The Treasurer did not maintain adequate, accurate and timely accounting records or prepare and provide the Board with accurate periodic reports. The Treasurer also did not prepare and file an annual report of foreign fire insurance funds with OSC. In addition, the Board did not establish and implement adequate internal controls over collections and disbursements. While the Treasurer was responsible for handling all moneys received and disbursed by the Company and monitoring and reconciling the Company's bank accounts, the Board did not review or oversee the Treasurer's work. The Treasurer made three deposits totaling $2,840 that were not recorded on the monthly reports. Furthermore, officials did not maintain documentation to determine whether $1,410 listed on the monthly reports was actually deposited. We also found 24 checks totaling $6,290 were deposited more than 20 days after the check dates. The Treasurer did not maintain adequate records to determine whether $9,700 in cash included in the deposits was deposited in a timely manner. Because records were so poor, the Company could not provide assurance that all cash had actually been deposited. Finally, controls over cash disbursements were not adequate to ensure that all disbursements were authorized, supported and for appropriate purposes.

The Board has not adopted budgets with reasonable expenditure and fund balance appropriations. For fiscal year 2015-16, revenue estimates were generally reasonable. However, in two of the three years the Board adopted budgets that overestimated expenditures and appropriated fund balance and reserves that it did not actually need to fund operations. Due to these expenditure variances, the District has reported operating surpluses for two of the last three fiscal years, with the 2014-15 operating deficit of $10.2 million being due entirely to the voter-approved use of $14.98 million from the District's tax stabilization reserve to fund capital projects. These surpluses occurred despite the Board appropriating an average of $4.7 million in fund balance each year, which made it appear that the District would be using it to fund operations. The District also appropriated from $149,000 to $15.3 million in reserves in each of the last three fiscal years. However, because the Board has not adopted realistic budgets, the District has not used any of the appropriated unassigned balance during that time. Despite presenting budgets to District residents that made it appear that the District was depleting its reserves and fund balance, the Board's continued overestimation of appropriations has increased the District's unassigned fund balance. When unused appropriated fund balance was added back, the District's recalculated unassigned fund balance was nearly 11 percent of the ensuing year's appropriations, exceeding the statutory limit by almost 7 percentage points each year

The Board adopted budgets with estimated appropriations that exceeded actual expenditures by a total of $2.5 million, or an average of 8 percent, over fiscal years 2013-14 through 2015-16, which resulted in appropriated fund balance not being used. By including significant amounts of appropriated fund balance in the budgets that was not needed, the Board made it appear that the District had less unrestricted fund balance than it actually had. Over the past three completed fiscal years, the District reported unrestricted fund balance that ranged from 0.1 percent to 2.4 percent of the ensuing years appropriations, which is well within the 4 percent limit allowed by Real Property Tax Law. However, when unused appropriated fund balance is added back to the reported unrestricted fund balance, the District's recalculated unrestricted fund balance ranged from 7.9 to 11 percent. In addition, the Board did not adopt a reserve fund policy and some reserves are overfunded. We analyzed the reasonableness of the balances in each of these reserves and found that, with the exception of the unemployment, tax certiorari and debt reserves, the balances appear to be reasonable. Finally, District officials have not developed comprehensive multiyear financial or capital plans.

The Board could improve its fund balance management. Over the last three years, the Board budgeted to spend-down fund balances in the general and water funds. However, those funds had surpluses that caused the fund balances to increase. The general fund balance increased by 42 percent to $338,000, or 159 percent of actual expenditures. Additionally, the water fund balance increased by 58 percent to $238,700, or 240 percent of actual expenditures. Consequently, the Village accumulated significant fund balances without clear plans to use this money. Although the Board has not increased the tax levy in the last three years, its budgeting practices, combined with maintaining excessive fund balance levels, has resulted in taxes that are higher than necessary.

Although the Board adopted a policy governing the operations of the extra-classroom activity (ECA) funds, it did not ensure that District officials implemented and enforced the policy. For example, faculty advisers did not ensure that student treasurers issued duplicate press-numbered receipts or maintained any other documentation of the source, date, amount and purpose of cash collections when collecting cash at fund-raisers or during ECA events. Without some form of documentation of the collections, District officials would be unable to ensure that all money collected for the ECA clubs was accounted for and properly remitted to the central treasurer for deposit. In addition, the District's ECA fund policy requires the faculty auditor to review, on a monthly basis, bank statements and bank reconciliations completed by the central treasurer. However, during the audit period, no one independent of the central treasurer performed these reviews. Finally, faculty advisors did not ensure that all student treasurers maintained appropriate ledgers to account for collections, disbursements and a daily running cash balance.

The Board has adopted an authorized signatures policy which authorizes the Treasurer to sign all checks. The policy also authorizes the District Clerk to sign disbursement checks in the Treasurer's absence. However, the District Clerk does not have her own signature flash drive and is not involved in the check signing process. Further, the policy authorizes the use of a signature flash drive to imprint District checks with the required signatures and requires that either the Treasurer or the Assistant School Business Official (ASBO) be present and control the affixing of the Treasurer's signature when checks are run. The Treasurer does not maintain custody of his signature, or supervise the application of his signature during the check signing process. Instead, the ASBO maintains custody of the flash drive that contains the Treasurer's signature and the accounts payable and payroll clerks imprint the signature onto the checks prior to the claims audit and Treasurer's review. Neither the Treasurer, nor the ASBO are present during the payroll or disbursement check signing process.

The Board needs to improve its policies and procedures over credit card use and travel related expenditures to ensure that all such expenditures are adequately supported and for necessary District purposes. District officials used credit cards to pay for 266 purchases totaling approximately $88,100 during the audit period, including 100 charges totaling $28,500 for travel and conferences and 166 charges totaling $59,600 for various miscellaneous purchases. In addition, District officials also disbursed seven checks totaling $2,850 for travel expenditure reimbursements. We also found that credit card charges totaling $32,860, which appear to be for proper District purchases, were either not adequately supported or did not comply with the District's purchasing policy. In addition, credit card charges for conferences totaling $6,185 were not supported by proof of attendance and District officials paid travel credit card charges for meals for individuals who were not authorized by the Board to travel.

The Board did not appropriately manage the District's fund balance to ensure financial stability. Total fund balance has decreased $4.7 million (33 percent), from $14.3 million as of June 30, 2013 to $9.6 million as of June 30, 2016. Approximately 85 percent of the $9.6 million fund balance is restricted for specific purposes and is not available for general operating expenditures. District officials said they want to levy taxes within the real property tax cap while maintaining current levels of service. Due to these self-imposed restrictions, District officials balanced the 2013-14 through 2015-16 budgets by appropriating $13.3 million of fund balance, including reserves of $10.1 million, as a financing source. Although the District is not using as much fund balance as planned, reserves decreased $2.2 million (21 percent) and unrestricted fund balance decreased $2.4 million (63 percent), leaving fund balance at a very low level. While unassigned fund balance increased by $429,000 (91 percent) in 2015-16 to $902,000, this represents 1.8 percent of 2016-17 appropriations. Continually using fund balance, which is a limited resource, to finance recurring expenditures is poor planning for fiscal stability. For example, if 2016-17 operations were funded without the use of fund balance and reserves, the real property tax levy would have exceeded the real property tax cap by $4.5 million (26 percent).

The Board has not established an internal control environment that fosters compliance and transparency due to its lack of policies, guidelines and monitoring. The District has not adopted any policies or procedures required by law or any that outline the District's specific operations. The Board did not ensure that bank reconciliations were performed and did not ensure that the Secretary included sufficient detail in the Board's meeting minutes. Further, the claims to be paid were not presented on an abstract, and Board minutes did not indicate that the Board authorized, via resolution, the payment of claims audited and reviewed. The District is also not in compliance with statutory filing requirements because it has not submitted its financial statements to the Office of the State Comptroller (OSC). Finally, the District pays a certified public accountant (CPA) to maintain its books and prepare and audit the District's financial statements. This arrangement raises questions about the CPA's independence and, ultimately, the reliability of the information in the audited financial statements and their value to the Board as a tool for monitoring operations.

The Board delegated its claims auditing responsibilities by appointing a claims auditor. The District has three credit card accounts, two home improvement store accounts and one credit card account issued by a bank. We reviewed all 128 credit card claims from these three accounts during our audit period. We found the claims auditor did not audit 83 claims totaling approximately $83,000 related to charges on the bank credit card account prior to the payments being made. However, the claims auditor did audit all 45 claims totaling approximately $55,000 for purchases from the home improvement store accounts.

District officials should improve controls over Backpack Program (Program) receipts and disbursements and oversight of non-District group transportation services. District officials deposited Program money, as collected and turned over by the volunteer, into District accounts but did not ensure that the volunteer provided adequate documentation to support the amount of cash collected. As a result, approximately $1,300 in fundraising collections were unaccounted for and the Program's fund did not reimburse the school lunch fund for a minimum of $4,640 spent on Program expenditures. In addition, although the Board adopted a transportation and use of building policy, its intentions for fees to be charged for using District property were not clearly outlined. For example, one non-District group that frequently used the Districts' buses was not charged the standard fee of $2.85 per mile fee charged to other groups. We found that six of the 23 non-District groups who used District bus services did not fill out a Use of District Property form, as required by the policy, and obtain the Superintendent's approval to use the buses. Furthermore, District officials have not updated the District's actual cost per mile since 2009. They prepared a cost per mile analysis for reimbursement rates after we began our audit. We reviewed their analysis and determined that the District cost per mile was $4.59. However, District officials charged most users $2.85 per mile, a difference of $1.74 per mile. As a result, District officials charged non-District groups $59,000 during our audit period, when it actually cost the District $105,000 to provide these transportation services.

The Board and District officials have not effectively managed fund balance and have allowed unrestricted fund balance to exceed the statutory limit for the past three fiscal years by an average of $2.1 million. As of June 30, 2016, unrestricted fund balance totaled $2.6 million and was 15 percent of 2016-17 budgeted appropriations, exceeding the statutory limit of 4 percent by $1.9 million (11 percentage points). Although District officials appropriated fund balance each year, these funds were not used as budgeted because District officials consistently overestimated appropriations by an average of $690,000, or 4 percent, each year. District officials also allowed reserve balances to accumulate to excessive levels and have consistently levied taxes for expenditures that could have been paid for with reserve funds. The District has seven general fund reserves totaling more than $2.3 million but the Board has not developed a written reserve fund policy or documented its rationale for setting aside funds in reserves, optimal funding levels or conditions under which the reserves would be used. We found that four reserves with balances totaling approximately $1.5 million were excessive. As a result, District officials missed opportunities to reduce taxes and return excess funds back to the residents.

District officials have ensured that cash disbursements are adequately supported, for District purposes and properly recorded. They have established effective policies and procedures over cash disbursements. Except for minor discrepancies, which we discussed with District officials during our fieldwork, cash disbursements were adequately supported, for District purposes and properly recorded. We commend District officials for designing and implementing effective policies and procedures to help ensure the accuracy of cash disbursements.

The Board needs to improve its oversight of the County's water and sewer districts' financial operations. The Board did not establish policies and procedures governing the financial operations of the water and sewer districts, including billing, making account adjustments or establishing how shared district expenditures should be allocated. Additionally, formal written agreements had lapsed or no evidence was presented to us to indicate that an agreement was ever initiated with two of five municipal water and sewer customers, its four largest commercial customers and its two water and sewer service providers. While the Board adopted increased rates for water district 1(WD1) in 2016, it did not analyze user rates for either sewer district to ensure the rates were adequate for each districts' operational needs. Because of the lack of timely rate analysis and adjustment, the financial condition of WD1 and sewer district 1 (SD1) declined significantly from 2013 through 2015 while sewer district 2's (SD2) fund balance was excessive. County officials purchased approximately 143.6 million gallons of water to supply WD1 customers and did not prepare water reconciliations to determine the amount of unaccounted-for water. We compared the amount of water purchased with the amount of water billed from January 1, 2015 through June 30, 2016. We determined that unaccounted-for water totaled approximately 38 million gallons (26 percent) or 2.6 times the Federal Environmental Protection Agency (EPA) industry standard of less than 10 percent. The approximately 23.6 million gallons of unaccounted-for water in excess of the EPA allowance would be valued at more than $78,000. Finally, County officials did not develop formal long-term financial plans or adequate capital plans related to the water and sewer districts.

The District paid a total of $66,689 to three Commissioners and two employees for payments in lieu of health insurance during our audit period. However, because the plan was not implemented in a prudent and cost effective manner, the buy-back program actually increased the District's cost of providing health insurance by $37,179. This occurred because the District allowed payments to individuals who did not actually have insurance with the District and to an individual who canceled the District insurance and obtained insurance through a spouse who was also a District employee. In addition, participants were not required to annually certify their eligibility to receive payments and their affidavits affirming other insurance coverage were between three and 14 years old.

In fiscal years 2011-12 through 2015-16, the Board appropriated fund balance totaling $4.9 million to fund operations. However, due to operating surpluses in four of the five years, $3.9 million of the appropriated fund balance (80 percent) was not used. The District did not use this appropriated fund balance because it had operating surpluses that resulted from overestimated expenditures. For example, for these five years, transportation salaries were overbudgeted by $1.5 million (19 percent) and retirement payments by $2 million (9 percent). District officials feel their budgeting practices are prudent and protect residents from fluctuating tax levies. In addition, the Board has not adopted a plan that addresses accumulating and using reserve funds. Such a plan would help inform District residents about how resources will be used. The District's tax certiorari reserve totaled approximately $8.5 million at the end of the 2015-16 fiscal year. We calculated the amount of reserve needed based on the 60 percent historical payments and determined the tax certiorari reserve was overfunded by approximately $2.1 million (25 percent) as of June 30, 2016. When the unused appropriated fund balance and excess tax certiorari reserve amounts are added back, the District's recalculated unrestricted fund balance ranged from 7 to 13 percent of the ensuing year's budget, exceeding the 4 percent statutory limit.

The Board did not adopt policies and procedures for granting, revoking, modifying and monitoring individual access rights to the networks. In addition, the Board has not adopted a comprehensive disaster recovery plan or policies and procedures for password security management. We compared a list of all individuals who have access to the networks to the payrolls and volunteer rosters to determine whether users are currently employed or affiliated with the Village and should have access. We found that eight individuals who were no longer affiliated with the Department still had active user accounts and could access the Department network. Finally, although the Board has adopted an acceptable use policy for the use of Village-owned computers, email and the Internet, the Board did not provide users with security awareness training to help ensure they understand security measures to protect the Village networks.

The Board has taken actions to improve the Village's financial condition, but Village officials should remain vigilant to continue these improvements. In February 2015, The Board adopted a fund balance policy that established the minimum desired fund balance levels the Board wants to maintain in each operating fund and budgetary procedures to help the Village achieve and maintain those levels. The policy sets a minimum fund balance target of $500,000 for the general fund, $250,000 for the water and sewer funds, $100,000 for the hydroelectric fund and $50,000 for the refuse fund. Each month, the Board receives detailed budget versus actual reports for all funds. In addition, the Board approves budget modifications at regular Board meetings as necessary. However, even though the Board is actively engaged in monitoring the budget, the Village's hydro-electric and sewer funds had deficit fund balances as of May 31, 2016. In addition, the general fund's unrestricted fund balance was relatively low, leaving the Village vulnerable to cash flow concerns and fiscal stress. Although Village officials have taken steps to improve the Village's financial condition, the Board has not developed and adopted comprehensive, written multiyear financial or capital plans. It also does not have any other mechanism in place to adequately address the Village's long-term operational needs.

The Board has not ensured the maximum occupancy of tenant housing units to qualified applicants. As a result, the Authority maintained a consistently high vacancy rate (33 percent vacancy rate for senior housing and 9 percent for non-senior housing as of March 31, 2016). As a result, the Authority annually lost potential revenue that ranged from approximately $72,000 to $117,000. Despite the lower occupancy rate, Authority officials did not demonstrate urgency to ready all vacant apartments to rent. For example, the March 2016 vacancy report indicated that the average vacancy period was two years, with three units remaining vacant for over eight years. We further identified both tenants and tenant applicants that were not treated in a consistently fair and equitable manner, resulting in questionable application rejections, waitlist cancellations and, conversely, potential preferential treatment to others. The result of the numerous inconsistent application rejections and cancellations further compounded the Authority's high vacancy rates. The high vacancy rates occurred because of the Authority's poor control environment. We found deficiencies in the information technology (IT) controls over the Authority's computers, including poor malware protection and insufficient IT governance. The Authority recently experienced at least two malware infections, and we found inappropriate and questionable Internet use on Authority computers, including access of pornographic websites. As a result, the Authority's personal, private and sensitive information (PPSI) is at risk of unauthorized access, public disclosure, inappropriate modification or interruption of legitimate use. Moreover, time spent visiting pornographic, social networking and shopping sites could have been used to fill vacant apartments and reduce the vacancy rates.

The Yonkers Public School District's budget request is $589.4 million for appropriations; however, the City's Executive budget contains revenues for the District of $572.9 million, resulting in a shortage of approximately $16.5 million. The District's budget request does not include an appropriation for textbooks and underestimated the appropriations for Social Security tax and charter school tuition payments. The City continues to rely on nonrecurring revenue, such as fund balance, to balance its budget. The City transferred $600,000 to its Community Development Fund, leaving a budget shortfall in the general fund. Revenue estimates for mortgage tax, income tax surcharge, parking violations, metered water sales, and other fees may not be achievable. The City's appropriations for tax certiorari settlements may not be adequate, the appropriation for police overtime could be underestimated, and Social Security tax is underestimated. The City's proposed budget does not include a contingency appropriation. The lack of a contingency fund, along with the near depletion in the City's unassigned fund balance, leaves the City vulnerable to unexpected events.