In recent years, the District has struggled with fiscal challenges. The Board has balanced its adopted budgets with appropriations of fund balance and reserves while limiting tax increases, which has contributed to the District's deteriorating financial condition. As a result, by the end of the 2012-13 fiscal year, the District had approximately $815,000 remaining in reserves and a deficit unrestricted fund balance of $435,655. We reviewed budget-to-actual results for the 2010-11 through 2012-13 fiscal years and found that District officials adopted realistic budgets and kept expenditures within budgeted appropriations. The Board reviewed budget-to-actual comparison reports throughout the year to monitor the budget and approved budget transfers at the monthly Board meetings. However, the Board's heavy reliance on appropriated fund balance and reserves as financing sources in the annual budgets has resulted in a significant reduction in the District's unrestricted fund balance and reserve balances.

District officials properly managed the financial condition of the District. While facing some financial difficulties, the Board has adopted budgets with reasonable estimates, provided sufficient reserves for future expenditures, and reduced expenditures. While real property taxes have increased, the amount of available surplus money has been kept within the statutory limit.

The Clerk did not record all receipts in the cash receipts journal, deposit amounts collected in a timely manner or intact, remit moneys collected from both Clerk and tax collection activity to the Supervisor and other entities in a timely manner, or issue press-numbered duplicate receipts. Due to these internal control weaknesses, cash receipts were not adequately safeguarded. We determined that the Clerk's account had a cash shortage of $7,741 as of August 31, 2013. However, on September 3, 2013, the Clerk deposited $5,956 to her account. This deposit still left a cash deficiency of $1,785 in Clerk fees as of September 3, 2013. We also found that the Clerk's tax liabilities at September 5, 2013 − all payable to the Supervisor − exceeded known cash assets by $6,424. On September 6, 2013, the day after we performed our analysis, the Clerk made a cash deposit to the Tax Collection account totaling $6,444, which eliminated this shortage. We referred our report to the Wyoming County District Attorney for further review.

The District did not have procedures for disbursements. In addition, the Board did not properly segregate the Treasurer's duties or implement effective compensating controls over the Treasurer's work. The Board also did not conduct an independent review of the bank statements or ensure that bank reconciliations were performed. As a result, there is an increased risk that fraud and abuse could occur without detection.

The bylaws establish various controls to help safeguard Company assets. However, there are no controls or other procedures in place requiring the Board's review and approval of claims prior to payment. These procedures would strengthen the controls over the cash disbursement process. Although the President appointed an audit committee as required in the bylaws, the audit committee did not audit the Treasurer's records prior to the annual meeting and submit its audit report as required. In addition, the Board did not audit each claim prior to payment. Instead, the Treasurer provides a list of paid disbursements to the Board and Company members at the meetings. While providing information regarding these disbursements to the Board allows it to monitor the Company's disbursements, this is not as effective or as strong a control as reviewing and approving claims before payments are made

We found that District officials approved payment of claims that did not comply with District policy. Over 61 percent of the credit card transactions reviewed did not have documentation to support the purchase as required by District policy. Expense reports submitted for travel advances did not match the receipts that were submitted. In addition, the reimbursements to District officials for the use of personal cell phones were made without the required cell phone bills. As a result, District taxpayers do not have adequate assurance that all claims paid were for legitimate District expenditures.

The Board has not provided adequate oversight to ensure that financial activities were accurately recorded and reported in a timely manner, and it has not effectively managed the Town's financial condition. Town officials were unable to determine the Town's true financial condition for each of the Town's funds because the accounting records and reports were inaccurate. Based on our analysis of all funds combined, the Town did not have enough cash to pay all of its bills at the end of fiscal years 2012 or 2013. As of December 31, 2013, the Town had a cash deficiency of about $325,000, or 24 percent of the next year's budget. The former Supervisor did not provide sufficient oversight of the bookkeeper to ensure that the Town's records were reliable and to address the Town's cash flow needs. The bookkeeper used interfund loans and transfers to keep the Town operational, but did not receive Board approval for most of the transactions and did not understand how to record them in the records. This resulted in misstatements, which obscured the Town's true financial condition. In addition, the bookkeeper did not regularly reconcile the Town's bank accounts to identify errors in the records. The Board did not fulfill its oversight responsibilities by performing a sufficient audit of the Supervisor's books and records. Also, the Board has not adopted a comprehensive multiyear financial and capital plan to adequately address the Town's long-term operational and capital needs. Finally, Town officials do not perform a formal needs assessment or cost-benefit analysis prior to acquiring highway equipment

The Board and Town officials have not adopted policies and procedures or long-term financial plans to govern the budget process or the appropriate level of fund balance to be maintained in each fund. As a result, the Board did not always adopt accurate budgets and relied heavily on the appropriation of fund balance to balance its budgets. Consequently, unexpended surplus funds declined quickly in the general fund, by nearly $87,000 from December 31, 2010 to December 31, 2013, to only 5 percent of the 2014 budget. Similarly, unexpended surplus funds in the highway fund declined as a result of $139,290 in unplanned operating deficits over three years, and the Board appropriated more fund balance in its 2013 budget than was available for this purpose. The Board also did not adequately fulfill its fiscal oversight responsibilities. The Board has not adopted policies or ensured that Town officials adopted procedures to govern financial operations or the management of cash, and has not adequately reviewed and updated its purchasing policy. Furthermore, the Supervisor did not maintain adequate control over the Town's accounting records and did not adequately contract for and oversee the financial duties performed by the bookkeeping firm. Finally, the Board did not perform an annual audit of the records and reports of the Supervisor and Town Clerk

In an effort to reduce unexpended surplus funds to a reasonable level, the Board adopted budgets that limited tax increases by balancing its budgets with appropriations of fund balance. As a result, the District spent $2.7 million more than it received in revenue, reducing unexpended surplus fund balance by $2.1 million. While we applaud District officials for taking action to reduce available fund balance in these funds, they have depleted these balances to precariously low amounts. Further, the school food service fund has not been self-sufficient and has required annual transfers from the general fund, averaging $77,000, in order to keep it solvent. The Board and Administration need to identify means to replace fund balance as a financing source or reduce expenditures to within the District's available revenues

The City's financial outlook, as projected by the City, has not improved in 2014 as a result of inaccurate revenue and expenditure estimates in the 2014 budget. Officials are projecting operating deficits for the 2014 fiscal year totaling $269,904 in the general fund and $5,582 in water fund. An operating surplus of $8,762 is projected for the recreation fund. The unassigned fund balances in these three funds are expected to remain as deficits of $3.9 million in the general fund, $523,679 in the water fund and $528,603 in the recreation and golf fund. The 2015 proposed budget contains significant financial risks that the City Council should consider when adopting the 2015 budget. The City continues to finance operating expenditures with debt when it should be funding such expenditures with operating revenues. In addition, the practice of supporting operating expenditures with unrealistic revenue estimates and one-shot revenues is not prudent. We also found that City officials had not fully implemented the recommendations in our prior budget review letter, issued on October 15, 2013. At that time, we recommended that City officials slow or curtail the use debt as a financing source to cover recurring operating expenditures such as tax certiorari payments, include reasonable revenue estimates, and adjust the City's budget presentation so that all fund activities are budgeted, accounted for and reported in the proper fund.

The Board established a “type” capital reserve to finance the cost of acquiring, refurbishing, constructing and reconstructing District owned buildings and grounds in accordance with GML. The Board funded its capital reserve through annual budget appropriations and by transferring operating surplus from the general fund. The Board approved the Substation 1 facility reconstruction capital project, which was funded with about $2.8 million from the capital reserve fund, without complying with the permissive referendum requirements. Because District officials failed to publish and post a legal notice on the project prior to approval, the Board had to petition the County Legislature to legalize and validate its actions. In addition, the Board did not approve change orders totaling more than $50,000 before the work began. These discrepancies occurred because the District did not have a written capital asset policy outlining the procedures to follow when constructing capital assets.

The purpose of our audit was to determine if actions taken by the county’s Child Protective Services (CPS) units were sufficient to reduce child abuse and neglect recurrence rates for the period January 1, 2011 through December 31, 2012.

Although the Department members developed good policies and procedures, the bylaws could be improved by adding specific language specifying who is responsible for approving bills for payment and reviewing the Treasurer's work to ensure that all Department cash receipts and disbursements are properly accounted for. We found that the Treasurer performed most accounting duties with limited oversight. Although the Treasurer maintained accurate records and reports, no one reviewed the accounting records or compared the bank reconciliations with the bank statements and cancelled check images. Department members approved some bills and transfers prior to making payment, however no one audited and approved all Department bills before they were paid. Department officers also did not follow the dual signature requirement for 11 identical checks for food at the meetings totaling $495 that were signed only by the Treasurer. Moreover, the Department's bylaws do not contain any specific cash receipts requirements. As a result, there were limited procedures in place to verify cash receipt accountability.

Department officials did not establish policies and procedures or provide oversight of Department financial activities. Consequently, the Department's accounting records were not properly maintained, bank reconciliations were not performed and crucial financial reports were not prepared and submitted for Department officials' review. In addition, press-numbered receipts were not issued to provide supporting documentation for the funds collected during our audit period, checks received totaling $19,318 were not deposited in a timely manner and personal checks totaling $400 were cashed using Department funds. Further, Department officials did not review and approve all bills prior to payment or document approval in the minutes. As a result, 23 disbursements totaling $2,819 were not supported by adequate documentation, which would have allowed Department officials to determine if these disbursements were for appropriate Department purposes.

The Board did not fulfill certain key oversight responsibilities. The Board did not audit claims prior to approval for payment during fiscal years 2012 and 2013. In addition, the Board also did not conduct an annual audit of the books and records of all Town officers who received and disbursed cash for fiscal years 2012 and 2013. The lack of statutorily required Board audits of claims and annual accounting records limits the Board's ability to monitor and maintain accountability over financial operations and increases the risk of improper payments or accounting errors occurring without detection.

The Board did not effectively manage fund balance and reserves. District budgets from fiscal years 2010-11 through 2012-13 included the planned use of fund balance averaging $495,000 per year; however, less than $51,000 was actually used. In addition, the District did not plan for the funding or use of reserves, but instead transferred excess surplus moneys to reserves to avoid exceeding the fund balance statutory limit. Regardless, the District's fund balance exceeded the statutory limit for two out of the last three years. Furthermore, District officials overfunded four of the District's seven reserve funds. By accumulating funds without a clear plan for the future intended use, District officials have made tax levies higher than necessary. And while fund balance is greater than necessary, the Office of the State Comptroller's Fiscal Stress Monitoring System identified the District as susceptible to fiscal stress in 2013, primarily due to the decrease in available cash to fund operations.

When implementing a new fingerprint time clock system, the Board did not establish policies and procedures over payroll timekeeping to ensure that employees' work and leave time was accurately accounted for. The Districts' new timekeeping system did not adequately and accurately document the time employees worked. Once the District transitioned to using the fingerprint time clock it resulted in less accountability over timekeeping because it was not used effectively. For example, employees did not consistently use the fingerprint time clock to punch in or out to record the times they reported for and left work, account for missed time clock punches nor did supervisors consistently review or sign employees' time records. Due to these deficiencies we could not determine from the time records we reviewed if all hourly employees worked the scheduled hours. Further, employees' leave accrual records were not reviewed for accuracy after information was entered into the leave tracking software. As a result, some employees' leave was not properly approved and documented on the time records or recorded in the central leave record.

The Board used fund balance as a financing source in the annual general fund budget until it was nearly depleted. Since 2010-11, the District appropriated more than $4.7 million in fund balance to finance appropriations in the general fund. This has resulted in a dramatic reduction in the District's total fund balance. During this same time period, the District increased property taxes an average of $521,000 (2.3 percent) annually. In addition, the District improperly used two reserves to help fund general fund operations during the 2012-13 fiscal year.

The District reported year-end unrestricted fund balance at levels that essentially complied with the 4 percent fund balance limit for fiscal years 2008-09 through 2012-13. This was accomplished, in part, by appropriating fund balance and funding reserves at year end. District officials' appropriation of fund balance aggregated to more than $21 million over the past five years, which should have resulted in planned operating deficits. However, because the District significantly overestimated expenditures in its adopted budgets, it experienced large operating surpluses in four of those five years and did not use the appropriated fund balance. The District used surplus funds to finance reserves without including those transfers in the budget process. For the five years reviewed, total actual revenues exceeded expenditures by almost $13 million and only $5 million of the nearly $21.5 million of appropriated fund balance was used to finance operations.

The Board needs to improve its oversight of the District's budget and financial condition. In fiscal years 2010-11 through 2012-13, the District budgeted to use an average of $811,000 of fund balance to fund the ensuing year's expenditures. However, the District did not use these funds as intended because revenues exceeded expenditures by an average of more than $1.7 million in each of these years. As a result, the District's unrestricted fund balance, totaling $3.8 million as of June 30, 2013, was 15 percent of the 2013-14 budgeted appropriations. This was almost four times in excess of the 4 percent statutory limit. Officials also need to improve their oversight of employees' sick leave accrual balances. We found that the sick leave accrual balances in the time and attendance system were not correct for fiscal years ending June 30, 2012 and June 30, 2013. As of July 1, 2013, all 10 employees' sick leave balances reviewed were overstated by a total of 139.25 days, with a value of $44,430. During the audit period, sick leave accrual balances were not accurate and, therefore, District officials could not rely on them.