Department payroll payments were not adequately supported and leave time was not properly accrued or used. We found that, of the $276,000 paid to police officers during our audit period, $6,084 of overtime paid to the Chief and the full-time patrolman was not adequately supported by appropriate time sheets. We compared time sheets to other required, supporting time records, such as the police blotter and County dispatch records, and found discrepancies between all of these sources. We further found that the Board and Mayor did not monitor or review the Chief's compensatory time. Instead, the Board allowed the Chief to record unsupported compensatory time, as accrued and used for himself. We also found the full-time patrolman accrued sick leave in excess of the amount authorized. As a result of inadequate monitoring of the accrual and usage of leave time, the two full-time officers were improperly credited with leave time valued at more than $12,000. Village officials did not adequately monitor or develop a plan to address the causes for the difference in water produced by the Village's water system to the amount billed to customers. The Village produced more than 346 million gallons of water of which 92 million gallons of water was billed to customers, resulting in unaccounted-for water of 254 million gallons (73 percent). For perspective, this amount of water loss would cover more than one square mile with one foot of water. The Village could have saved approximately $66,000, during our audit period, if it did not need to produce the 254 million gallons.

The County Departments of Aging, Public Health, Mental Health and Social Services provide assistance to individuals and families with social service and financial needs through contracts with third-party agencies. Payments to these agencies total approximately $8.7 million per year. However, the Board does not provide proper administration and oversight. Although the Board has adopted a procurement policy, the County has awarded nine third-party contracts totaling $1.9 million without soliciting competition or documenting a justifiable reason for not soliciting competition and has paid three vendors $770,000 for various services without any written contracts with the vendors. In addition, there is no Board of Ethics and no one else helping to ensure that individuals are free from potential conflicts of interest in fulfilling their public responsibilities. Finally, although Department heads have various procedures to monitor contract performance and payments, the Board does not ensure that contracts are adequately monitored.

The Solid Waste Manager has instituted various programs to divert waste from the landfill and monitors program effectiveness by tracking results at least quarterly. For fiscal years 2011 through 2013, the recycling program has saved the County more than $1 million

The Town's internal controls over payroll need to be improved. Payroll duties were not properly segregated. Department heads are not required to sign time cards showing their approval, and pre-approval for overtime was not required. We also found the Town's internal controls over vehicle fuel need to be improved. The Town does not take a physical inventory of its fuel and does not reconcile fuel purchases and usage. As a result, during a three-month period, 228.6 gallons, representing 7 percent, or $750, of the Town's diesel fuel cannot be accounted for.

The Board has not established an effective claims audit process. We examined 99 general fund and highway fund claims totaling $423,485 to determine whether they were properly authorized and approved, contained adequate supporting documentation, were in accordance with Town policies and were for proper Town purposes. The Board approved 51 claims totaling $103,341 that had deficiencies. We question how the Board approved these claims for payment without the necessary documentation. We also found a Board member has a prohibited interest in Town contracts. The Town made purchases from the Board member's business from January through December 2013 totaling $2,393, and from January through June 2014 totaling $1,057. When Town officers, in their private capacities, conduct business with the Town for which they serve, the public may question the appropriateness of the transactions.

The Town does not have complete, accurate and up-to-date accounting records because the Supervisor did not provide adequate oversight of the bookkeeper during our audit period or adequately segregate the duties of the bookkeeper and payroll clerk. Lack of oversight and errors in recording transactions caused the financial records to be misstated. As a result, the Supervisor could not provide the Board with sufficient interim financial reports and did not file the required annual financial report with OSC for 2012 and 2013 in a timely manner. Without complete, accurate and timely financial information, the Board could not properly monitor and manage Town operations.

The Board has not provided effective oversight of the water district's financial operations, which has contributed to the water district's accounting records being incomplete and inaccurate. As a result, the Board was not aware of the water district's actual operating results and overall financial condition. In addition, the Board did not adopt realistic budgets and did not properly monitor the water district's financial operations throughout the year. Consequently, the water district realized significant operating deficits of $24,785 for 2012, $43,473 for 2013 and $61,600 (projected) for 2014. In June 2014, the town-wide general fund made a $30,410 interfund advance to the water district so that it could pay its operating expenses. We project that the water district will not be able to repay this interfund advance by the close of the fiscal year as required. We also identified significant internal control weaknesses over the Collector's financial activities. For example, the Collector did not maintain adequate, accurate and complete records and did not assess penalties to all tax payments that were received after the due date. In addition, the Collector did not physically secure tax collections prior to deposit and did not deposit collections in a timely manner and intact. Furthermore, the Collector did not refund overpayments in a timely manner and did not remit interest and penalties to the Supervisor in a timely manner or in the appropriate amounts. We also found that the Board did not audit the Collector's records as required. Consequently, the Town did not realize all potential revenues for penalties. In addition, as of July 31, 2014, the Collector had a cash shortage of at least $1,053, which resulted in the Collector not being able to disburse a $350 refund check for an overpayment or remit $1,010 in interest and penalties that were owed to the Supervisor.

The Board did not properly establish any of the Town's 14 capital reserves, totaling $614,266 as of May 31, 2014. The Board also failed to seek approval from OSC to establish any of these reserve funds. Furthermore, two of the reserve funds, entitled “communications” and “software” totaling approximately $35,000, are not permitted by GML. During our audit period, the Board expended funds from three of their type capital reserve funds and failed to subject the expenditures to permissive referendums and obtain approval from OSC. In addition, internal controls over the Court's accounting and reporting of financial activity were inadequate. Justice Atwell did not perform monthly bank reconciliations or accountabilities during 2012 and 2013. In addition, he did not always deposit collections in a timely matter. Furthermore, when he resigned from his position on October 23, 2013, he transferred the funds in his bank account to the succeeding Justice without supporting records indicating associated pending cases. Justice Durkin did perform monthly bank reconciliations, but did not perform monthly accountabilities of cash on hand and on deposit to outstanding liabilities and she had unaccounted for funds in her bank account.

The Board has contracted with the Foundation to provide services to the school, including legal assistance, advocacy, curriculum design and test administration for fees totaling $115,779 from 2010-11 through 2013-14. However, the compact contract with the Foundation is not sufficiently detailed to determine how the delivery of services will be measured and the fee structure does not appear to be reasonable. The fees to the Foundation are increasing because they are calculated as increasing percentages of per pupil revenues. There is no relationship between the fees to be paid to the Foundation and the services to be provided by the Foundation to the School's attendance and tuition revenue. Although the Board President recused himself from voting on the compact because he was the Executive Director of the Foundation, he did not disclose this information on the financial disclosure forms that he filed during our audit period, as required.

District officials have significantly improved the District's financial condition due to staff reductions and consolidation and restructuring of the location of students. However, we found that the Board and District officials did not adopt reasonable budgets that were based on realistic estimates of revenues and expenditures. Also, the Board has not adopted an adequate reserve policy and is not budgeting to fund reserves, but funds reserves at the end of the fiscal year. As a result, three of the District's six reserve funds are overfunded. Additionally, due to the District's budgeting practices, the balance in the debt service fund has increased significantly over the last two years. Furthermore, the District's current multiyear financial plan is inadequate and not sustainable.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The District's tentative budget for 2015-16 complies with the property tax levy limit.

Internal controls over the department's cash receipts process are not appropriately designed or operating effectively. The Board has not adopted comprehensive written policies for departmental cash receipts or implemented procedures to provide guidance for employees when recording transactions to help ensure that the department's financial reports are accurate and reliable. As a result, the Comptroller incorrectly recorded department revenues which results in the Board not having adequate information to make budget decisions for recreation programs.

The Board did not ensure that District personnel used competitive methods when purchasing goods and services not subject to competitive bidding. This occurred because the Board did not require that District personnel obtain quotes or issue requests for proposals in accordance with the Board-adopted procurement policy. District officials paid 27 invoices totaling $83,370 for purchases without obtaining any type of competition. In addition, the Board did not follow its own procurement policy because it approved 22 vendors for use without obtaining competition. The District also did not seek competition when selecting four professional service providers who received payments totaling $155,865. The Board also did not enter into written agreements with two professional service providers who received payments totaling $35,113 during the audit period. In addition, the Board has not established written policies or procedures for granting, changing and terminating access rights to the District's financial system. It has not ensured that each financial system user is assigned only one username and password, and has not designated someone to be the financial software system administrator. The Board has not implemented policies or established procedures that address remote access to the financial system. Finally, the Board did not adopt a breach notification policy or a disaster recovery plan.

We found that the Board could improve its oversight of the Department's financial activities. Although the Board has adopted Department bylaws, which includes cash disbursement policies, we found them to be inadequate. Even though the Department's bylaws specifically detail the Board's responsibilities and the Treasurer's duties, these guidelines did not adequately segregate or provide oversight of the Treasurer's duties. Further, the Board has not adopted policies or procedures for financial operations such as cash receipts, procurement and claims processing. As a result, the Treasurer receives all Department funds, prepares and makes all deposits, pays Department bills and performs all recordkeeping functions, including bank reconciliations, with little or no Board oversight. In addition, the Treasurer did not always obtain Membership approval prior to transferring funds in the Department's bank accounts as required by the bylaws. We found that the Treasurer generally maintained appropriate financial records; however, completed bank reconciliations were not maintained. While the Treasurer provides a verbal bi-weekly report to the Board and Membership detailing the Department's finances, the Treasurer did not provide the Board with written financial reports for review. Furthermore, the audit committee did not complete an adequate annual audit and the results were not documented in the meeting minutes. Finally, the Board did not prepare or adopt an annual budget and has not adopted a code of ethics.

While all the disbursements we reviewed were properly recorded on Board-approved abstracts, the Board does not conduct a comprehensive audit of each claim as required by Town Law. We reviewed 205 disbursements totaling $708,616 to determine if they were properly approved and supported by adequate documentation. We found that 43 disbursements totaling $139,303 were authorized by the Secretary instead of the Director as required. In addition, claims for 13 disbursements totaling $170,008 did not contain an authorizing signature. The Director properly authorized the remaining 149 expenditures totaling $399,305. We also found credit card claims were not always supported with adequate documentation.

The Board has not developed policies and procedures to govern budgeting practices and the level of unexpended surplus funds, and as a result, the Town has accumulated a significant amount of unexpended surplus funds. For example, the town-wide general and highway funds had unexpended surplus funds totaling $288,800 and $170,500 at the end of the 2013 year. These amounts represented 75 and 42 percent of 2014 appropriations in those funds. Further, we found that the unexpended surplus funds in the town-outside-village general and highway funds reached $65,448 (106 percent) and $264,118 (120 percent), respectively, of 2014 appropriations. The accumulation of unexpended surplus funds in the Town's operating funds was primarily due to consistent operating surpluses and underestimation of sales tax revenues.

The Board did not provide proper oversight over the management of the Park. The Board did not ensure that proposed improvements were properly evaluated and authorized prior to committing Town funds. Town officials never received written authorization from NYS Parks for any of the proposed projects, as required by the terms of the agreement. Instead, the Board relied on the judgment of the Supervisor and the oversight of a local development corporation that it formed to identify potential projects and manage the Park. As a result, Town officials wasted money by contracting for services that ultimately provided little or no benefit to the Town. To date, the Town has spent more than $1.1 million on the Park, and this spending has not resulted in any significant improvements other than normal Park maintenance and the paving of two parking areas. Furthermore, the Board did not properly monitor fuel purchases and usage at the Park, and the Town did not have adequate controls over Park fuel supplies. We identified approximately 2,000 gallons of diesel fuel with a value of approximately $6,500 that is unaccounted for and may have been dispensed into an employee's personal vehicle.

We found that the town-outside-village operating fund balances were reasonable and the Board's budget estimates for revenues and expenditures were generally reasonable for all funds. However, because the Board did not fully understand the impact of appropriating fund balance each year, fund balance for both of the town-wide (TW) operating funds combined experienced significant declines over the last three years totaling about $463,316. The TW general fund ended 2013 with an unrestricted, unappropriated fund balance of $2,683 and the TW highway fund ended the year with an unassigned fund balance deficit of $75,952. The Board adopted budgets that relied too heavily on appropriated fund balance as a financing source and appropriated more fund balance than it had available. Additionally, the Board has not developed a fund balance policy to determine the amount of fund balance to maintain or multiyear financial and capital plans to address the Town's long-term priorities. As a result, the Town's ability to react to external influences, provide basic services and plan for capital needs is diminished.

The Board did not effectively oversee the Town's financial operations. The Supervisor did not provide the Board with adequate monthly financial reports. In addition, the Town's procedures for auditing claims were not in compliance with Town Law. Furthermore, the Board did not annually audit or cause an audit of records and reports of all Town officers or employees who received or disbursed moneys on behalf of the Town. As a result of these deficiencies, there is an increased risk that inappropriate payments or irregularities could occur and the Board's ability to effectively monitor the Town's financial operations is diminished.

The Supervisor did not maintain accounting records. Specifically, general ledgers, receipt and disbursement journals, subsidiary revenue and expenditure ledgers and cash account balances were not maintained. As a result, the Supervisor was unable to prepare monthly bank reconciliations or provide the Board with complete and reliable financial reports. Additionally, 88 disbursements totaling approximately $68,300 were made either without proper supporting documentation or Board authorization and an accurate 2013 annual financial report was not filed with the Office of the State Comptroller. Further, the Board did not adequately oversee the Supervisor's financial duties to properly monitor and manage financial operations and assess the Town's financial condition. The Board also did not annually audit the Supervisor's records or develop and implement policies and procedures over its budgeting practices and the level of fund balance to maintain. As a result, cash at the end of 2013 totaled $689,998 or more than twice the 2014 Board-adopted budget and the Board may have raised more real property taxes than necessary to finance Town operations. Finally, the Town purchased an engine for a highway vehicle from the Highway Superintendent for $1,300, which created a conflict of interest.