The Supervisor told us that he has not maintained any accounting records since 2013. Specifically, he does not maintain a general ledger, general journal, receipt and disbursement journals or revenue and appropriation ledgers. Further, he does not reconcile the bank accounts because there are no accounting records to compare to the adjusted cash balances. In fact, the Supervisor had not opened most of the bank statements for 2016 and 2017. We found 125 unopened bank statements in the original envelopes in the Supervisor's two offices at the Town Hall. Although the Supervisor appointed a Deputy to act in his absence, the Deputy is not involved in keeping any accounting records. In addition, the Supervisor has not asked the Board for authorization to hire a bookkeeper to help with recordkeeping responsibilities. Furthermore, officials were paying bills without knowing if sufficient funds were available in the various bank accounts. From February through June 2017, the Town bounced 26 checks totaling about $132,800, even though there was enough cash to pay the bills. The Supervisor has not prepared or filed an annual update document (AUD) with OSC for the 2013 to 2016 fiscal years. He has not provided the Board with any monthly financial reports showing all funds received and disbursed or budget-to-actual results since 2012. The Supervisor also did not deposit Town funds in a timely manner. In 2017 he made only one bank deposit in February of the $2.5 million check received from the tax collector for the 2017 tax levy. No other bank deposits were made until early June 2017 when the Deputy found numerous uncashed checks totaling over $975,000 in the Supervisor's two offices. Finally, the Board did not request the Supervisor to provide his books and records on or before January 20th of each year so the Board could perform the required annual audits from 2013 through 2016 and it did not engage an independent accountant to perform an audit.

District officials need to improve their maintenance of the vendor master file. Officials have not established written policies or procedures for maintaining its vendor master file. The Deputy Superintendent and business office staff are responsible for adding vendors and changing vendor information within the vendor master file. The District's vendor master file contained the names of 1,798 active vendors who received payments during our audit period. We reviewed the vendor master list and determined that 16 vendor names were duplicated multiple times and each of these vendors had from two to five different vendor identification numbers, representing 41 of the District's active vendors. We reviewed 102 invoices totaling approximately $478,000 from 66 vendors and found that all of these invoices represented valid claims. However, District officials did not have a W-9 on file for nine of these vendors. Without W-9s on file for all vendors, the District has not complied with federal tax requirements and there is an increased risk that payments may be made to fictitious vendors.

The Supervisor did not properly maintain the financial records and reports. The Supervisor relied on the Secretary to perform most of the financial transactions without providing adequate oversight. Consequently, the records are incomplete and not up-to-date, and are therefore, unreliable. Furthermore, the Supervisor did not provide the Board with the necessary financial reports to adequately monitor operations, and did not file the required reports with the appropriate agencies, including OSC and the Internal Revenue Service (IRS).

Town officials did not always ensure that purchases were at the best prices and disbursements were for proper Town purposes. Town officials purchased goods and services totaling $265,200 without soliciting competition, selecting the lowest bidders or using County or New York State Office of General Services (OGS) pricing. In addition, cost-benefit analyses were not conducted with consideration of other factors that impacted the purchasing decision. Also, disbursement duties were not segregated and mitigating controls were not put in place. As a result, there is an increased risk that public money will not be used in a prudent and economical manner and that errors or irregularities could occur and not be detected. In addition, claims may not be paid for proper Town purposes or prices.

Department officials did not review the bank statements and canceled check images for the bank accounts managed by the Treasurer and Fire Police Captain. Department officials did not deposit or account for all donations received or deposit money received from fundraisers and lounge sales. Deposits totaling approximately $158,300 were not supported by adequate documentation. Department officials did not approve 499 disbursements totaling $63,010 before payment was made.

In our prior 2013 audit, we recommended the Mayor and Council develop realistic budgets and adopt a multiyear financial plan. Our prior audit also discussed the use of casino revenue to balance the budget. However, the City did not maintain a multiyear financial plan and has continued to rely on unreliable revenues and one-time funding sources. From fiscal years 2014 through 2017, City officials balanced the budget using primarily casino revenue, averaging $9 million, and fund balance, averaging $2.9 million. By the end of 2017, we project that the City will deplete available fund balance. Assuming no additional casino revenue is received under the current compact, we project a general fund budget gap of $12 million for the 2019 fiscal year and subsequent years. If the current dispute with the Seneca Nation of Indians is not resolved positively for the City, City officials will have to make difficult choices to achieve some combination of reduced expenditures and increased revenues.

While the Board, by resolution, generally approved a warrant of claims, it did not perform an effective claims audit or establish an adequate process to ensure that transactions were properly authorized and approved, complied with statutory or Village requirements or that claims were for proper Village purposes. As a result, the Board does not have adequate assurance that goods and services are purchased at the best price.

The Board has consistently underestimated revenues and overestimated expenditures in its budgets over the past four years, which contributed to an accumulated surplus fund balance of approximately $360,000, about 81 percent of its annual budget. For the same period, the Library also increased the real property tax levy by approximately $26,000. As a result, the Library levied and collected more taxes than necessary.

The Board-adopted procurement policy meets all General Municipal Law requirements and includes a provision that requires a purchase order be approved prior to making all purchases in excess of $800 that are not subject to bidding requirements. However, the Board did not adopt a policy regarding the use of Village credit cards. In addition, purchase order requirements were not being enforced and credit card payments were made without adequate documentation.

The Board needs to improve oversight of the Treasurer, whose duties were not adequately segregated. The Treasurer is responsible for most aspects of District cash transactions (depositing, disbursing and recording) and preparing bank reconciliations. The Treasurer is also responsible for all aspects of payroll, including adding and deleting employees, making payroll changes, receiving and processing regular and overtime timesheets and printing, signing and distributing payroll checks. Because these duties are incompatible, it is imperative that the Board regularly monitors transactions processed by the Treasurer. The Board performs a proper claims audit and reviews the monthly bank reconciliations, cash summary and budget status reports provided by the Treasurer. However, the Board does not review the bi-weekly payroll until after the Treasurer distributes payroll checks. Although we did not find any material discrepancies, because the Treasurer performs payroll duties that are inadequately segregated with little Board oversight, there is a risk that errors and irregularities could occur and not be detected or corrected in a timely manner.

District employees did not properly use the biometric system, and the system and the District's payroll software are incompatible. Therefore, employees' time records captured in the system must be entered manually into the payroll software from the information recorded in the system. We tested one month of payroll for 169 employees, comparing the hours worked as recorded in the biometric system to the hours paid. We identified 36 transportation employees who were paid 741 hours, totaling approximately $19,000, more than the biometric system reports showed as being worked. There was no documentation explaining the differences. In addition, the District paid 191 Facilities Department employees for approximately 369 hours of overtime totaling $16,078 during April 2016. We compared the overtime hours paid to available overtime forms and found 19 employees were paid 207 overtime hours totaling $9,470 without overtime forms being submitted.

The County adopted an assigned counsel plan (Plan) in 1965 to provide representation by counsel. However, the judges and magistrates have not been provided with guidance for determining if indigent defendants qualify for assigned counsel and do not use the criteria and procedures provided by the Office of Indigent Legal Services (OILS). Instead, they exercise the broad discretion granted them by law; essentially making determinations based on their own personally developed and undocumented criteria and procedures. As a result, there is an increased risk that individuals could be denied counsel in one town or court while being granted such counsel in another town or within the same court. Furthermore, the Board did not periodically distribute or monitor the Plan. As a result, none of the 25 judges we interviewed tracked attorney assignments or submitted quarterly reports as required by the Plan. In addition, although the County paid over $2.9 million for assigned counsel costs over the last three years, the courts were inconsistent in their determinations of proper charges for providing counsel. County officials told us they believed they were limited in claims review because the decisions were ultimately up to the discretion of individual judges and that they relied on the Plan to address any needed requirements. However, the Board has not updated the Plan since 1965. As a result, there is an increased risk that assignments may not be made in the best interest of the defendants and free from conflicts and favoritism.

District officials accurately paid salaries and wages. We reviewed the gross pay calculations of 30 employees over four payroll periods, totaling approximately $252,000, to determine whether salaries and pay rates were authorized, overtime rates and hours were accurately calculated, and other provisions of collective bargaining agreements were accurately calculated and paid. Except for minor discrepancies which we discussed with District officials, the District accurately calculated and paid gross salaries and wages. We commend District officials for establishing a well-designed system for processing payroll to ensure that employees are accurately paid the salaries and wages to which they are entitled.

City officials need to improve internal controls over IT assets to help ensure that IT systems are sufficiently secured and protected against unauthorized access and loss. The IT department's acceptable computer use policy was not signed or acknowledged by all employees. City officials have also not classified personal, private and sensitive information (PPSI) based on its level of sensitivity and the potential impact should that data be disclosed, altered or destroyed without authorization. In addition, City officials have not ensured that employees received adequate cyber security training and have not adopted a breach notification policy or a disaster recovery plan. IT department officials did not maintain accurate and up-to-date IT inventory records and were unable to locate 140 items listed on the City's inventory. We also identified significant weaknesses in the use of web filters. As a result, City employees were able to access websites unrelated to City activities, such as personal online brokerage and trading, personal email and social media. Further, we found deficiencies in the City's online banking activities to protect financial assets because City officials did not adopt a written policy addressing electronic banking transactions, develop specific written procedures for electronic transfers, provide adequate monitoring of online bank account activities or implement appropriate online banking security controls and alerts.

The Board did not oversee the Village's financial affairs and did not adopt policies and procedures for cash receipts and disbursements, processing of user charges, payroll, and information technology (IT). The Clerk-Treasurer and her Deputy collect receipts using the same cash drawer, share responsibility for depositing receipts, and record them using the same user name. Similarly, key financial procedures in billing and collecting water and sewer charges were not adequately segregated. In payroll processing, we found that leave accruals were not calculated in accordance with applicable contracts or the personnel policy, resulting in the overstatement, understatement or incorrect use of accrued leave. The Board has not adopted IT policies and procedures related to acceptable use, online banking and breach notification, and also had no disaster recovery plan. We also found that the Board's ability to carry out its fiduciary responsibilities was limited because the four Trustees did not review the monthly Treasurer's report for the three operating funds. The Board did not make budget transfers on a timely basis to control spending during the year.

The Council and City officials did not effectively manage the City's financial condition. The City incurred operating deficits from 2013 through 2015 totaling $4.5 million. As a result, unassigned fund balance that totaled $1.8 million at the end of 2013 declined to a deficiency of more than $1.6 million at the end of 2015. To fund the cash needed for operations, the Chamberlain issued revenue anticipation notes (RANs) of $3 million in 2014 and $4 million in 2015, based on the anticipated receipt of State aid. However, the State aid revenue was not appropriately restricted in a special bank account when received, as statutorily required. As a result, the City used RAN proceeds to fund City operations and the RANs were not repaid until the subsequent years because reducing general fund balance would have created a $2.5 million cash deficiency at December 31, 2015. To help offset revenue losses, the City entered into agreements with the County to consolidate personnel costs for the street and buildings and grounds departments and agreements with the County and other surrounding municipalities to share services for animal control, code enforcement and assessment enforcement services. In addition, the City increased real property taxes by 12 percent over the past three years and joined the County's insurance plan in 2016. Although the Chamberlain projects an operating surplus for 2016 of $167,000, the City's operating plan does not include a provision to retire the outstanding $4 million RAN. Because City officials failed to maintain accurate, complete and timely accounting records, the year-end 2015 balance sheet account balances were not available until August 2016, and included significant inaccuracies. Additionally, the 2014 AUD was filed more than one year late and the 2015 AUD was not filed as of May 2, 2017.

The Department's inadequate computer system produced unreliable data and reports for use in monitoring and enforcing unpaid accounts. The Department was unable to produce a complete and accurate listing of outstanding balances for all open cases and of unpaid victims and amounts held on their behalf. We combined various reports from different sources to estimate that the Department had open cases with over 2,800 obligations with outstanding balances totaling approximately $3.1 million. Of that amount, approximately $2.7 million (86 percent) was for cases opened prior to our audit period, some cases dating back as far as 1985. Because of the Department's inadequate enforcement efforts, this aging amount is unlikely to be collected. In addition, a general lack of oversight by the Board, County Administrator and Director − such as failure to develop policies and procedures, segregate key financial duties and provide for an annual audit and require a financial report − has resulted in pervasive deficiencies throughout Department operations. The principal typist controlled most cash accounting responsibilities but did not maintain a running cash balance. Therefore, she could not determine the source or purpose of an unidentified cash balance of approximately $11,400. This amount is likely undisbursed restitution that should have been provided to crime victims.

District officials need to improve budgeting practices to effectively manage the District's financial condition. While unrestricted fund balance was within the statutory limit at the end of 2011-12 and 2012-13, it exceeded the statutory limit by a range of 4.2 to 8.1 percentage points over the last three years. Year-end unrestricted fund balance exceeded the statutory limit by about $1.8 million in 2013-14, $3.5 million in 2014-15 and $2.2 million in 2015-16. Based on information provided by District officials, we project a $2.2 million operating surplus in the current year, most of which the Board plans to transfer to the capital reserve. Consequently, we estimate unrestricted fund balance will be about $4.1 million at the end of 2016-17, more than 9 percent of next year's anticipated budget appropriations. The Board does not plan to appropriate any the excess fund balance to finance the 2017-18 budget. Further, the Board did not use the budget process to fund reserves in a transparent manner. The Board passed resolutions to fund reserves at year-end instead of including appropriations in its adopted budgets to fund reserves. As of June 30, 2015, the District had six reserves totaling over $9 million, which included reserves for capital, compensated absences, property loss, retirement, tax certiorari and unemployment. While the Assistant Superintendent provided the Board with an annual report on the status of reserve funds and reserve balances were generally reasonable, total reserves increased by $4.6 million over the past five years outside of the budget process.

District officials could improve their management of fund balances. Total fund balance has increased by $6.3 million (38 percent) to $22.6 million from 2013-14 through 2015-16. While District officials have maintained unassigned fund balance in compliance with the statutory limit each year, they consistently overestimated expenditures and appropriated fund balance that was not used. When the unused appropriated fund balance was added back, the District's recalculated unassigned fund balance significantly exceeded the statutory limits. Furthermore, District officials maintained and established some informal written guidelines for six reserves totaling $16.9 million. While three reserves had adequate support and plans for the balances, three reserves did not, including the retirement contribution reserve, unemployment reserve and insurance reserve.

The Board needs to improve its oversight of District operations. The Board did not provide adequate oversight of the District's Length of Service Award Program (LOSAP). Specifically, it engaged professional service providers for managing various facets of LOSAP without first soliciting competition or entering into written contracts with them. Further, neither the District nor its LOSAP administrator could provide documentation to show how much the District paid for these services. The Board also did not maintain essential financial documentation to detail how LOSAP funds were invested and disbursed. The Board designated a financial advisor to act as custodian of the District's funds, instead of a bank or trust company as required by General Municipal Law (GML). The Board also borrowed $100,000 each year from District reserve funds to fund operating expenses, which is not in compliance with the law. Finally, the Board has not adopted an online banking policy that defines the process for authorizing, processing and monitoring transactions.