The Board did not audit and approve claims prior to payment. The Library's bylaws do not address the requirement for an audit of claims, and the Board did not adopt a written claims audit policy. The Director reviews and approves invoices and provides them to the Library's senior clerk, who then prepares checks. Checks require two signatures prior to payment – the Director and the Board President. However, the Board President pre-signs blank checks and does not review the claims for which checks are written. In addition, the Board minutes did not indicate that the Board conducted an audit of claims. Internal controls are compromised when the same individual who reviews and approves claims for payment also signs the checks to pay those claims and when checks are pre-signed. We reviewed 171 claims totaling $59,967 to determine whether they were itemized, contained adequate supporting documentation and were proper Library expenditures. Other than a few minor exceptions that we discussed with Library officials, claims were generally properly itemized, had adequate supporting documentation and appeared to be for proper Library expenditures.

The typical duties of a library treasurer carry with them a high degree of public trust and may involve the exercise of judgment or discretion. As such, without express statutory authority, these functions may not be delegated to an independent contractor. The Treasurer's status, as either a Library officer or independent contractor, is unclear. While this appointment and the duties attached to this function are indicative of those of a public officer, it appears this individual was engaged to perform the duties of Treasurer as an independent contractor. Among the indications of an independent contractor relationship, the Treasurer does not take an oath of office, which is a requirement for holding public office, and is not compensated through the payroll, as are other Library officers and employees. The Board cannot be certain that it has properly appointed an individual to the position of Treasurer.

Village officials have established effective procedures that ensure claims are adequately documented and properly supported, for legitimate Village purposes and approved prior to payment. The Clerk-Treasurer receives vendor invoices from a department head or by mail and prepares the claim packets. The Clerk-Treasurer consecutively numbers all claim packets and lists them on an abstract. Pre-paid claims are included on the abstract. The Clerk-Treasurer submits the claim packets to the Board for review at the regularly scheduled Board meetings. Each Board member reviews each individual claim packet and Board resolutions approving payment of claims are then passed and documented in the meeting minutes. We commend Village officials for designing and implementing this system of controls over the approval of claims.

While the Board, by resolution, generally approved abstracts of claims, it did not perform an effective claims audit or establish an adequate process to ensure that transactions were properly authorized and approved or that claims were for proper Village purposes. During our audit period, the Village paid 5,987 claims, totaling $12,315,993 and we selected and reviewed 30 claims, totaling approximately $399,377. Although all claims reviewed appeared to be reasonable and legitimate, the use of confirming purchase orders circumvents internal controls and weakens the procurement and budget control process. Moreover, when the Board does not audit and approve claims prior to payment and has the same person that audits the claims sign checks, there is an increased risk that the Village could pay for goods and services that are not proper Village expenditures.

Although the Board adopted a procurement policy that required obtaining competition for purchases not subject to bidding requirements, Village officials did not always ensure that purchases were made in compliance with the requirements. Furthermore, the policy did not include procedures for procuring professional services. We selected a sample of purchases from 30 vendors totaling approximately $1.7 million and found that Village officials did not use competitive methods to procure goods and services from six vendors who were paid a total of $196,732 for professional services. In addition, Village officials did not competitively bid purchases from four vendors totaling $148,387, as required.

Although the Board has adopted a procurement policy that requires competition for purchases not subject to bidding requirements, the policy does not clearly establish procedures for procuring professional services. Also, the purchasing agent and claims auditor did not always ensure that purchases were made in compliance with the policy or require District officials to properly document compliance when they sought competition. We selected 20 vendors who were paid approximately $589,000 and found District officials could not demonstrate that they sought competition when procuring professional services from five vendors who were paid approximately $164,000 or obtain quotes for purchases from one vendor totaling $3,000

Although the Board and District officials reported unrestricted fund balance levels that were in accordance with statutory limits, they have annually appropriated fund balance towards the next year's budget that was not used due to a practice of overestimating appropriations. This trend is projected to continue through 2015-16. Once the unused appropriated fund balance is included in unrestricted fund balance, the District's recalculated unrestricted fund balance exceeds the statutory limit, ranging from approximately $2.4 million (12 percent) in 2012-13 to $930,000 (5 percent) in 2014-15. District officials have increased the tax levy each year of our audit period. In addition, three reserves totaling approximately $3.8 million were overfunded, and the debt reserve totaling approximately $600,000 has not been used since 2010-11 for related debt principal and interest payments, as statutorily required. Funding reserves at greater than reasonable levels contributes to property tax levies that are higher than necessary.

BOCES did not properly oversee the Managed Technical Support cooperative service agreement (COSER), which resulted in errors in reporting aidable expenditures to the New York State Education Department (SED). Specifically, BOCES assigned staff who were not shared by two or more districts. As a result, BOCES reported aidable expenditures to SED for 62.7 full-time equivalent (FTE) district-based staff who were not eligible for aid reimbursement. Consequently, BOCES claimed $2.5 million in additional aid (on behalf of the districts) to which it was not entitled. In addition, BOCES did not charge all districts for services using the approved FTE method.

The Board and District officials have not developed adequate written policies and procedures governing the claims processing function. In addition, the Board did not develop a comprehensive job description that outlines the claims auditor's expectations and requirements. The claims auditor compares invoices against only the purchase orders, which does not always provide adequate documentation about the vendors' prices. The claims auditor does not compare invoices against quotes, bids or government contracts, and there is no policy that requires that these documents be attached to the claims. We found no indication that the claims auditor documented any exceptions or concerns she may have found.

The Board delegated its responsibility to a claims auditor who generally ensured claims were adequately supported, properly audited before payment and in compliance with District policies. The claims auditor verified that claims were supported by original documentation such as detailed invoices or receipts and that each claim had been properly authorized. Additionally, the claims auditor ensured there was evidence within the claims packets indicating that the District actually received the goods or services described in each claim. We commend the claims auditor and encourage the Board and District officials to continue with their efforts in ensuring that the claims audit process is working as intended.

The Department did not maintain an adequate recordkeeping system for the LOSAP attendance records and has not established procedures to ensure the information is organized and accurately recorded. Several types of attendance forms are used to track participation in LOSAP activities, including incident reports, call logs and activity sign-in sheets. We compared LOSAP attendance records with the participant activity reports for 22 volunteers. We found that volunteers' points were inaccurately recorded. Twelve volunteers were awarded 129 fewer points than they were entitled to and 10 volunteers were awarded a total of 87 more points than they were entitled to.

The Board should improve its oversight of financial activities. Although the Board has adopted a code of ethics and purchasing and investment policies as required by statute, they do not have any policies or procedures for credit card usage. Additionally, prior to the current Chairman’s election, they did not have policies or procedures for hall rental receipts. Furthermore, the Treasurer is responsible for performing virtually all of the District’s financial duties. While Board members did review some monthly reconciliations, they did not have adequate records to perform a comprehensive review.

The Board did not implement sufficient controls to safeguard Department money. Although the Treasurer maintained financial records, she did not keep adequate documentation to support all financial activity or prepare monthly bank reconciliations. Furthermore, the Treasurer performed all aspects of the cash receipt process with no oversight and did not maintain supporting documentation for cash receipts collected from fundraising activities. Because Department officials did not adhere to the bylaws and provided insufficient oversight of the Treasurer’s financial duties, officials cannot be sure that all money collected was deposited or that Department funds were appropriately spent.

District officials need to improve their monitoring of custodial employee overtime to ensure that the District is incurring only necessary overtime costs. The District does not have a comprehensive payroll policy or written overtime procedures. The Assistant Superintendent for Business told us that overtime is preapproved either verbally or by email. During our audit period, the District paid $166,271 for overtime. Of this amount, $152,140 (92 percent) was paid to custodial unit employees. We examined records relating to 346 overtime hours ($14,871) worked by the 10 custodial unit employees that worked 100 overtime hours or more in the fiscal year ending June 30, 2016. We found no documentation that 314.5 overtime hours, totaling $13,321 had been preapproved by a supervisor. For example, one cleaner worked 44 overtime hours and received overtime payments totaling $1,535 for 13 days of summer cleaning at the middle school without documented supervisory preapproval. Had overtime preapproval been required and documented, District officials may have been able to rearrange work shifts to incorporate summer cleaning into employees' regular workdays.

Although the treasurer properly accounted for receipts and disbursements for most of the clubs we reviewed, we found one club, the Middle School Student Association, with significant deficiencies. For example, no evidence was found that proceeds from at least five events were deposited. We estimate the proceeds should have been approximately $7,600, based on typical revenue collected at these events. For these same events, faculty advisors paid at least $3,300 to various event vendors without going through the proper disbursements process and approximately $4,300 remains unaccounted for. This occurred because the Board did not establish adequate policies and procedures to ensure receipts from all events are deposited, and the treasurer did not ensure the faculty advisors followed the established, informal procedures.

The District has not established written policies or procedures for the cash receipts process at the District's Business Office or for the Food Service Department, which collects cash at the school cafeterias. We found that the key duties of cash handling, recordkeeping and reconciliation are concentrated with one position. In addition, there was no process in place for someone independent from the recordkeeping function to verify that funds were deposited into a District bank account. Generally, we found that cash receipts were accurately recorded and deposited timely and intact. District officials have implemented compensating controls to help reduce risks, such as oversight of the cash receipts process, review of prepared bank deposits and bank reconciliations by the Treasurer. However, District officials' implementation of these control procedures could be improved by assigning tasks to an individual independent from the Business Office to perform the review and requiring review of the audit trail reports generated from the financial system.

District officials properly performed criminal history background checks, which helped ensure the safety of their students. The Board adopted a policy entitled Fingerprinting and Criminal History Record, which states that the District “shall not employ or utilize a prospective school employee unless that person has been granted a clearance for employment by the New York State Education Department (SED) or an emergency conditional appointment has been made in a manner consistent with this policy and applicable regulations of the Commissioner.” We commend District officials for properly obtaining fingerprint-supported criminal history background checks of prospective employees and requesting the clearance for prospective employees already fingerprinted from SED.

The Board and District officials did not always effectively manage the District's financial condition by ensuring budget estimates were reasonable and adopting realistic budgets based on historical costs and trends. As a result, the District overestimated expenditures by a total of $12 million (4 percent) from July 1, 2012 through June 30, 2016. Additionally, to stay within the year-end statutory limit for unrestricted fund balance, District officials appropriated a total of $9.4 million of fund balance. However, this appropriated fund balance was not needed to finance operations because the District had a total of $2.9 million in operating surpluses in three of the four fiscal years. When adding back unused appropriated fund balance, the District's recalculated unrestricted fund balance exceeded the statutory limit.

BOCES officials did not adequately use multiyear planning, which includes ensuring that reserves are appropriately established, maintained and supported. They did not develop formal, written multiyear financial plans, including a reserve plan that indicates their intentions for funding, using and accumulating reserve funds. BOCES officials also did not prepare a formal analysis of certain reserve funds to ensure amounts were appropriate for BOCES' needs or include reserve funding in the annual budgets. We also found that BOCES can manage its software more effectively and efficiently. The Board's acceptable use policies were inadequate because they do not include enforcement practices and specific penalties for noncompliance. The IT staff did not maintain a comprehensive inventory list of all software that BOCES currently owned and for which it purchased licenses. In addition, BOCES officials and IT staff did not regularly monitor or review computers to ensure that all software installed was appropriate and legally obtained. As a result, we found that eight of 86 computers had improper software applications that included noneducational gaming software, a coupon application and an Internet browser rewards bar. We also found that BOCES did not have sufficient documentation to provide evidence that it purchased licenses for six of 177 software programs that required licensing.

The Board did not adopt realistic budgets or ensure that reserves were reasonably funded. District officials consistently overestimated expenditures during the last five fiscal years (2010-11 through 2014-15). These budgeting practices generated more than $3.5 million in operating surpluses. The District also appropriated an average of approximately $995,000 in fund balance annually, which was not needed to fund operations due to the operating surpluses. This practice allowed the District to appear that it was within the 4 percent statutory limit imposed on the level of unrestricted fund balance. However, when adding back unused appropriated fund balance, the District's recalculated, unrestricted fund balance ranged between 6 and 9 percent of the ensuing year's appropriations, exceeding the limit for all five years. In addition, from 2010-11 to 2015-16, District officials increased the tax levy by 12 percent. District officials also used approximately $8.4 of fund balance to fund six reserves that, as of June 30, 2015, totaled approximately $8.3 million. The retirement contribution reserve is overfunded, and the employee benefit accrued liability reserve is fully funded but not used. As a result of these practices, the District's tax levy may have been higher than necessary.