The District did not seek competition for five professional service contracts totaling $265,706. Although we found the services procured were for legitimate and appropriate District purposes, without a competitive process, District officials and the Board do not have assurance that professional services are being procured in the most economical way and in the best interests of residents. We also examined 73 invoices totaling $105,728 requiring quotes and found 64 invoices totaling $44,956 in which no quotes were documented. The District generally complied with competitive bidding statutes.

District officials specified that the Treasurer and Deputy Treasurer are authorized to process online banking transactions and developed secondary approval requirements for electronic fund transfers (EFTs) based on each user's access. However, the Board did not adopt an online banking policy defining authorization, process and monitoring of online banking transactions. The bank provides email notifications for each EFT but District officials do not review them to verify transfer accuracy and legitimacy. In addition, while the Treasurer uses a computer designated strictly for online banking transactions, the Deputy Treasurer does not. Finally, not all employees involved in the online banking process have received Internet security awareness training.

The facilities department purchased 4,030 gallons of gasoline and 921 gallons of diesel fuel for vehicles and equipment used to maintain the buildings and grounds. The facilities department's informal procedures require employees that dispense fuel to fill out a log sheet with the vehicle, odometer reading, gallons dispensed and their names. However, because employees did not record the meter reading showing the total gallons dispensed to date, officials do not have sufficient information to ensure that the log is complete and accurate. In addition, facilities department staff did not maintain a physical inventory record showing the amount of fuel in the tanks based on periodic stick readings. We attempted to reconcile fuel purchases to usage from July 1, 2015 through December 31, 2016 but were unable to do so due to missing information on the log sheets. Without adequate fuel inventory records and reconciliations to physical inventory readings, District officials have no assurance that fuel purchased is properly accounted for and used only for proper District purposes. In addition, there is an increased risk that fuel leaks or losses could remain undetected, which could prove costly over a period of time.

Village officials did not adequately monitor or develop a plan to address the causes for the difference in water produced by the Village's water system to the amount metered. For the 2015-16 fiscal year of billing, the Village pumped 93.2 million gallons of water, but only metered use of approximately 27.5 million gallons. The Village could not account for approximately 65.7 million gallons of water, approximately 71 percent of the water pumped, valued at approximately $42,000. The Board did not sufficiently audit claims to ensure they were all for proper Village purposes. Instead, the Board only reviewed the abstract of claims and particular invoices of claims it had questions about, which is inconsistent with New York State Village Law. Village officials paid 161 claims totaling approximately $43,000 without proper Board approval. The Board did not adopt a comprehensive IT policy governing the Village's IT system. Although the Board established policies and procedures addressing acceptable computer use, it did not enforce these policies and did not address disaster recovery plans.

The Board needs to improve its oversight of Village financial operations to ensure that the adopted budgets are reasonable, adequate fund balances are maintained and competition is sought when procuring professional services. Village officials developed budgets for the general fund that had insufficient appropriations and adopted sewer fund budgets with overestimated appropriations. As a result, from 2013-14 through 2015-16 the unrestricted general fund balance decreased by approximately $375,000 (65 percent) due to operating deficits caused primarily by underestimated budget appropriations for legal expenditures, while the unrestricted sewer fund balance increased by approximately $78,000 (20 percent) due to operating surpluses of approximately $167,000 caused primarily by the overestimated budget appropriations of approximately $140,000. Finally, Village officials did not always seek competition when selecting professional service providers. Therefore, the Board does not have adequate assurance that services were procured in the most economical manner and in the best interest of Village residents.

The District's adopted budgets were unrealistic and included appropriated fund balance not used as planned to fund operations. The budgets overestimated appropriations by almost $1.2 million or 7.7 percent from 2013-14 through 2015-16. Unrestricted fund balance increased to almost $854,000 or 15 percent of the ensuing year's budgeted appropriations, exceeding the statutory limit by 11.1 percentage points as of June 30, 2016. Finally, the retirement contribution reserve and unemployment insurance reserves appear overfunded.

The Board and District officials did not ensure that budget estimates and fund balance were reasonable. The Board adopted budgets for fiscal years 2013-14 through 2015-16 that appropriated a total of $19 million in fund balance to finance operations. However, because the District overestimated expenditures by $19 million over the three-year period, the appropriated fund balance was not used. As a result, the District's unrestricted fund balance has exceeded statutory limits. When adding back the unused appropriated fund balance, the District's recalculated unrestricted fund balance averaged 10.8 percent of the subsequent year's appropriations, exceeding the statutory limit by almost 7 percentage points.

District officials did not apply for all the transportation State aid to which the District was entitled for bus purchases. We found that District officials had not submitted any State aid forms to SED for the 35 buses purchased during our audit period. The District was in danger of losing approximately $1.7 million in transportation State aid, consisting of $509,000 that the District would have received from 2013-14 through 2016-17 and $1.2 million that we project the District would have received from 2017-18 through 2021-22. District officials also did not adequately safeguard personal, private and sensitive information on District servers. Although District officials properly segregated duties within the financial software, they could better manage network user accounts and improve safeguards of IT resources by developing and implementing a disaster recovery plan. Because of the sensitivity of some of information, we did not discuss all results in this report, but instead communicated some confidentially to District officials.

We found that certain billings to school districts of residence were not accurate and student enrollment and attendance was not always adequately supported. For students with less than full-time enrollment, School officials incorrectly calculated the FTEs and overbilled by more than $6,250. In addition, School officials did not retain proof of residence documents for 44 of the 55 students (80 percent) we examined, or retain the 2015-16 attendance records for computing FTEs and billing during the majority of our audit period. As a result, School officials could not provide data to support billings in case of a dispute and may not be in compliance with records retention requirements.

The Board should improve its oversight of the District's fiscal operations. The Board adopted unrealistic budgets that contributed to the growth of total fund balance by 21 percent between 2014 and 2016 (to $1.6 million). District officials have not established the levels of fund balance to be maintained or thresholds for reserves. As a result, the Board increased the tax levy by 7 percent, needlessly taxing the residents and overriding the tax levy cap in 2016 and 2017. Furthermore, the Treasurer was performing all financial transactions without sufficient oversight or mitigating controls. Although the Board established a financial and internal audit policy that would provide mitigating controls to safeguard District money, the Board was not following it. As a result, there is an increased risk that errors or improper payments could occur and not be detected.

District officials need to improve internal controls to help ensure that extra-classroom activity cash receipts and disbursements are properly accounted for. Although central treasurers deposited collections in a timely manner, student treasurers did not maintain adequate supporting documentation for cash receipts totaling $127,553. Student treasurers did not collect sales tax on all applicable sales and faculty advisors were not aware that sales tax needed to be collected on certain sales. In addition, 25 disbursements totaling $37,217 made by the central treasurers and 117 disbursements requested by student treasurers totaling $80,817 lacked the proper supporting documentation. Student treasurers, generally, did not maintain cash receipt and disbursement ledgers and none of them prepared profit and loss statements for fundraising activities. Further, the Board did not appoint a faculty auditor to periodically compare student ledgers with central treasurer ledgers and investigate and resolve differences.

The Village's Point System is not consistent with General Municipal Law and points were not awarded in accordance with the Point System. Our review of the length of service award program (LOSAP) records for 47 of the Department's 138 active volunteers showed that at least 27 of these volunteers did not receive accurate LOSAP points. As a result of these deficiencies, volunteer firefighters may not be properly receiving LOSAP points for certain qualifying activities. Twelve of the 47 volunteer firefighters did not meet the 50-point minimum and therefore have not received accurate LOSAP service credit, which may result in their potential loss of future benefits or, conversely, in the Village incurring more LOSAP costs than necessary.

The Office of the State Comptroller, as Fiscal Agent for the City of Yonkers (City), determined that the City's adopted budget for fiscal year 2017-18 and the related justification documents are in compliance with the requirements of the Fiscal Agent Act (Chapter 488 of the Laws of 1976). The City's 2017-18 budget totals $1.15 billion. The budget includes operating and debt service funding of $590.7 million for the Yonkers Public Schools (District) and $563.6 million for the City. The 2017-18 budget is $38 million more than the City's budget for 2016-17, an increase of 3.4 percent. The 2017-18 budget relies on nonrecurring revenue, such as fund balance, to balance its budget. The City could potentially face a shortfall of approximately $1.7 million in revenue if income tax surcharges remain at 2016-17 levels. The City could potentially face a shortfall of $515,000 if revenue estimates from the Parking Violations Bureau are not realized. Police overtime costs could potentially be over budget by as much as $2.6 million based on the 2016-17 fiscal year overtime costs. The City plans to borrow up to $13 million for tax certiorari settlements in the 2017-18 fiscal year. Social Security tax payments are underestimated by approximately $828,000 in the 2017-18 budget. The City's adopted budget does not include a contingency appropriation, which leaves the City vulnerable to unexpected events. With the 2017-18 budget, the City will have exhausted 93.21 percent of its taxing authority and the City's ability to increase property taxes may be limited in future years if property values do not increase. Over the last 10 years, the City's outstanding debt has grown 15 percent and the City's debt service payments have risen 38 percent.

The Justices correctly reported financial activities to the Justice Court Fund on a monthly basis. However, they did not perform bank reconciliations or accountability analyses on a monthly basis during the audit period. As a result, two of the three Judges had cash overages totaling $1,743 that could not be explained. In addition, all bail moneys were not deposited into the bank accounts of each Justice or into a joint bail account but instead were deposited into one Justice's account. Also, five of nine bail receipts tested totaling $610 were not deposited in a timely manner. As a result, it is more difficult to track bail moneys and the Court is more susceptible to the unauthorized use, disposition or theft of cash collected.

The Board needs to improve the claims auditing process to ensure all claims are properly audited, adequately supported and for legitimate Authority purposes. The Board did not ensure that an audit of claims was performed in compliance with Authority bylaws, which authorize the Treasurer to review all Authority bills and advise the Board concerning the accuracy of such claims. Instead the Director audits all claims (after the clerk assembles the claims packets and prepares the warrant). The Director also signs the checks and approves all purchases. However, these duties (i.e., approving purchases, signing checks and auditing claims) are incompatible because the Director has the ability to procure and pay for goods or services that may not be for valid Authority purposes. The Board needs to improve its cash receipt process to ensure cash receipt functions are adequately segregated to safeguard Authority assets. The Board did not adopt policies and written procedures for the Authority's cash receipt process. The clerk's duties were not adequately segregated because she was responsible for collecting receipts, recording transactions in the financial software, preparing and making bank deposits and preparing bank reconciliations. Authority officials did not implement compensating controls, such as providing additional oversight or routinely reviewing the clerk's work, to ensure that all collections received are reconciled with the amounts recorded and deposited.

We reviewed the District's process for billing nonresident tuition and found the District could have received an additional reimbursement of more than $800,000 over the last two fiscal years from school districts of residence. The District bills based on nonresident tuition rates calculated by the New York State Education Department (NYSED), but the District's actual costs are generally greater than NYSED rates. In addition, the District is not billing for special education services provided to nonresident students who attend nonpublic schools. We also reviewed the District's process for identifying students and calculating costs to claim Excess Cost Aid and found it was generally reasonable and adhered to NYSED guidelines. However, the District does not include assistive technology purchases or rentals in the calculation of costs. These costs are considered eligible expenditures in the year the purchase is made and should be added to the total cost for students claimed for Excess Cost Aid. Our audit also included a review of payroll records for a sample of 25 grant employees and grant expenditures (goods and services) totaling $7.7 million. We found no material discrepancies. Grant expenditures appeared to be for appropriate purposes and were properly supported. The District generally reported grant activity to grantors properly and accurately.

College officials have adopted effective fixed asset policies and procedures. The fixed asset policies and procedures establish the minimum cost to determine when assets should be recorded in the inventory records. The College's policies also identify the individuals responsible for tagging assets, adding them to the inventory records and disposing of the assets. We commend College officials for establishing effective fixed asset policies and procedures.

We found the Committee and Company officials have not provided adequate oversight of the Company's financial operations. The Treasurer did not prepare monthly reports including a list of all moneys received and deposited and the list of bills presented or paid. The Board did not conduct a biannual audit of the Treasurer's books, as required by the Company's bylaws. We also found 27 bank withdrawals and transfers, totaling $21,841, that were not approved. Company officials also do not require detailed fundraising reports showing the revenues and expenses of each fundraising event. Officials do not issue press-numbered receipts for collecting revenues and do not require any supporting documentation for reimbursing fundraising expenses. Because of these control weaknesses, the Company either underreported or under collected $1,985 in revenues for the 2013 and 2014 banquets. The lack of proper Committee oversight increases the risk of fraud, waste or abuse.

The Board needs to improve its budgeting practices to ensure the adopted budgets are accurate and take action to address the reasonableness of fund balance, including reserves. The Board and District officials prepared budgets for the 2013-14 through the 2015-16 fiscal years that overestimated appropriations. District officials appropriated $2.4 million of fund balance that was not needed to finance operations because the District's budgeting practices produced operating surpluses totaling $2.1 million during these years. When unused appropriated fund balance was added back, the District's recalculated unrestricted fund balance exceeded the statutory limit by up to 4 percentage points. In addition, the District's reserves, totaling approximately $6.6 million as of June 30, 2016, were properly established and used in compliance with statutory provisions. However, the Board and District officials did not take appropriate action to address the reasonableness of reserves. Although the Board adopted a reserve fund policy, the policy did not stipulate the maximum funding levels for each reserve, the conditions necessary for using reserves to finance related costs or the circumstances under which reserve funds will be replenished. We found that three of the District's six reserves appear overfunded.

The Board did not effectively manage the Village's financial condition. The Board did not adopt effective budgets because it did not receive accurate and sufficient financial information from the Clerk-Treasurer. As a result, the general fund experienced operating deficits in two of the three most recent years and the water fund experienced operating deficits in all of the three most recent years. In addition, unpaid property taxes ($101,000) and water bills ($64,000) have severely impacted the Village's financial condition. Village officials are actively addressing this issue. The Clerk-Treasurer did not maintain complete and accurate financial records. As a result, the financial reports provided to the Board were not accurate. The Clerk-Treasurer, and the account clerk, made numerous and various billing errors related to real property taxes and water rents. In addition, the Clerk-Treasurer and a laborer were paid the wrong hourly wage. Both were paid a lower hourly wage than was included in the budget. However, with their unbudgeted overtime, they both received more than the budgeted amount for their respective positions. The Clerk-Treasurer has not filed the Village's 2014-15 and 2015-16 AUDs with our office. Finally, although the Mayor was aware of the annual audit requirement, the Board did not conduct, or cause to conduct, an audit of the Clerk-Treasurer's records and reports.