The Town did not follow the contract provisions when it billed the New York State Department of Parks, Recreation and Historic Preservation (Parks) for operation/maintenance and debt service costs for the joint transmission system. Although the contract required operation and maintenance costs to be billed based on each entity's (Parks, Town and the Village of Youngstown) proportionate share of sewer flow, the Town billed Parks based on water consumption. Furthermore, the Town billed Parks for certain debt service costs in a manner that appears to be inconsistent with the contract. We estimate that Parks was inaccurately billed by approximately $152,900 for operation and maintenance, debt service and a repair to a lift station.

Although the Board has developed a procurement policy and written procedures, the policy and procedures do not provide guidance on seeking competition for professional services, require documentation of actions taken or identify the individuals responsible for making purchases. As a result, eight professional service providers were paid $178,027 and 25 vendors were paid $353,418 without seeking competition. In addition, the Town has no policies or restrictions for Internet use. We also found numerous instances of personal Internet use.

The Board has not established adequate policies and procedures governing separation payments. The calculations for separation payments made to two employees during our audit period were incorrect, resulting in inappropriate payments totaling $1,271 for additional leave accruals that were not earned. The Town also paid $17,500 to a retiring employee to cover the subsequent year's health insurance premiums, with no documented Board approval. Additionally, separation payments totaling $50,128 were paid from an “Employee Benefit Reserve” in 2016, which was not appropriately established. Furthermore, payments for health insurance premiums are not authorized expenditures to be paid from such a reserve. The Board also did not establish policies and procedures governing the financial operations of the water and sewer districts; did not enter into inter-municipal agreements with the Village of Waterloo (Village) for water and sewer services provided to the Town; and did not require regular and adequate reports from the Village to monitor the financial operations of the water and sewer districts. Town officials also did not prepare formal water reconciliations to determine unaccounted-for water, which totaled 26.8 million gallons (30 percent) from January 1, 2015 through June 30, 2016, which is three times the federal goal for acceptable water loss. From 2013 through 2016, three water districts and both sewer districts experienced net operating deficits, ranging from a total of $11,742 to $82,676. Two districts incurred a continually growing deficit fund balance over the four-year period. The Board hired a consulting firm to analyze unaccounted-for water and was provided a report in 2015 with numerous recommendations to improve operations, most of which have not been addressed.

The Board reviews and approves the abstracts without auditing the individual claims. Without a thorough and deliberate examination of each individual claim and the supporting documentation, the Board does not have enough information to determine whether the claims it approves are appropriate and legitimate. While Village Law authorizes certain claims to be paid in advance of audit, 10 of 18 claims totaling $163,725 were not authorized for such payment under Village Law. Village officials ensured that leave accruals and payments were recorded and calculated accurately.

The former Clerk-Treasurer did not appropriately record and report debt proceeds. The former Clerk-Treasurer failed to record a deposit and subsequent disbursement of $700,000 on August 12, 2010, to renew a bond anticipation note (BAN) issued on August 12, 2009. Additionally, the former Clerk-Treasurer incorrectly recorded a $3,892,000 long-term BAN, issued and held by the Environmental Facilities Corporation (EFC) in 2011; specifically, instead of recording the entire authorized amount as a revenue and cash held by the trustee as cash with fiscal agent, she recorded each disbursement from the EFC as if it were a BAN issuance. As a result, revenues and expenditures were understated in Village records and reports as well as annual update documents (AUDs) as of May 31, 2011 and short-term and long-term liabilities and cash were not accurately recorded and reported until the project was closed on January 21, 2014, and the long-term BAN was refinanced by the issuance of a serial bond totaling $3,655,000. In addition, the Board did not adequately monitor the capital project. Finally, the Clerk-Treasurer did not appropriately account for settlement proceeds and water-related expenditures.

Although a previous Office of the State Comptroller audit recommended that the District adopt policies and procedures that restrict users' financial software application permissions to only those functions that are necessary for their job duties, the District did not act on this recommendation. The District also has not adopted a formalized process for monitoring user activity for appropriateness. As a result, we identified 24 user accounts, or 69 percent of the established accounts, that had inappropriate or unnecessary access rights or permissions. We also confirmed that the former District Treasurer attempted to manipulate her paid leave accruals by adding 60 unauthorized sick days valued at approximately $10,000. District officials notified us at the onset of our audit that they had discovered through an informal review of leave records that the former District Treasurer attempted to manipulate her paid leave records. District officials corrected the leave records, and the former District Treasurer did not receive any undue benefit.

During our audit period, the Board and District officials did not develop reasonable budgets or effectively manage the District's financial condition to ensure that the general fund's unrestricted fund balance was within the statutory limit. Over the last four fiscal years, the District spent nearly $3 million less than planned and only used $1.5 million of the over $4 million of appropriated fund balance that was budgeted to finance operations. As a result, the District's year-end unrestricted fund balance as a percentage of the next year's budgetary appropriations averaged about 41 percent over the last four years, which is more than 10 times the statutory limit. In addition, the District accumulated a total of $2,339,680 in its six reserve funds as of June 30, 2015. We analyzed these reserves for reasonableness and adherence to statutory requirements. Five of the six reserves appeared to maintain reasonable amounts and adhere to statutory requirements. However, the funding and current balance of the tax certiorari reserve was questionable.

School officials did not comply with the Board-adopted Financial Policies and Procedure Manual (policy). Payroll records for all of the employees that we reviewed for the 2013-14 school year did not have a Personnel Action Form (Form) and 13 of them did not have offer letters on file as required by the School's policy. Of the 34 employees that had offer letters in their files, four were cumulatively overpaid by $1,528 and one was underpaid by $429. In addition, the Board did not establish clear policies and procedures for the accrual and use of leave time. As a result, five of the six administrative staff took more vacation time off than the 10 days allowed by the School's policy. Furthermore, we found that all employees' beginning balances of personal leave were in excess of the three days allowed, resulting in an additional cost to the School.

Although District officials sufficiently reviewed and approved these payments, they have not developed written policies or procedures to formalize this process. Therefore, we reviewed the terms of separation for each of the 23 employees who left District service during our audit period to determine those eligible for a separation payment and if the payments were properly calculated per the Board-approved employment contract or policy terms. We found that nine of these employees were eligible for and paid separation payments totaling $152,607, all of which conformed to the terms of the written agreements. While the procedures in place provide a good system of controls over separation payments, the lack of written procedures results in a risk of the procedures not being followed or changing over time. Formal, written policies and procedures will help District officials ensure that separation payments to District employees are accurate and in accordance with the applicable employment agreements.

The District is serving nutritious meals to its students and the meals are being prepared economically. However, the District's productivity level for meals per labor hour is below the industry averages. Although the industry averages may not be achievable given certain District conditions, District officials can use the industry averages to monitor operations and work towards increasing productivity. We commend District officials and cafeteria staff for providing nutritious meals in a cost effective manner.

District officials generally ensured that leave accruals were properly recorded. However, we found supervisors did not verify that leave accrual balances were available prior to approving leave requests because they did not have access to current leave balance data for employees. Additionally, because there were no periodic reviews of leave accrual records and balances, input errors may not be detected and corrected in a timely manner.

The District's total general fund balance declined by more than $21.5 million (70 percent) from 2009-10 through 2012-13. As of June 30, 2013, the District's unrestricted fund balance was less than $320,000 and fund balance totaled $9.3 million. Additionally, during 2012-13 the District used $4 million of employee benefit accrued liability reserve money to fund District operations, which was 54 percent more than the amount authorized. District officials also have not developed a multiyear financial plan to address the use of fund balance or reserve funds to finance operations. District officials took action to improve the District's financial condition by cutting costs in the 2013-14 budget. We also found that the District's claims auditor did not report to the Board or prepare any written reports for the Board showing the claims audit results. In addition, budget transfers were not made in a timely manner and budget account codes were overspent before the transfers were made. The claims auditor approved claims for payment without ensuring that sufficient budget appropriations existed to fund the cost of goods or services purchased. Our review of the District's 2012-13 budget codes showed that District officials overspent 77 budget appropriation codes by more than $4.3 million.

Generally, foreign fire insurance (FFI) tax money may be spent for any purpose which the membership of the fire department or company determine to be for the benefit of the fire department or company, provided the expenditure is not illegal or contrary to public policy. We examined all 61 FFI expenditures totaling $34,822 during our audit period for adequate support, approvals and propriety and did not identify any concerns. However, we did find that the Finance Director did not prepare or file the 2015 and 2016 annual reports with OSC, as required by General Municipal Law. The Finance Director stated that she was unaware of the requirement. After the end of our field work, the Finance Director filed the 2015 and 2016 annual FFI reports on June 29, 2017.

City officials could better safeguard the City's water and wastewater systems. There is no formal process for staying current on system cybersecurity threats. Water and wastewater personnel do not receive alerts to such threats from key sources including the U.S. Department of Homeland Security's Industrial Control System Cyber Emergency Response Team (ICS-CERT) or the Water Information Sharing and Analysis Center (WaterISAC). The Superintendent indicated that they rely on the City's third-party vendors for threat information. However, we found no evidence that such information is routinely shared and the service level agreements between the City and these vendors do not require them to do so. In addition, officials have not provided employees with cybersecurity awareness training. Finally, officials do not prevent or monitor public disclosure of information that could jeopardize the City's systems.

The County's payroll processing procedures were reasonable and our testing of pay rates, deductions and withholdings did not identify any significant deficiencies. However, the County could improve oversight for leave usage. During our initial meeting, County officials told us the Director of Probation (Director) was under investigation for taking leave from work without charging his leave accruals. He was placed on unpaid administrative leave and reached a retirement settlement with the County that deducted 71 days from his remaining leave balances. Also, the County uses an electronic timekeeping system (ETS) that records the times employees punch in and out and allows edits of timeclock times. For example, the ETS allows the designated department administrators to manually edit the start times and end times that are automatically recorded in the ETS when employees clock in and out of work. According to County officials, edits were made primarily due to employees either forgetting or not having access to punch in or out, flextime or overtime work at offsite locations. We tested 108 edits and found that 54 edits were not approved in writing by the employee's department head; 49 edits did not have support and 22 edits were done by the employees themselves. As a result, the County lacks assurance it is paying for hours worked and services rendered.

The majority of purchases are made by the Chief or two assistant chiefs and invoice approval is typically the Chief's responsibility. While the claims we reviewed were for valid purposes they did not always include approval by the official who made the purchase or have adequate supporting documentation, such as evidence that officials obtained the required number of quotes. Officials also used debit cards to make purchases totaling more than $7,300. The Board has not adopted a written claims processing policy.

Current officials of the participating municipalities were unaware they had entered into an intermunicipal agreement (agreement) establishing the Joint Youth Program (Program). Consequently, we found that several agreement provisions were not adhered to. In addition, the Program's agreement did not include provisions establishing adequate oversight of the Program's financial activities and we found that oversight of Program financial activities was inadequate. As a result, non-resident swim program fees in 2015 were not remitted to the bookkeeper for deposit and the swim program fees in 2016, which were remitted to the bookkeeper were not supported by adequate documentation, such as duplicate press-numbered receipts or daily collection reports. In addition, the Town's governing board did not establish or approve the salaries of any Program employees paid by the Town, except for the Town's recreation director. Furthermore, we found that 13 claims totaling $9,553 were not certified by a recreation director indicating their approval. We question the appropriateness of five claims totaling $856 for services provided that should most likely have been payroll disbursements, which were not supported by adequate documentation, and two claims totaling $1,894 for bus rentals that were not Program activities.

The Board did not ensure that the Superintendent complied with the Town's procurement policy when making highway department purchases. As a result, the Superintendent made purchases without soliciting bids or quotes as required, which resulted in the Town paying $8,800 more than necessary for a dump truck and purchasing $32,000 in road materials without obtaining competitive bids. In addition, the Superintendent did not obtain quotes for $27,000 in tool and auto part purchases. We reviewed available State and county contracts for $8,200 of the auto parts and all the tools and found that the Town could have saved approximately $1,200 for the auto parts and $1,100 for the tools had it purchased them through the contracts. Finally, the Board did not adopt a fleet management policy, and the Superintendent did not keep up-to-date maintenance logs for the department's fleet of vehicles and equipment.

The Clerk issued duplicate receipts for Clerk fees and recorded collections in the accounting system but did not record the form of collections in either record. The Clerk told us she was not aware that the payment form should be recorded. The Clerk also did not perform monthly bank reconciliations to verify the accuracy of Town records or accountability analyses comparing cash on hand and on deposit to known liabilities. In addition, we found deposits were not made intact. Furthermore, the Clerk did not maintain adequate records of tax collections and tax collections were not deposited timely. Budgetary estimates for certain town-wide accounts were not realistic. From 2014 through 2016, the town-wide (TW) general fund realized a total of $66,000 (7 percent) more revenue than estimated and expended $102,000 (11 percent) less than planned. During the same period, the Board adopted reasonable estimates for revenues (actual total revenues were 2 percent more than estimates) in the TW highway fund; however, actual expenditures were $318,000 (13 percent) less than estimated amounts. The combination of receiving more revenues than planned while spending less money than planned created operating surpluses for the TW general and highway funds. As a result of the operating surpluses in the TW general and highway funds, the fund balance of the TW general fund increased by $167,494 (24 percent) and the TW highway fund balance by $241,567 (89 percent) from the beginning of 2014 to the end of 2016. Furthermore, because the 2017 budget does not include realistic estimates of revenues and appropriations, it is likely these funds will realize operating surpluses in 2017, further increasing total fund balance. The Board did not establish a fund balance policy. The Board did not adopt a long-term financial or capital plan.

The Supervisor did not provide oversight of the accountants' duties related to maintaining the accounting records. Consequently, we found significant deficiencies with the Town's accounting records. From 2010 through 2016, the Town did not allocate sales tax revenue to its part-town funds to eliminate property tax levies in those funds before allocating any remaining sales tax revenue to its town-wide funds. As a result, $277,744 was improperly allocated to the town-wide general fund causing taxpayer inequities to occur. The Town lacked effective procedures to ensure water and sewer charges were accurately billed, collected and enforced. Finally, 26 of 50 claims reviewed (52 percent) totaling $59,113 were not audited and approved by the Board prior to payment.