To supplement money received from foreign fire insurance proceeds and donations, the Company holds an annual chicken barbecue. The Bylaws do not address fundraising activities and there are no policies and procedures in place to ensure fundraising money is safeguarded. There was no report prepared of expenditures, revenues and starting cash, and the records that did exist were not adequate. In addition, Company officials told us the Treasurer has their approval to pay disbursements when he receives them, but we found no authorization of this in the Bylaws or Company meeting minutes. Finally, the Directors have not prepared and filed the Company's 2017 and 2018 Form 990 with the Internal Revenue Service or the annual report of foreign fire insurance tax proceeds, expenditures and the remaining balance with the State Comptroller's Office. The Treasurer told us he thought the Horseheads Fire District's Board of Commissioners was filing the reports.

District officials did not use a request for proposal (RFP) process when contracting for the annual audit as required by Education Law. District officials told us that they did not obtain proposals or seek competition for the annual audit. Although law also requires the District to repeat the RFP process every five years, the Assistant Superintendent told us that they have not issued an RFP for the last seven years since he has been with the District. In addition, District officials did not always comply with the purchasing policy when procuring professional services by using RFPs, as required. During the audit period, officials paid more than $1.5 million to these providers. Officials did not use RFPs to select six professional service providers who were paid a total of $437,732, including $153,077 for legal services, $139,415 for accounting and auditing services, $89,000 for independent performance evaluation services and $56,240 for Medicaid billing specialist services.

The Board overestimated appropriations by a total of $3.5 million over three years and annually appropriated an average of $357,000 of fund balance that was not used to finance operations. Because the Board overestimated appropriations, it appeared that more revenue and financing sources (fund balance) were needed to maintain a structurally balanced budget and address budgeted operating deficits (more expenditures than revenues), despite historical trend data indicating otherwise. However, because no operating deficits occurred and no appropriated fund balance was used, annual operating surpluses cumulatively totaled approximately $1.2 million and fund balance increased. As of June 30, 2018, surplus fund balance totaled $365,000 and was 5 percent of 2018-19 appropriations, exceeding the 4 percent statutory limit by approximately $74,000 or 1 percentage point. Annually appropriating fund balance that is not needed to finance operations is, in effect, a reservation of fund balance not provided for by statute and a circumvention of the statutory limit imposed on the surplus fund balance level. For perspective, when we added the unused appropriated fund balance amounts back into surplus fund balance, the District exceeded the limit each year by 6 to 7 percentage points. Finally, the District has not adopted a comprehensive written reserve fund policy and could not demonstrate a plan for the need for certain reserves that have not been used for three years.

The Treasurer appropriately paid health insurance buyout payments to seven eligible employees in 2017-18 and nine eligible employees in 2018-19 totaling $82,188, as of December 14, 2018. The average annual buyout payable to each participating employee during these two years was $7,793. If the District did not offer the health insurance buyout option, it could have been liable for a portion of the participating employees' health insurance had they chosen coverage from the District at an estimated cost of $182,254 during our audit period. The health insurance buyout may have saved the District as much as $100,066 during our audit period. However, we believe that the District's two collective bargaining agreements (CBAs) clearly state that employees wishing to participate in the buyout program must elect to have no health insurance through the District. However, we found that three employees received a health insurance buyout in 2017-18 and 2018-19 even though they were covered by the District's health insurance through a spouse or parent employed by the District. As a result, District officials paid these employees approximately $34,738 in health insurance buyouts during our audit period that appear inconsistent with the language contained in both CBAs. Finally, the Treasurer's buyout calculations were not reviewed by District officials.

The Board did not regularly review financial records to ensure that receipts were properly recorded and deposited in the bank and that disbursements were properly supported and approved for District purposes. As a result, the audit found deposit shortages totaling $1,095. Given these shortages, the matter was referred to OSC's Division of Investigations which then partnered with the Chautauqua County District Attorney's Office to jointly investigate this matter. In May 2019, the Assistant Treasurer admitted to stealing $4,100 in County funds from 2012 to 2017 and resigned from her position. She pleaded guilty to misdemeanor petit larceny and agreed to pay back $4,100 in restitution.

While the District had acceptable use policies for IT assets, they were not readily available for our review, disseminated to officials and staff, or enforced. In addition, the policies did not address connecting personal mobile computing and storage devices to the network, which can create security vulnerabilities and allow inappropriate access to IT assets and data. The Board did not adopt IT security policies addressing data classification, regulations to help ensure the protection of PPSI or a breach notification policy in the event that attackers access PPSI. It also did not adopt policies addressing online banking, user access rights or sanitation and disposal of IT equipment. Officials did not maintain up-to-date hardware inventory records. District officials also did not maintain a comprehensive software inventory. Finally, the District did not implement comprehensive procedures for monitoring user accounts. During our review of the District's 833 enabled network user accounts for staff and students, we found that 332 accounts (40 percent) had not been used in the last six months.

The Town did not have an acceptable use policy. We reviewed the technology use section of the employee handbook and found that it did not clearly define use that was not acceptable or the consequences of violating the computer and communication systems. We reviewed the web browsing history for 10 computers used by 10 employees and found significant personal Internet use on all 10 computers that was not related to Town-business. This included social media use and accessing entertainment and leisure websites. All 10 employees' job duties included routinely accessing PPSI. As a result, their personal Internet use unnecessarily exposed this information to being compromised. Town officials also did not provide users with IT security awareness training to help ensure employees understood IT security measures. Town officials did not develop comprehensive written procedures for managing system access. During our review of all 15 network accounts, we found that five (33 percent) had not been used in six months or more. The Board did not adopt an information breach notification policy or a disaster recovery plan. Finally, the Town did not have a written contract or service level agreement with its IT consultant.

Controls are inadequate over receipts and disbursements because the Treasurer, without adequate oversight, is the only one who receives, counts, deposits and reports cash receipts and prepares, signs, reports and maintains a manual ledger of checks. Therefore, there is a lack of segregation over the Treasurer's duties, as he has control over the approval, recording and disbursing functions. The Treasurer sends listings of the receipts and disbursements to the bookkeeper to record in the accounting records. The bookkeeper performs monthly bank reconciliations and provides financial reports to the Treasurer. Although this slightly mitigates the risk, the Treasurer is the only one counting money collected without anyone else certifying it or verifying it was deposited. Furthermore, we could not determine whether 75 purchases totaling $27,514 were approved by the Membership because of inadequate documentation. We also could not determine whether 20 purchases totaling $3,245 were for proper Company purposes.

The Board underestimated revenues and overestimated expenditures in the general, water and sewer funds each year. The Board's budgeting practices resulted in an increase in the combined fund balance for the general, water and sewer funds from $2.4 million in 2014 to $4.1 million in 2018. The Board appropriated fund balance totaling $1.4 million of which only $340,000 (25 percent) was used to finance appropriations from 2014 through 2018. Furthermore, officials increased the real property tax levy in each of the five completed years reviewed while experiencing operating surpluses totaling $2 million. Officials told us that the Board has discussed establishing a fund balance policy, but never formalized one. Finally, the Board has not developed comprehensive written multiyear financial and capital plans.

The Justices did not prepare monthly accountabilities or maintain sufficient records to identify outstanding balances. For example, we found that Justice Kline did not properly identify and pay Court funds to appropriate parties. We performed an accountability of Justice Kline's account as of the month she resigned (April 2018) and found that she had records to support $4,600 of outstanding bail (i.e., from defendants pending resolution of their cases); and $273 owed to defendants, the Town Supervisor and Justice Winsor's account. However, Justice Kline had unidentified funds of $8,906, the majority of which ($8,704) was transferred from the prior justice, Justice Daniels. Furthermore, she recorded $370 of receipts from three defendants, reported this amount to the JCF and remitted this amount from her account to the Town Supervisor. However, the $370 was not deposited into Justice Kline's account. We sent confirmations to the three defendants to determine whether Justice Kline recorded erroneous receipts or whether she failed to deposit the collections. We did not receive responses from the defendants to determine the cause of the $370 shortage in her account. Justice Kline transferred her bank balance of $13,359 to Justice Winsor when she left office in April 2018. Justice Winsor was unable to identify most of the outstanding liabilities because he was not provided monthly accountabilities from Justices Daniels and Kline. We commend Justice Winsor for researching the sources of unidentified funds transferred from prior Justices Daniels and Kline.

While we found that generally billings were calculated accurately and properly supported, the School relies on staff at its accounting firm to calculate tuition. School officials provide the accounting firm with attendance and enrollment records but do not adequately review the tuition bills to ensure the correct district is being billed or that tuition charges have been calculated correctly. As a result, the School did not correctly calculate State aid attributable to students receiving special education services. The School billed the Buffalo City School District (District) $78,000 more than it would have had it followed New York State Education Department guidelines. In addition, the School did not use the correct number of school days to calculate tuition for 85 students who attended the School less than a full year. As a result, the School underbilled the District approximately $7,400.

Determine whether 17 school districts used their resources and two charter schools (collectively referred to as schools in this report) used their financial resources to develop, adopt, file and implement district-wide school safety plans and building-level emergency response plans in compliance with the New York State Safe Schools Against Violence in Education (SAVE) Act.

The Clerk did not remit real property taxes totaling nearly $1.4 million in 2017 and 2018 to the Town Supervisor (Supervisor) or County Treasurer (Treasurer) each week, as required by law. For example, the Clerk collected taxes totaling $951,513 during the first seven weeks of 2017 (from January 2 through February 17) but made only one remittance totaling $909,157 to the Supervisor on February 14, 2017. In addition, the Clerk did not deposit real property tax collections within the required timeframe. For example, $468,215 or 34 percent of taxes paid by check in 2017 were deposited from 8 to 38 days late. The Clerk also did not always deposit Clerk fees within the required timeframe or remit them to the Supervisor in a timely manner. We found that the majority of checks received were deposited in a timely manner. However, collections paid by cash were not deposited intact in a timely manner.

Agency officials have developed written procedures to provide detailed guidance to employees on receiving and recording transactions, issuing receipts to customers, keeping the cash drawer closed and preparing daily cash out reconciliations. However, Agency officials did not ensure that all employees followed the required procedures. Agency officials did not have adequate controls in place to help ensure that all cash receipts were recorded and deposited. In addition, officials did not perform periodic unannounced cash counts for all employees responsible for cash collection, as required by the Agency's written procedures. Furthermore, officials did not adequately track garbage disposal sticker and compost pass inventories and ensure that sales were properly accounted for.

As of March 31, 2019, the District reported four general fund reserves with balances totaling $39,891,644. We compared the balances for each reserve to its historical expenditures and planned use and found three of them (capital, retirement and employee benefits) to be reasonably funded. However, based on the highest rate at which the District has paid out tax certiorari settlements for the past five fiscal years (4.75 percent of the total amount claimed), we found the tax certiorari reserve balance of $6,211,404 was sufficient to cover at least eight years of potential claims. This occurred because there was no reserve policy, the existing fund balance policy does not indicate a targeted funding amount and officials had used an estimate of 50 percent of open tax certiorari claims rather than analyzing the actual needs for the reserve. As a result, funds may be tied up in the reserve that could be applied to other District needs. In addition, although the Business Official submits an annual report to the Board, the report does not meet all the criteria of the Board's fund balance policy.

The Board adopted budgets that conservatively estimated revenues and appropriations over the last three fiscal years, which resulted in unplanned operating surpluses totaling $2.3 million instead of planned deficits. In the last three completed fiscal years, the District generated $2.3 million in unplanned operating surpluses instead of $1.4 million in planned deficits. Over the past three completed fiscal years, the District reported surplus fund balance that ranged from 3.9 percent to 4 percent of the ensuing year's appropriations, which is within the 4 percent limit allowed by New York State Real Property Tax Law. However, when unused appropriated fund balance is added back, surplus fund balance exceeds the statutory limit. In addition, certain reserve balances were excessive or not needed. Of $3.7 million in seven reserves, three reserves totaling $636,665 may be unnecessary because related expenses were paid from operating funds. Finally, District officials did not develop comprehensive written multiyear financial or capital plans.

We have determined that the 2019-20 budget materially complies with the provisions of the Fiscal Agent Act. However, we identified the following issues which impact the City's financial condition in the current and future years. In prior years, we have expressed concern about the City's practice of financing recurring operating expenditures with nonrecurring funding sources. The 2019-20 budget continues this practice of reliance on nonrecurring funding of $50.3 million to finance operating expenditures. In addition, the City has not implemented procedures to reduce police overtime, so it is likely the historical trends will continue, which means the appropriation for overtime is likely underestimated by as much as $3 million. The adopted 2019-20 budget includes $500,000 for payment of tax certiorari claims, which is low compared to the $15.7 million in tax certiorari payments the City made so far in 2018-19. We also found that the water fund may be subsidizing the general fund for services not related to the water fund by as much as $3.7 million. The City will need $71.2 million to service its debt obligations during 2019-20 which represents about 6 percent of the City's annual budget. In addition, the City recently passed special ordinances authorizing the issuance of bonds up to $160.2 million with payments becoming due in 2020-21. As of June 28, 2019 the City has not completed the State Comptroller's Constitutional Tax Limit Form to verify this computation as required and the City has not finalized and submitted the Comptroller's Real Property Tax Cap Form as required.

District officials need to improve their claims audit process to ensure that the claims auditor properly audits and approves all claims before payment. The purchasing agent provides the claims and supporting documentation to the Business Administrator for review and approval before sending the claims to an Oneida-Herkimer-Madison Board of Cooperative Education Services' account clerk. The account clerk processes the claims and returns a warrant and the related check payments to the purchasing agent who compares the checks to the claims and warrant before mailing the checks. However, the purchasing agent provides the warrant, claims and check stubs to the claims auditor for review and approval after the checks have already been mailed. We found that the claims auditor did not audit and approve 116 claims we reviewed totaling $1.9 million (19 percent) until after the claims were paid, including five claims for travel reimbursements totaling $1,260 that were not submitted for payment within District policy timeframes. Finally, the claims auditor did not audit and approve 20 electronic payments for credit card charges totaling $11,600 and nine postage claims totaling $11,442.

We examined the continuing education department's cash receipts activity and found weaknesses in procedures. We found no significant discrepancies when comparing participant registration forms to cash receipts recorded in the Department's revenue ledger and to bank deposits. However, without duplicate press-numbered, itemized receipts, there is no assurance that all course registration fees paid to the Department were properly accounted for. Further, both the Coordinator and the clerk perform, or have access to perform, all of the same functions in the cash receipts process. As a result, incompatible duties (of receiving and having access to undeposited cash receipts and updating participant registrations and class rosters) were not properly segregated or mitigated by sufficient monitoring and oversight. These exceptions occurred because the Board did not establish a written policy and District officials did not develop detailed procedures to provide guidance for the Department on how to properly account for and handle cash receipts.

The Board's budgets were incomplete and inaccurate. Also, appropriations were overestimated and transfers to reserves were not budgeted. Over the five-year period from 2014 through 2018, actual expenditures were approximately 24 percent or $605,479 less than budgeted appropriations. In addition, the Board was unable to provide documentation of four required permissive referendums and legal notices. The Board was unable to provide documentation of permissive referendums and legal notices that were required before expending reserve funds from type reserves. Finally, the Board did not adopt a reserve policy. Because the reserves were established over 10 years ago, Board members were unsure if a policy had been previously adopted and were not aware of the need for one.