The Board has not implemented adequate compensating controls to address the lack of segregation of duties performed by the Treasurer. The Treasurer performs virtually all of the Village's financial operations without Board oversight and compensating controls. Although the Treasurer performs all aspects of processing payroll including adding and deleting employees, recording hours worked, maintaining leave records and signing checks, Village officials do not adequately review payroll records, including the Treasurer's timesheet, prior to payroll checks being printed. For 10 of the 35 (29 percent) bi-weekly payroll periods we reviewed, the Treasurer had either over- or underreported her hours worked. In addition, the Board does not review individual claims during the audit of claims to ensure that the Treasurer is making disbursements for Village purposes. Further, we were unable to determine if water and sewer deposits were made intact. The Board did not audit the Treasurer's records and reports during our audit period. In addition, the Village does not have policies and procedures in place to safeguard IT assets, including an appropriate use policy, a breach notification policy and a disaster recovery plan. Additionally, Village officials have not implemented adequate controls and restrictions over user access to the financial system. Lastly, the Board has not adopted comprehensive data back-up policies and procedures.

Village officials did not develop structurally balanced budgets for the general fund and did not ensure that sewer rates generated sufficient revenues to cover sewer fund costs over the last six fiscal years. As a result, the general fund balance declined from $219,000 to a negative balance of $19,000 and the sewer fund balance declined from $94,000 to $18,000. The significant declines in fund balances were contributed to by a reliance on surpluses in the general fund and fluctuations in sewer rent revenues. These declines, combined with a lack of a long-term plan could have a significant impact on the Village's financing of future budgets and the ability to maintain current service levels.

The Board-adopted 2011-12 through 2013-14 general fund budgets were not structurally balanced because the Board routinely relied on significant amounts of appropriated fund balance to finance operations. The Board also did not adopt a policy establishing the level of unrestricted fund balance that should be maintained to prepare for any unanticipated expenditures and/or revenue shortfalls. As a result, for the 2011-12 and 2012-13 fiscal years the general fund incurred operating deficits totaling more than $5.6 million and unrestricted fund balance declined by about 73 percent. In addition, the general fund's cash level was deficient, resulting in District officials not having sufficient cash to pay District bills and other obligations when due. As a result, District officials annually issued short-term debt to finance operations in the form of a revenue anticipation notes (RANs), which are a temporary source of cash borrowing in anticipation of the pending collection or receipt of certain specific revenues other than real property taxes. The District's financial condition will likely decline further in the future if the Board continues to adopt budgets that are not structurally balanced. Further, if actual revenues and expenditures for the 2013-14 fiscal year mirror the budget, the District will reduce the remaining fund balance to approximately $1.5 million as of June 30, 2014.

We commend District officials for the steps they have taken to increase educational productivity and reduce the costs associated with instructional materials and program delivery. During the budget development process for fiscal year 2011-12, District officials decided to control expenditures and improve student achievement by using technology and bringing most special education programs in-house. In fiscal year 2010-11, approximately 47 percent of the District's students in Grades 3-8 received academic intervention services (AIS), including those enrolled in special education programs. District officials took action in March 2011 to raise students' standardized test scores using teaching and learning technologies. As a result, from 2010 to 2013 the District's test score ranking increased by almost 43 percent. District officials also decreased special education costs by using State and BOCES aid to finance additional teaching and learning technology, while at the same time reducing the District's real property tax levy.

The Board adopted general fund budgets that were not structurally balanced because the Board routinely relied on significant amounts of appropriated fund balance to finance operations. The Board also did not adopt a policy establishing the level of unassigned fund balance that should be maintained to prepare for any unanticipated expenditures and/or revenue shortfalls. As a result, for the 2011-12 through 2012-13 fiscal years the general fund incurred operating deficits totaling more than $934,000, unassigned fund balance declined by 98 percent and cash balances declined by 47 percent. Further, at the end of each fiscal year 2010-11 through 2012-13, the general fund's cash balance was so depleted that District officials did not have sufficient cash to pay bills and other obligations when due. The District's financial condition could decline further if the Board continues to adopt budgets that are not structurally balanced. If the 2014-15 fiscal year's actual revenues and expenditures mirror the budget, the District will have limited unassigned fund balance as of June 30, 2015. Finally, the District's school food service fund was not self-sufficient and required subsidies from the general fund through interfund transfers and advances. At the end of the 2012-13 fiscal year the school food service fund owed the general fund accumulated advances of more than $167,000, which were not repaid by the end of the fiscal year, as required.

The District reported unrestricted fund balance of more than $3 million as of June 30, 2010. District administration developed, and the Board adopted, budgets that included plans to use nearly $2.5 million of fund balance to finance operations during the 2010-11, 2011-12 and 2012-13 fiscal years. As a result, the District's unassigned fund balance declined by about $1.53 million or about 94 percent. The District also reduced fund balance by nearly $477,000 because of a prior period adjustment recorded during the 2010-11 fiscal year to write-off some accounts receivable and adjust accrued interest for a bond anticipation note issued during the 2009-10 fiscal year. The Districts' unrestricted fund balance as a percent of the next year's budget declined from more than 8 percent to less than 1 percent over this same period. The 2013-14 budget planned to use nearly $1.2 million in fund balance as a financing source. Moreover, the Board has not developed a comprehensive multiyear financial plan to address the use of fund balance to finance a significant long-term building project.

We found no material discrepancies with the accounting for moneys received by the Court or the accuracy of bank deposits. However, we found that the Justices did not always perform monthly bank reconciliations and accountabilities properly. We also found that the Justices did not always report and remit moneys to the Justice Court Fund in a timely manner. In addition, the Justices did not follow up on pending cases or enforce unpaid fines and fees. Further, the Board did not conduct an annual audit of the Court's records as required. As a result of these weaknesses, the Board cannot be assured that all Court moneys were received and properly accounted for.

We found that Village officials have not taken adequate steps to identify and reduce the amount of unaccounted-for water within the Village's system, therefore all water and sewer usage may have not been captured. Generally, the Clerk-Treasurer properly billed, collected and deposited water and sewer rents. However, the Board did not properly segregate the duties of the Clerk-Treasurer or implement compensating controls. As a result, the Clerk-Treasurer calculates estimates and makes billing adjustments with no oversight and all unpaid water and sewer bills are not being enforced by levy on the tax roll. In addition, the Clerk-Treasurer does not maintain accounts receivable control accounts.

The District maintains 10 reserves. The total balance of the reserves in the last five years has increased from $1.2 million to $12.5 million. At this point, the District's reserves represent 37 percent of the current budget. For the last five fiscal years ending June 30, 2013, the District generated approximately $11 million in operating surpluses, which it used to fund reserves. We reviewed these reserve funds for adherence to statutory requirements and reviewed the reasonableness of those balances. We found issues with the establishment, funding and use of certain reserves. For example, the District funded a repair reserve to $2.9 million without the required voter approval. The District also established and funded a liability reserve to $800,000 for a purpose that was not permissible. Furthermore, some reserve balances were excessive compared to the potential costs for which those reserves were established. These excess reserve funds could be transferred to other legally established reserves, as applicable, or used to reduce the tax levy. In addition, these reserves were not used in the last five years.

While the Board planned properly for the ongoing capital project, monitoring the project's progress has been hampered by the lack of available complete information and the necessity to compile information from a variety of sources. As of the end of fieldwork, no one was preparing detailed financial reports to monitor the project's progress against the plan developed by the Board and District administration. The Board and District officials did not develop reasonable estimates for expenditures and use of fund balance in the annual District budget. While revenue estimates were generally close to the actual revenues received, expenditures for fiscal years 2008-09 through 2012-13 were consistently and significantly overestimated; the District spent nearly $14.2 million less than budgeted (nearly 7 percent) during this time. In addition, although the District planned to use more than $16 million in unexpended surplus funds and reserves over the last five fiscal years, it actually used $1.68 million (11 percent). The District, however, is facing considerable uncertainties regarding the final funding for the elementary school replacement, along with the funding for remaining flood recovery projects. If the District does not receive all of its anticipated funding, it may need to use unexpended surplus fund balance or reserve funds to fund these projects.

The Treasurer does not routinely prepare cash-flow analyses. We found that the Treasurer was only maintaining a record of daily cash-flows of cash receipt and disbursement activity and was not analyzing future cash flow for the fiscal year. Without cash flow projections, the Council and City officials were unaware of the magnitude of City's shortfall. We prepared a cash-flow analysis for 2014. Our analysis found that the City will run out of cash in September 2014 and the cash deficiency will increase to nearly $4.6 million by the end of the fiscal year. In addition, The City's accounting records are in such poor condition that City officials do not know the severity of their fiscal problems. The books for the 2013 fiscal year were not closed as of June 2014. The general ledger cash balances were unreliable and were not reconciled to cash in the bank. Further, City officials anticipate that the audited financial statements will not be available until October 2014. These delays have put the Council and City officials at a disadvantage as they try to resolve the current cash-flow shortfall, begin the 2015 budgeting process and develop a long term plan that would address the City's fiscal problems.

The Board did not adopt realistic budgets; budgets varied significantly from the actual results each year. We reviewed the Town's four operating funds for the four-year period ending in 2013 to determine if the Board reasonably budgeted for revenues and expenditures. Annually, each of the funds' estimates generally varied from actual results; the general town-wide and highway part-town overestimated revenues and expenditures, the general part-town underestimated revenues and overestimated expenditures and the highway town-wide underestimated both revenues and expenditures. These unrealistic budgets resulted in annual operating surpluses that caused unexpended surplus funds to increase in the general town-wide and highway part-town funds year after year.

The purpose of our audit was to determine if school districts have adequately controlled access to Student Information Systems for the period July 1, 2011 through April 30, 2013.

At the end of 2013, unassigned fund balance totaled almost $178,000 or more than 3 times the 2014 budget appropriations. This occurred primarily because in 2008 and 2009 the District received unexpected insurance proceeds totaling about $157,000. Further, the Board currently has no plans to use a portion of the existing unassigned fund balance to reduce future real property tax levies. The District reported a capital reserve fund with a balance of $165,728 as of December 31, 2013. The Chairman told us that District officials created this reserve in the late 1990's to fund future costs of new vehicles. However, the Board could not provide us with a resolution, or any other documentation to show when or if this reserve fund was properly established or what type of reserve was established. The Chairman also informed us that the Board funded this reserve with annual budget appropriations of $10,000 until 2009. In 2010, District officials contracted with the City and another fire district to provide fire protection services to District residents instead of the fire department located within the District. Since then District officials continue to contract for fire protection services. As a result, the Board stopped annually budgeting for the capital reserve fund. District officials have not established any plans for using the money accounted for as a reserve fund. Because of the District's contractual arrangements with the City and the other fire district and the minimal amount of fire-fighting equipment owned, there is no apparent need for a capital reserve fund.

We found that the Town's use of wind power revenues was reasonable. However, the Board did not adequately oversee the Supervisor or ensure that wind power revenues were properly reviewed for accuracy. Additionally, the Board did not annually audit the Supervisor's records as required. Consequently, Town officials were unaware the Town was not receiving the correct amount of host community licensing fees. As a result, from January 2009 through March 2014 the Town was underpaid wind power revenue totaling approximately $356,000. Further, the Board did not have a comprehensive multiyear financial and capital plan in place to adequately address wind power revenue use and the Town's long-term operational and capital needs. Finally, the Board did not properly establish its reserve funds. As a result, Town officials cannot ensure that the current and future use of wind power revenue will be in the best interest of Town residents.

The Board has generally adopted adequate policies and procedures, but there are still areas in need of improvement in its oversight of the Village's financial operations. The Board does not complete an adequate, documented annual audit of the Village Justice's and Clerk-Treasurer's records. Additionally, although the Board discusses plans for future equipment purchases regularly, a formal, written long-term financial plan has not been developed. We discussed other minor deficiencies with Village officials during our fieldwork.

We found that the Board did not monitor the Village's finances. The Board has not ensured that adequate policies and procedures required by law and sound business practice have been adopted, regularly reviewed and updated, monitored for compliance and distributed to officials/employees. It did not ensure that the Clerk-Treasurer maintained accurate accounting records. It also did not ensure that duties in the Clerk-Treasurer's office were properly segregated or provide mitigating controls, which created an environment that allowed for the possible misappropriation of Village funds. The lack of monitoring also led to the Village accumulating fund balance in excess of its current needs. We calculated an estimated fund balance level for the general, water and sewer funds at the 2012-13 year end, and estimate unexpended surplus funds to be excessive at $474,479 (82 percent) for the general fund and $131,095 (91 percent) for the sewer fund. The water fund, at $59,360 (23 percent), is more reasonable, but still high. Furthermore, there was no oversight of water/sewer account adjustments, which were made by the former Clerk-Treasurer without the Board's approval, and resulted in approximately $300,000 in reductions and $269,000 in added charges to customer accounts during our audit period. The Board also did not provide adequate oversight of payroll taxes, where Federal monthly and quarterly payroll-tax reports were filed late or incorrectly on numerous occasions and the Village incurred approximately $4,000 in penalties and interest during the audit period alone. Finally, the Board has not established policies and procedures related to acceptable use, computer security, breach notification or online banking, and the Board has not adopted a disaster recovery plan to address potential disasters.

The Board did not develop and adopt realistic, structurally balanced general fund budgets because Village officials used fund balance as a recurring revenue source. This resulted in the repeated adoption of budgets using fund balance to finance operations. During fiscal years ended 2012 and 2013, the Village used over $120,800 of fund balance. This continued use diminished the Village's general fund balance to a precarious position by the end of the 2013-14 fiscal year. From fiscal years 2011-12 to 2013-14, the use of fund balance kept the real property tax levy artificially low while at the same time revenues remained at the same level and expenditures were increasing by 6 percent. The Village's 2014-15 budget includes an appropriation of $100,000 of fund balance, which is $150,000 less than the previous year. In order to fill the budget gap, Village officials overrode the property tax cap limit and increased taxes by over 8 percent.

The purpose of our audit was to determine if Court officials properly collected, reported and remitted moneys on behalf of the Court for the period January 1, 2012 through December 31, 2013.

The purpose of our audit was to determine if Court officials properly collected, reported and remitted moneys on behalf of the Court for the period January 1, 2012 through November 30, 2013.