The Board did not audit all claims before approving payments or adopt a resolution allowing eligible claims to be paid in advance of audit. Furthermore, the Supervisor paid 13 claims totaling approximately $8,300 before the Board audit. Finally, the Board approved 22 claims totaling approximately $39,000 that did not contain sufficient documentation to determine whether the amounts paid were for legitimate Town purposes. We reviewed other available evidence and determined that these claims were for legitimate Town goods and services.

The Supervisor did not maintain sufficient, complete and accurate accounting records. He maintained two accounting systems for the Town's funds that were not set up to properly account for transactions by individual funds; and the two systems did not match one another. Consequently, the Supervisor was precluded from preparing accurate, periodic reports to the Board and from filing the past two annual financial reports. Furthermore, the Board has not conducted an annual audit of the Supervisor's records for several years. Without timely up-to-date financial information, the Board was unable to adequately monitor and manage the Town's financial operations and was unaware that the Town had accumulated significant fund balances in its two major funds. We project that at the end of 2016, the highway and general fund balances were higher than necessary. The general fund balance was approximately $975,000, or 372 percent of the ensuing year's budgeted appropriations, and the highway fund balance was approximately $786,000, or 117 percent of the ensuing year's budgeted appropriations.

The Justices provided oversight of Court activity; however, they could improve their oversight to further safeguard Court money. We sampled 42 various Court transactions and determined that they were properly accounted for because these transactions were recorded as the Justices adjudicated and the associated Court money was deposited and reported to the Justice Court Fund. We also tested 13 disbursements and found that, although they were properly disbursed to appropriate parties, the Justices allow the Clerk Manager to sign all disbursement checks. One Justice explained his time constraints would make it difficult to sign all the checks in a timely manner given the large volume of returned bail each month. However, if the Justices signed the checks it could serve as a preventative control and further improve their current oversight of disbursements.

The Board has not adopted policies to sufficiently protect the Town's information technology (IT) assets and did not ensure that the adopted acceptable use policy was enforced or monitored. We found that users were able to make changes, additions, deletions and adjustments without authorization or subsequent review. Town officials did not effectively manage software and licenses. The Board did not ensure that the Town had adequate written agreements with the IT service provided or bank used for online banking. Further, Town officials did not adequately segregate online banking duties and did not dedicate a separate computer for online transactions to limit access to online bank accounts. In addition, we found that the Board did not adopt an IT disaster recovery plan. The Board has not adopted a comprehensive multiyear financial and capital plan or an adequate fund balance policy. While the Board adopted a fund balance policy that set the reasonable amount of fund balance in the town-wide (TW) and town-outside-village (TOV) general and highway funds at 15 to 20 percent of the ensuing year appropriations, the policy did not establish any guidelines for the other funds, such as the sewer and water funds. Further, the Board did not ensure that the fund balance policy was followed. As a result, the Town accumulated excessive fund balance in the TW, TOV, sewer and water funds. As of December 31, 2016, the TW, TOV, sewer and water funds had unrestricted fund balances that were 55, 57, 107 and 153 percent of ensuing year appropriations.

Driving range fees were not remitted to the Town Comptroller’s office in a timely fashion, and no one independent of the Director of the Department of Parks and Recreation reconciled the daily sales logs to his annual report of driving range fees.

The Town did not accurately maintain employees' leave accrual records. The maintenance of leave accrual records during the 2015 fiscal year was decentralized. Multiple employees were responsible for manually accounting for employees' leave accruals with no oversight. The Secretary to the Supervisor maintained leave accrual records for the landfill attendant and for herself; the highway foreman maintained them for the Highway Department employees; and the Assessor and landfill supervisor maintained their own. In addition, the bookkeeper, who was responsible for processing payroll, was not provided with the leave accrual records maintained by these employees. As a result, the bookkeeper could not know whether employees had sufficient leave time available prior to being paid for it. Additionally, Town officials were not aware that the leave accrual records maintained by the landfill supervisor for himself were inadequate. The records did not include any information for sick and personal leave, but only for vacation leave; and the vacation leave records – while including the leave time that was earned and the total amount used each year – did not include starting leave accrual balances or the dates that leave was used. In total, as of September 30, 2016, six employees' leave accrual balances were overstated by 712.75 hours valued at $12,207 and understated by 14.75 hours valued at $231.

The Town did not seek competition to procure goods and services totaling approximately $268,000 and did not have a current contract with the IT consultant. When purchases are made without a competitive purchasing process, there is the risk that goods and services were not purchased at the best prices and were not obtained prudently. Further, without adequate written contracts, neither party has a clear means of determining the basis for compensation. Although Town officials contracted with a consultant for IT services, they did not develop a disaster recovery plan, or establish controls to prevent employees from installing games or visiting social networking websites. We tested seven of the Town's 27 computers and found that multiple game programs had been downloaded onto them. These games can potentially possess spyware and may cause a denial of service through an application crash. In addition, we identified questionable Internet use by Town employees including visiting websites for online banking and investment, shopping, travel, sports, social networking and entertainment. Employees also performed other Internet research and browsing of a personal nature using the Town's computers. One computer had numerous instances of inappropriate website access, including personals (dating), solicitation of various sexual acts and pornography. As a result, the computer system and data are at risk of loss and damage. Employees' inappropriate use of Town computers also results in lost productivity.

The Board and Supervisor should improve their management of the Town's fund balances. The Town has accumulated fund balance totaling $358,706 in the general fund and $515,112 in the highway fund without clear plans for the use of these accumulated funds. Town officials have identified potential uses for the funds including needed repairs at the highway garage or road improvements, but have not developed financial plans to address these needs. In addition, Town officials have not planned for the Town's established reserves to fund these needs.

The Board did not provide adequate oversight of Town purchases to ensure the prudent and economical use of its residents' money. While Town officials generally competitively bid and utilized New York State Office of General Services (OGS) or county contracts where appropriate, they did not seek competition for professional services and did not obtain the proper number of quotes for purchases subject to their policy. As a result, there is a heightened risk that purchases were not at the lowest cost to the Town residents. Furthermore, we found the Town could have saved over $6,000 if they had purchased heating oil and road sand through the available OGS and county contracts.

While Town officials effectively managed town-wide fund balances, they could improve their management of town-outside-village (TOV) fund balances. The Town has accumulated fund balance in the general and highway TOV funds without clear plans to use these moneys. More specifically, Town officials have not developed a fund balance policy, nor have they established any reserves or developed formal long-term capital or financial plans. As a result, the Board may have raised taxes unnecessarily in the TOV funds and may have missed opportunities to improve the level of service available to residents.

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.