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.

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.