The Supervisor did not ensure that the bookkeeper accurately maintained the Town's accounting records. As a result, the Town's accounting records were incomplete and inaccurate. In addition, the Supervisor did not adequately review the bookkeeper's monthly bank reconciliations. Consequently, the Supervisor was unaware of the discrepancies that we identified in the accounting records. The Supervisor also did not provide the Board with all the financial information it needs to monitor the Town's financial operations, and the Board did not conduct a proper audit of the Town's records. In addition, the Justices did not provide adequate oversight of their Court operations or the work performed by the Court clerks. The Justices also did not perform monthly accountabilities, and the Court clerks did not deposit all cash receipts collected intact. Further, we found that the Court clerks did not remit all cash receipts to appropriate parties in a timely manner, did not always issue receipts for moneys collected for bail and did not report all tickets issued and fines and fees collected to the Justice Court Fund. Also, Town officials did not perform an adequate audit of the Justices' records.

The Board adopted budgets that were not financed by sufficient recurring revenues. Instead, to keep the real property tax levy relatively level, the Board used fund balance to finance the Town's increasing expenditures. As a result, there were consistent operating deficits because expenditures exceeded revenues and fund balance was consumed, to the point of depleting fund balance. The 2013 budget included the use of fund balance totaling $70,734 in the town-wide highway fund and $84,766 in the part-town highway fund, while $50,123 and $57,490, respectively, was available. Overall, the available fund balance in all four of the major operating funds has declined between 40 and 99 percent from fiscal years 2009 through 2013. When preparing the 2014 budget, Town officials appropriated more than $104,000 in total fund balance in three of the Town's operating funds, but the part-town general fund and the town-wide highway fund did not have sufficient fund balance available to meet the appropriated amounts. As such, these two funds' deficits will increase. Further, the Board did not develop a multiyear financial plan. Had such a plan been in place, the Board would have been better able to monitor the use of fund balance before it was depleted.

The Board has not established policies and procedures to ensure adequate internal controls over the cash receipt process for taxes. Library personnel do not maintain a record of taxes received by fiscal year and they have no process in place to ensure the Library received the full amount of real property taxes levied for the Library each year. We determined that for the last four completed fiscal years the amounts transmitted to the Library by the District were $3,500 in 2010-11, $880 in 2011-12 and $46,500 (or 4.26 percent) in 2012-13 less than the voter approved tax levies. We discovered that the District has been reducing the amount of money paid to the Library when there are refunds in property assessments due to tax certiorari judgments. However, there is no authority for a school district to charge back any portion of a tax certiorari refund to a school district public library. The Board has also not established adequate internal controls for over-the-counter receipts. The Library does not have procedures in place to record all receipts at the time of collection and there are no procedures to ensure individual accountability.

District officials underestimated revenues and overestimated expenditures in the Board-adopted budgets for fiscal years 2008-09 through 2012-13, resulting in combined operating surpluses totaling more than $25 million. Although the Board appropriated unexpended surplus funds each year (exceeding a combined $13.2 million over the five-year period) to help finance the next years' operations, the District actually used less than $5.3 million to fund operations. The District accumulated unexpended surplus funds exceeded the statutory limit over the last three years, while at the same time, increased the real property tax levy by more than $6.6 million, a 9 percent increase.

From fiscal years 2010-11 through 2012-13, the District's unrestricted unappropriated fund balance has exceeded the 4 percent statutory limit. However, the District's fund balance has declined as a result of planned operating deficits and appropriating fund balance to finance the planned deficits. Specifically, the amount of unrestricted unappropriated fund balance as a percent of the ensuing year's budgeted appropriations declined from 9.7 percent in fiscal year 2010-11 to 5.4 percent in fiscal year 2012-13. The Board has budgeted to further reduce unrestricted unappropriated fund balance by using it to fund a planned operating deficit in the fiscal year 2013-14 budget. With this appropriation of fund balance, the District's unrestricted unappropriated fund balance is projected to be 4.8 percent of the ensuing year's appropriations, which is still above the 4 percent statutory limit. While we encourage the District to bring its fund balance within the statutory limit, District officials now need to be mindful of the amount of fund balance they will appropriate going forward. Further, the Board has not adopted a multiyear financial plan to allow it to effectively manage its future finances. Such a plan would have helped the Board to monitor and plan for the use of fund balance.

The District's controls over extra-classroom activity funds were not operating effectively. The Board did not ensure that District officials implemented and enforced its policy governing the operations of the activity funds. Consequently, we found that 30 cash receipts totaling $19,322 had no supporting documentation and four student treasurers did not maintain ledgers during the 2012-13 fiscal year. The District's failure to maintain activity funds in accordance with the Board's policy increases the chance that extra-classroom activity moneys could be lost or misused. These deficiencies continued to exist even though our previous audit identified similar internal control weaknesses over the District's extra-classroom activity funds.

Based on our examination, it appears that the Clerk-Treasurer misappropriated approximately $115,891 of Village funds, made questionable purchases totaling $1,405 and received questionable expenditure reimbursements totaling $319. In total, we question the propriety of $117,615 in Village transactions that were initiated by the Clerk-Treasurer. The Clerk-Treasurer was able to misappropriate funds because the Board had not established an adequate system of internal controls over the Village's cash assets and financial records. The Clerk-Treasurer was responsible for receiving funds and making bank deposits, preparing and signing Village checks, processing payrolls, maintaining the Village's accounting records, and receiving unopened monthly bank statements and canceled check images. She performed these functions with virtually no Board oversight. This created an environment where the Clerk-Treasurer was able to write checks to herself or to others for payment of her personal expenses without Board authorization and divert receipts instead of depositing them into Village accounts. This occurred over a four-year period without detection by the Mayor or the Board.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. Although the City has made progress in improving its financial condition, it did not completely implement recommendations contained in our March 2013 budget review report letter. We recommend City officials investigate the difference between the streets maintenance budget summary schedules and supporting schedules and adjust the budget to agree with the corrected debt schedule and to include court security personal service costs. Lastly, we recommend that the potential water and sewer rate increases be authorized by the Common Council prior to the adoption of the budget. The City's proposed budget complies with the property tax levy limit set by statute.

At December 31, 2012, the general fund balance was 12 percent of the $409 million budgeted for 2013. Although the Legislature adopts realistic budgets, they appropriate general fund balance every year to subsidize the airport and bus transportation enterprise funds. As a result, $3.5 million in operating surplus in 2012 resulted in fund balance increasing by $2 million with $1.5 million used to subsidize the enterprise funds. While the County's budgeting practices have improved its financial condition, the continued subsidizing of the enterprise funds will impact these efforts. An additional $5.7 million of appropriated fund balance was budgeted in 2013 and proposed in the 2014 budget to subsidize both funds.

The Department has not adopted any written policies and procedures for financial operations other than the by-laws, which were not adequate or consistently followed. In addition, the Board did not provide adequate oversight of the Treasurer, who was responsible for all financial duties. As a result, the Treasurer did not present to the Board financial records, detailed monthly or annual reports for cash receipts and disbursements, bank statements or reconciliations of the Department's bank accounts. We reviewed all 915 check disbursements made from January 2012 through May 2013, totaling $363,124. We found that numerous vendor payments reviewed had deficiencies. For example, 66 payments totaling $23,459 were paid before purchase order approval. Additionally, 68 disbursements totaling $35,088 were made without the President's signature on the check as required in the by-laws, and 40 checks totaling $38,159 contained only one signature.

We found that the Board generally provides adequate oversight of District financial activities, but should make certain improvements. Although the Board audits and approves claims for payment at its monthly meetings, the Treasurer processes and pays certain claims prior to the Board's audit which are not statutorily authorized for payment in advance of audit. In addition, the Board did not use the prescribed budget format, and adopted budgets did not include the required comparisons to prior years, the detail for non-property tax revenue estimates, or estimated fund balance. Furthermore, the monthly reports provided by the Treasurer include only year-to-date information and do not provide detail for the current month's activities, which makes it more difficult for the Board to monitor operations on a monthly basis.

We found that the Clerk deposited all moneys collected and remitted these moneys to the Supervisor, County and other agencies appropriately. In addition, moneys collected were reported in an accurate and timely manner. However, the Clerk, as the Tax Collector, did not deposit or remit real property taxes received in a timely manner. We also found that the Board is not providing adequate oversight of the Clerk's operations and has not conducted the required annual audit of the books and records of the Clerk/Tax Collector. Because of these weaknesses, the risk is increased that Town moneys could be lost or misappropriated.

We found weaknesses in the College's internal controls over IT assets. College officials do not maintain a complete and comprehensive software inventory list that contains all software that the College currently owns and has installed on its computers. In addition, the College does not regularly monitor or review its computers to ensure that all software installed is approved and legally obtained. Further, the College could not provide supporting documentation for five software programs installed on College computers. We found that one of 36 computers reviewed contained gaming and instant messaging software.

The Board did not comply with its own policy for firehouse hall rentals, and it did not review and/or approve, monitor or control the firehouse hall rental process. As a result, one Commissioner (Commissioner A) controlled all aspects of hall rentals, including taking and recording reservations for hall rentals, collecting rental fees and depositing moneys in the District's bank account. Because the Board did not properly oversee transactions related to the firehouse hall rental process, Commissioner A was able to rent the hall to various individuals and organizations and collect but not deposit any of the approximately $43,800 rental moneys generated by these events. The District's policies for credit card use, meals and refreshments, and cell phone usage were weak. Not only did the Board fail to provide oversight in these areas, individual Board members themselves abused these District resources. For example, of the $44,245 of credit card purchases that we identified as being questionable, $33,063 were made by one Board Commissioner (Commissioner A). Finally, the District's capital asset policy does not provide adequate guidance regarding appropriate inventory recordkeeping and vehicle and equipment usage and disposal. The District has more sport utility vehicles (SUVs) than appear to be necessary for appropriate District operations, seven of which were either not being used or were assigned to employees who did not need District-owned vehicles to fulfill their job responsibilities.

The Supervisor did not maintain complete and accurate accounting records and reports for all Town funds or ensure that bank reconciliations were properly performed. This resulted in accounting errors and the failure to file annual financial reports with OSC in a timely manner. Further, the Board did not annually audit, or have an independent public accountant audit, the Supervisor's records.

A monthly Treasurer's report is submitted to the Board that includes monthly payments, as well as the year-to-date expenditures and a report which compares the budgeted expenditures by individual budget line item to the total amounts spent from each line item to date. However, the monthly reports to the Board are not accompanied by bank statements or bank reconciliations, which prevents the Board from knowing the amount of cash on hand and that the bank balance reconciles to the cash balance per the records maintained by the Treasurer. The Treasurer did not maintain complete records because she did not record deposits in the checkbook register or maintain a running cash balance. As a result, bank reconciliations could not be completed by the Treasurer and provided to the Board. The Board should also review the cash balance recorded in the checkbook register to make sure a running cash balance is maintained. The Treasurer has not filed an annual financial report with the Office of the State Comptroller since the fiscal year ending December 31, 2010, when it was filed with assistance from our office.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. We also found that the District's proposed budget complies with the property tax levy limit.

The District sponsors and funds a defined benefit length of service award program (LOSAP), which is intended to facilitate recruitment and retention of active volunteer firefighters by providing them with a monthly pension-like benefit based upon their years of firefighting service to the District. Points must be granted for performing certain activities, in accordance with a system established by the LOSAP's sponsor (Point System). The activities for which points may be granted are specified in General Municipal Law (GML). The District's Point System was not consistent with GML. Additionally, District officials did not implement standards and procedures ensuring that records of activities performed under the Point System maintained were accurate and complete. Further, District officials did not obtain an annual independent audit of the LOSAP as required. Because of these deficiencies, the District may have paid for benefits that were not legitimately earned, participants might not have received the service credit to which they were entitled and District officials cannot be certain that the LOSAP's assets are sufficient to pay the benefits to which members are entitled.

We found that the Board did not develop or implement procedures to track Community Development Block Grant (CDBG) funding and document how grant funds were spent and that the intended objectives and outcomes were accomplished. The Board entered into a written contract detailing the services to be provided by the Cuba Community Development Corporation (CCDC), but did not properly monitor its progress toward meeting CDBG program goals. The CCDC submitted 31 invoices totaling $288,968 for work not yet performed, and made $28,117 in payments to contractors which were not submitted to or approved by the Board. This enabled the CCDC to divert $3,000 of Town grant funds to finance other unrelated CCDC operations. Currently, the CCDC has exhausted the Town's grant funds while still owing contractors $8,925 for completed work and has not returned the diverted grant funds to the Town.

The Court was audited by the New York State Office of Court Administration, which released a report in July 2011 that found that at least $89,600 in Court funds were misappropriated by the former Court clerk. Given the past misappropriation of Court funds, we reviewed the Court's financial activity to ensure corrective action has been taken and preventative procedures have been established to safeguard Court assets. Overall, the Justices have established adequate processes and procedures for the Court's financial operations. The Court clerk collects cash receipts, records entries in the accounting system and prepares deposits. The Justices review the deposits to ensure they are accurate and that all receipts are accounted for prior to depositing the receipts. While the Justices properly account for monthly activity and prepare bank reconciliations, we found that the accountability reports were not properly prepared. We prepared accountabilities for both Justices for the months of June, July and August 2013 and found minor variances with both Justices' accountabilities. When the variances were brought to the Court clerk's attention she promptly investigated and accounted for the variances.