ensure the timely receipt of transportation State aid. We reviewed all 19 of the District's new bus purchases during our audit period and found that District officials had submitted Form SA-16 to SED for 15 of the buses purchased. However, five of these were for buses purchased during the 2014-15 fiscal year, totaling $389,249, and weren't submitted until after our notification to the District of our intent to conduct a State aid audit. Additionally, District officials had not submitted Form SA-16 for four buses purchased during the 2016-17 fiscal year, totaling $308,545. We informed District officials during our audit fieldwork and they completed and submitted the paperwork to SED in May 2017. Had the District not submitted Form SA-16 for the nine buses in question they potentially may have lost approximately $400,000 in State aid, consisting of $136,245 that the District would have received during the 2015-16 through 2016-17 fiscal years and $264,133 that we project the District would receive during the 2017-18 through 2021-22 fiscal years.

While the Board has generally ensured that cash disbursements are adequately supported, for valid Authority purposes and properly recorded, it needs to improve the Authority's cash disbursements process to ensure that all aspects are properly performed. The Director, in his general management of the Authority's business affairs, approves purchases, audits all claims (after the account clerk assembles the claims packets and prepares the abstracts) and signs checks. The Assistant Director also audits the claims and countersigns the checks. However, these duties (i.e., approving purchases, auditing claims and signing checks) are incompatible because the Director has the ability to procure and pay for goods or services that may not be for valid Authority purposes. In addition, although the Director and Assistant Director manually sign many Authority checks, they also both have password-protected electronic signatures that are stored in the Authority's financial software. They authorized the account clerk to use their electronic signatures without their direct supervision.

The Board should improve its general fund balance management. Although fund balance declined by $117,000 (35 percent) in 2016-17, the balance as of May 31, 2017 was $213,000, or 78 percent of the average annual expenditures over the last three years. Furthermore, the Board has no clear plans for the use of the accumulated funds. For example, the Board has not developed a fund balance policy or comprehensive long-term financial and capital plans specifying the Village's objectives and goals for using the accumulated funds.

The College generally complied with competitive bidding statutes and its purchasing policy. College officials sought competition for three professional services costing $89,568 but they did not seek routine competition for services provided by an insurance agency that was paid $86,013 during our audit period. The College's purchasing policy does not address insurance coverage and competitive methods to procure it.

The District does not have a comprehensive policy for identifying and recording fixed assets. The District's fixed asset policy does not establish a threshold value for tagging assets. In addition, the IT department does not have written procedures for maintaining IT inventory. Although the IT department labels items before they are placed in service and adds these assets to the IT inventory database, there are no written procedures. In addition, fixed assets were not tagged as District property for 26 items valued at $144,421. District officials could not explain why these assets did not have tags and told us they thought the contractor was responsible for tagging. Finally, District inventory records of technology assets were inconsistent.

The Board-adopted procurement policy does not require the solicitation of competition before awarding professional service contracts. As a result, Village officials did not seek competition for nine of 10 professional service providers paid $733,497. Village officials also did not always obtain the number of quotes required by the Village’s policy when procuring purchase and public works contracts. In addition, the Board did not audit claims or create the office of Village claims auditor. Instead, two Board members audit Village claims individually prior to the monthly meeting of the Board. A warrant is present and approved by the Board during its monthly meeting. However, no claims along with supporting documentation are presented to the Board as a whole. Finally, the Mayor does not maintain custody of his signature stamps.

Four employees are authorized to collect water and sewer payments; however, there is only one cash drawer, which limits the ability to identify who made the collections. In addition, one of these employees has incompatible duties including generating bills and preparing and recording deposits. Also, Authority officials did not reconcile their property information to information from the County or municipalities for billing purposes, which resulted in the incorrect billing of 82 properties and a potential loss of $10,200 in annual revenue. Further, officials did not periodically verify water meter readings for wholesale customers for billings totaling $855,000. In the event of a shortage, there may be no way to hold a particular employee accountable. In addition, there is an increased risk that customer usage will not be properly billed and that money received will not be properly collected, recorded and deposited.

District officials have established adequate procedures to ensure that claims are sufficiently documented and supported, are for legitimate District purposes, and are audited and approved before payment. We reviewed 118 claims totaling $213,873 to determine whether they were properly supported, audited and approved before payment. We noted minor deficiencies, which we discussed with District officials. We commend District officials for establishing effective procedures for processing District claims.

The Board and District officials did not ensure that budget estimates were reasonable. The Board adopted budgets for fiscal years 2013-14 through 2015-16 that resulted in overestimated appropriations totaling $24.9 million. The Board appropriated fund balance totaling $3.1 million from the 2012-13 to the 2014-15 fiscal years to finance the subsequent year's budget. However, because the District experienced operating surpluses totaling $20.5 million between 2013-14 and 2015-16, the appropriated fund balance was not used. Also, the Board routinely funded reserves with operating surpluses at year end, instead of funding the reserve through the annual budget process, which would have been more transparent to District residents. Additionally, District officials inappropriately used legally restricted reserve funds for operating cash flow.

Three employees were overpaid by $1,433 during the audit period. This occurred because the Board did not establish the terms and conditions of employment or authorize specific salaries for several years for the three employees. In addition, the Treasurer functioned as the payroll clerk and was responsible for processing payroll and entering the annual salary information, including pay increases, into the payroll system. Specifically, the Treasurer's salary was overpaid by $1,089. In addition, for 2015-16, the Treasurer overpaid the Superintendent's secretary by $198 and the attendance clerk by $146. These overpayments, as well as the overpayments that the Treasurer received, were all a result of the Treasurer inaccurately inputting annual raises into the payroll system as 2.4 percent instead of 2 percent. Finally, the Treasurer received, used and was paid for leave time she was not entitled to valued at $4,070. This occurred because the Board did not provide clear and specific guidance concerning the terms and conditions of employment for all employees, including salary and benefits. In addition, District officials did not review the leave accrual balances paid to the Treasurer on her departure for accuracy.

The Board adopted budgets with estimated appropriations that exceeded actual expenditures by a total of $23.7 million, or an average of $4.7 million (4 percent), during fiscal years 2012-13 through 2016-17, which resulted in appropriated fund balance not being used. Because the Board overestimated appropriations, it appeared that the District needed to both increase its tax levy and use appropriated fund balance to close projected budget gaps. The Board increased the real property tax levy by approximately $9.6 million (11 percent) from 2012-13 through 2016-17 and appropriated $11.1 million (a yearly average of $2.2 million) in fund balance from the 2012-13 through 2016-17 budgets. Over the last five years, the District reported unrestricted fund balance that ranged from 4.0 percent to 7.4 percent of the ensuing year's appropriations. These amounts were above the 4 percent statutory limit in three years reviewed. During the same period, the Board also appropriated an average of $2.2 million of fund balance annually to finance District operations in the ensuing year, but did not use it. This allowed the District to circumvent the statutory limit on unrestricted fund balance in all years. After adding back the appropriated fund balance that was not used, the recalculated amount of unrestricted fund balance at year end ranged from 5.4 to 9.0 percent of the ensuing year's appropriations.

The significant revenue and expenditure projections in the proposed budget are reasonable. City officials are projecting an operating surplus of $3.26 million in the general fund, a $38,615 surplus in the water fund and a $36,751 surplus in the golf and recreation fund. These three funds are projected to have a combined unassigned fund surplus of $448,951 by 2017 year end, a significant improvement from the previous year. The City has budgeted $1.96 million for building permit revenues, an increase of $53,000 over the 2017 estimate. City officials estimate $675,000 in termination payments, including $625,127 for employees retiring from the Police Department, and intend to use appropriated general fund balance to cover these costs. For 2017, the City projects an operating surplus of $38,615 in the water fund that will decrease the unassigned fund balance deficit to $141,641. For 2017, the City projects an operating surplus of $36,751 in the golf and recreation fund that will decrease the unassigned fund balance deficit to $369,649. City officials did not fully implement the recommendations in our prior budget review. The City's proposed budget complies with the tax levy limit.

District officials established effective controls over non-payroll cash disbursements by segregating duties and providing management oversight, so that no individual controls all phases of a transaction. District officials have also adequately segregated wire transfer duties. The Treasurer initiates wire transfers through on-line banking software and the Deputy Treasurer or Business Administrator approves the wire transfers. However, District officials allow all three third party administrators (TPAs) to electronically withdraw funds for benefit claims from a District bank account. District officials allow TPAs who process health, dental and prescription claims on the District's behalf to electronically withdraw funds from a District bank account. GML does not provide authority for the District to allow the TPA to directly access District bank accounts, irrespective of whether the Treasurer authorizes the withdrawal.