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.

The Board did not adequately manage the finances for the sewer or water capital projects or develop a long-term plan that evaluated each project's financial impact on the annual operating budget. The sewer fund did not have sufficient cash to pay $296,000 of new debt service costs. As a result, the sewer fund had to borrow approximately $293,000 from the general fund and the loan has not been repaid because the sewer fund's financial condition has deteriorated. In addition, the Board did not approve water capital project change orders, which resulted in the project's budget being overspent by $179,000 (5 percent). As a result, there will be limited cash for water operations and unrestricted fund balance in the water fund will be significantly reduced. Unless these problems are addressed, future operations could be adversely impacted.

The Board adopted an employee handbook in 2005 that outlined policies and procedures regarding time attendance and leave accrual benefits including compensatory time. However, the Board did not ensure that Village officials and employees consistently followed the established procedures. For example, we found the time sheets for the former Deputy Clerk and current Clerk were not consistently approved and signed. Furthermore, the current Treasurer's time sheets were never approved and signed. Currently, one employee is eligible for compensatory time. We found that the Board does not require this employee to maintain a log of compensatory time earned or used and the employee is not maintaining a log. In addition, one employee, who has worked 28 years for the Village, is eligible for vacation leave. This employee told us he has never used vacation leave when he takes time off, does not know how much vacation leave he earns each year, does not know how much leave he has accrued nor how much he will be entitled to as a payout upon retirement. This employee does not use a time attendance system or maintain leave records for time taken or accrued.

Based on the results of our review, except for certain matters, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. Our review identified issues that require the City Council's attention. The proposed budget includes estimated revenue for refuse and garbage charges of $9.45 million. These amounts include a mid-year increase of refuse and garbage charges to $15 per sanitation parcel, which the City Council has not yet authorized. If the proposed increase is not authorized, or is authorized at a different rate, budgeted revenues for refuse and garbage charges should be modified accordingly. The City's proposed budget includes appropriations for overtime salaries totaling $2.7 million. The City expended $2.7 million in the first nine months of the current fiscal year. In addition, overtime costs have averaged approximately $3 million in each of the last five completed fiscal years. Although the City has improved its projections for overtime costs in certain departments, based on the trends it does not appear that the total proposed appropriation will be sufficient. Because officials decided to adopt the budget on May 16, 2017, rather than the initial May 23, 2017 adoption date, and did not communicate this change to our Office, we were not able to provide recommendations to the governing board in a timely manner.

The Board and Village officials need to improve controls over water department operations. Because the Village does not use water meters, Village officials cannot determine how more than 90 percent of the water produced is consumed. While the Village produced approximately 98 million gallons of water during the 2015-16 billing cycle, it recorded commercial usage of about only 7 million gallons. Therefore, Village officials have no information concerning whether the remaining 91 million gallons was consumed by residential customers, used for municipal purposes or lost to leakage or unapproved use. In addition, Village officials have not established proper procedures to ensure adequate collections of water rents receivable. As a result, the Village maintains a balance of $27,370 of water rents over 90 days past due, which represents approximately 8 percent of total 2015-16 water billings. Furthermore, approximately 10 percent of all 2015-16 water billings had a late fee that was charged improperly, resulting in a loss of $1,110. By identifying the sources of unaccounted for water and improving water billing and collection procedures, the Village could realize significant cost savings and revenue enhancements in water department operations.

The local Board members did not provide adequate oversight of the management company (Company) or actively direct and monitor the School's financial operations. The Company performed all aspects of the School's financial transactions, which School officials could not monitor because they did not have access to the accounting records and bank accounts. Further, the local Board members did not regularly receive monthly financial reports from the Company, and reports submitted since August 2015 were insufficient and lacked information, such as a detailed budget-to-actual report and cash flow statement. As a result, the School's budgets were insufficient to adequately support ongoing operations, financial records and reports were inaccurate and incomplete, and the local Board member's ability to carry out their oversight responsibilities was severely limited. Consequently, the Board was not fully aware of the School's financial problems and was not in a position to take timely, effective corrective steps. We also found that one School Trustee may have a prohibited interest in a School contract. Because the Board has conceded management of the School to the Company with limited oversight, School officials and taxpayers cannot be assured that the School's financial transactions are appropriate and in the best interests of the School rather than the Company.

District officials need to ensure that District staff comply with the Board's purchasing policy. Staff did not always seek competition or obtain the required number of quotes when purchasing goods and services. In addition, District officials did not have written agreements with four professionals for services totaling $27,048. As a result, there is an increased risk that goods and services may not be procured in the most economical manner and that the District could be paying more for professional services than intended. The Board also did not ensure that all claims were supported with documentation and that claims were for appropriate District expenditures. Twenty-six claims totaling $311,774 had deficiencies including a lack of receiving slips, invoices, vouchers and original receipts. In addition, the District has a debit card that was used for 25 transactions totaling $7,017. Many of these transactions did not have sufficient documentation and the use of the debit card allows payments to be directly withdrawn from the District's bank account before approval.

Village officials calculated water and sewer bills using estimated meter readings when actual meter readings were unavailable or unreasonable. While it is not uncommon for a Village to bill customers based on estimated readings, Village officials should review excessive usage, take steps to correct leaks and broken meters and contact residents to ensure they are accessible for meter readings. Village officials do not reconcile gallons of water produced to gallons billed. During our audit period, the Village produced 35.8 million gallons of water and billed 16.4 million gallons, resulting in an excess of 19.4 million gallons (54 percent) produced but not billed. Village officials believe the excess gallons produced over gallons billed is primarily the result of the tower's frequent and severe leaks. However, until the tower is repaired and water produced is reconciled with water billed, the Village lacks assurance that the tower's leaks are the predominant leaks in the infrastructure. The cost of producing the excess gallons of water during our audit period was approximately $9,600. The Board has not adopted a long-term capital plan to address this issue.

From fiscal years 2013-14 through 2015-16, budgeted appropriations in the general fund exceeded actual expenditures by an annual average of $99,600 (36.8 percent). Budgeted general fund appropriations exceeded actual expenditures by an annual average of $99,600, or almost $300,000 over the last three years combined. Operating surpluses totaled over $230,000 for fiscal years 2013-14 through 2015-16.The average budget to actual variance for total expenditures from 2013-14 through 2015-16 was 37.3 percent. Unrestricted fund balance increased $148,357 (60 percent) over the past three years to $396,383 as of May 31, 2016, which represents 105 percent of the ensuing year's budgeted appropriations. Village officials have not developed a comprehensive, written multiyear financial or capital plan.

The Land Bank executes a Development Enforcement Note and Mortgage Agreement (Agreement) that sets the Land Bank's lien terms, or enforcement mortgage. As part of this Agreement, the buyer agrees to improve, develop and/or repair the property in accordance with a redevelopment plan, which addresses the scope of the renovations needed. Once the required renovations or improvements are complete, Land Bank officials discharge the mortgage and the property is considered to be back in productive use. We found that procedures to monitor buyers' compliance with the redevelopment plans exist, but monitoring was not always timely. Enforcement mortgage property records did not always contain work-in-progress status and an activity history was not retained for each.