The District lacked adequate procedures to ensure Medicaid claims were submitted and reimbursed for all eligible services provided. As a result, claims were not submitted and reimbursed for 1,674 eligible services totaling $58,965 and service providers did not document 1,593 scheduled services totaling $54,054 in the special education system as having been provided to students. Had these services been appropriately claimed and documented, the District could have realized potential revenues totaling $56,510. District officials did not submit any claims for reimbursement from 2011-12 through 2014-15 or submit claims for all eligible services provided from 2015-16 through 2017-18 due to inadequate procedures.

The Board received monthly financial reports provided by the Treasurer that it used to monitor financial operations. However, we identified deficiencies related to the Board's claims audit process and annual audit responsibilities that it should address to improve its oversight of financial operations. For example, we tested 75 of 480 disbursements made during our audit period, totaling $31,300, and found that 15 totaling $7,159 were not audited and approved by the Board. In addition, the District used debit cards to make purchases totaling approximately $14,000. The Board did not audit and approve the associated claims before payment. The Board did not contract for an independent audit of its 2017 records as required by law. Finally, certain Treasury duties were improperly assigned to a professional service provider and third-party vendors (vendors) had access to District bank accounts to withdraw electronic payments.

The Board did not appoint a faculty counselor, faculty auditor or a central treasurer as required by the Commissioner's Regulations. Although not formally appointed by the Board, the District Treasurer performed the central treasurer's duties for ECA funds. She was responsible for receiving funds from the faculty advisors, disbursing club funds, preparing bank reconciliations, depositing funds and preparing reports for the Board. Because the clubs had no faculty counselor, there was no one to advise the faculty advisors on financial planning or the records they should maintain. Additionally, with no faculty auditor, there was no one responsible for reviewing ledgers maintained by the ECA clubs and comparing them to the central treasurer's records. The Treasurer recorded receipts for three clubs totaling $37,911. However, none of these clubs maintained sufficient documentation to determine how much was collected or that receipts were accounted for. In addition, we reviewed 28 deposits totaling $31,521 and found four deposits totaling $4,086 were deposited between 11 and 14 days after the date the faculty advisor brought the funds to the Business Office. The ECA clubs had 56 disbursements totaling $39,630 during the audit period. We also reviewed 20 disbursements totaling $32,553 and found two cash advances totaling $1,780 did not have the proper approvals.

The District reported unrestricted fund balance that exceeded the 4 percent statutory limit from 2014-15 through 2016-17 by an annual average of approximately $860,000. Unrestricted fund balance exceeded the statutory limit because the Board and District officials consistently overestimated appropriations. Furthermore, the budgeting practices made it appear that the District needed to both increase taxes and use appropriated fund balance to close projected budget gaps. However, the District realized operating surpluses and, consequently, appropriated fund balance was not needed to finance operations. We recalculated unrestricted fund balance with the amounts of unused appropriated fund balance which resulted in the totals further exceeding the statutory limit. In addition, as of June 30, 2017, the District reported six reserves with balances totaling approximately $9.6 million or 31 percent of 2017-18 budgeted appropriations. The Board overfunded two reserves and District officials did not use the debt reserve. By maintaining excessive reserves, combined with ongoing budgeting practices that generated operating surpluses and excess unrestricted fund balance, the Board and District officials have levied higher taxes than necessary.

Two Justices, Leroux and Wilbanks, adjudicate legal matters within the Court's jurisdiction, such as vehicle and traffic, criminal, civil and small claims cases. The Justices did not consistently identify whether collections and corresponding deposits were in the form of checks or cash. Fines collected were recorded in the accounting system by the clerk from issued press-numbered receipts. However, for the 16 months covered by our audit period, Justice Wilbanks' monthly cash reports did not agree with bank deposits in any of the months and Justice Leroux's did not agree for two of the months. As a result, we requested bank compositions for both Justices Leroux and Wilbanks, in order to verify recorded collections were deposited to the Justices' bank accounts. We were able to trace each of the 376 duplicate receipts to the bank records and monthly reports and determine all collections were accounted for. However, we found that Justice Wilbanks made 83 percent of bank deposits from three to 67 days late. In addition, the Justices' cash balances exceeded known liabilities by a combined total of $4,728 as of April 30, 2018. Furthermore, the Justices did not prepare bank reconciliations or accountabilities. Finally, the Justices did not maintain accurate outstanding bail reports.

District officials overestimated expenditures by an annual average of $1.2 million (about 7 percent) from fiscal years 2014-15 through 2016-17. Officials also appropriated a total of $1.8 million (3 percent of the subsequent year's budgeted appropriations) in fund balance from fiscal years 2014-15 through 2016-17 that was not needed to fund operations. Because the Board overestimated certain appropriations, the appropriated fund balance was not needed to finance the budget. By including appropriated fund balance in the budgets, it appeared that the District had less unrestricted fund balance than it actually had. As a result, the District reported unrestricted fund balance at the 4 percent statutory limit. However, when unused appropriated fund balance is added back to the reported unrestricted fund balance, the District's recalculated unrestricted fund balance ranged from 6.7 percent to 7.6 percent which, in effect, exceeded the statutory limit by between 2.7 to 3.6 percentage points. Finally, District officials overfunded three of the five reserves.

We reviewed 76 agricultural, senior citizen and Veterans properties with exemptions and found 49 (64 percent) lacked supporting documentation (e.g. applications, renewal forms, income support and military records) to verify taxpayer eligibility. The properties with exceptions had their total taxable assessed value reduced by about $2.9 million. Specifically, we reviewed 30 properties receiving an agricultural exemption and found 26 exemptions lacked one or more pieces of supporting documentation necessary to verify their eligibility for the exemption. All 20 of the properties we reviewed receiving a senior citizens exemption lacked the necessary supporting documentation to verify the eligibility and accuracy of these exemptions. Finally, we reviewed 26 properties receiving veterans exemptions and found three properties (12 percent) lacking one or more pieces of supporting documentation to verify the eligibility and accuracy of these exemptions.

The Board adopted an updated written reserve fund policy in July 2017. The policy requires an annual report to the Board, which includes a description of the reserves, the date of establishment, interest earned, withdrawal details, ending balances and an analysis of projected needs for the reserves in the upcoming fiscal year with a recommendation regarding funding those needs. However, the policy does not address funding methods, optimal funding levels or use resulting in overfunded reserves that are not used. As of June 30, 2018, the District reported 11 general fund reserves totaling approximately $7.3 million and a debt reserve of approximately $594,000 in the debt service fund. We found that District officials properly established all reserves with the exception of the debt reserve, and that the retirement contribution, debt, repair, property loss and liability, and insurance reserves with balances totaling $3.5 million are overfunded and may be unnecessary.

The Board engaged the services of a CPA to provide the following financial advisory services related to the processing and recording of cash for the Village: maintain the general ledger, prepare monthly bank reconciliations and prepare monthly financial statements designed to meet the needs of the Village Board. Our review of Village financial records indicated that these services, such as maintaining the general ledger cash accounts, were not advisory but that the CPA actually performed these activities with little or no oversight from the Clerk-Treasurer. While it is acceptable for the Clerk-Treasurer to obtain advice when performing her duties as the Village's chief fiscal officer, she is responsible for the Village's financial operation and should have a complete understanding and approval of the Village's financial records and reports.

The Board and District officials have not adopted adequate security policies and procedures to safeguard IT assets. Specifically, the Board has not adopted IT security policies addressing data classification and regulations addressing the protection of personal, private and sensitive information (PPSI). Further, the Board has not adopted policies addressing password management, wireless security, remote access, online banking, user account management and access rights, sanitation and disposal of IT equipment, backup and disaster recovery. In addition, District officials did not provide IT security awareness training for employees. Furthermore, the District's disaster recovery plan was inadequate because it did not designate alternate work locations and IT equipment or identify staff responsible for restoring critical applications and systems listed in the plan. In addition, the plan did not provide details on how often the plan should be tested or updated. The Board did not develop a policy or written procedures for maintaining leave records. As of February 27, 2018, leave balances for 31 of the 40 non-instructional employees tested (78 percent) were inaccurate.

The Board sought opportunities to share services with neighboring districts to implement cost savings and maintain programs for students. Beginning in August 2015, the Board began sharing the Business Administrator position with the Roscoe Central School District (Roscoe CSD). Additionally, in January 2017, the Board entered an agreement with the Roscoe CSD to share the Superintendent position. By sharing these positions, District officials saved approximately $326,000 in total salaries and benefits during this period compared to the amount that would have been paid if the positions had not been shared with the other district. The Board also shared sports programs with other districts to ensure their students had varied sports opportunities available to them while decreasing expenditures by $90,000 since 2013-14. Finally, we found that District officials could potentially save taxpayers $284,000 per eight-student classroom by providing select special education services in-house.

The Board did not approve all compensation and some payments were not paid accurately or supported sufficiently. We reviewed payroll payments totaling $4.7 million to 151 employees and found almost $418,000 in payments (9 percent) were not accurate, supported or paid in accordance with contracts or Board resolutions. For example, the Board did not authorize salaries paid to six individuals totaling $347,368 and paid $11,690 to an employee who worked offsite without certainty as to the work performed. In addition, manual adjustments for fingerprint time clock system entries were not adequately supported or approved by supervisors.

The three Supervisors from 2016 through audit fieldwork in 2018 neither maintained nor required the bookkeeper to maintain complete, accurate and up-to-date accounting records and reports. They also did not adequately oversee the bookkeeper's work during their tenure by verifying that all transactions were properly recorded. For example, the bookkeeper did not record all expenditures in the general and highway funds in a timely manner. In addition, general fund real property taxes were overstated in the general fund accounting records, by almost $42,000 in 2016 and by approximately $4,250 in 2017. This was a result of double counting almost $38,000 of fire district taxes in the general fund in 2016, and not reporting interest and penalties separately in either year. Lastly, the high turnover in Supervisors during our scope period led to disruptions in recordkeeping and made it difficult for the bookkeeper to create the 2017 annual update document (AUD), which was filed with OSC 122 days late.

The Assessor granted 850 non-NYS STAR property tax exemptions for non-municipal-owned property on the 2017 assessment roll, collectively reducing the Town's 2018 taxable assessed value by more than $117.7 million. For example, we reviewed 100 exemptions totaling $59.3 million and identified issues with 66 exemptions totaling $25 million (42 percent) including exemptions that were miscalculated or inappropriately granted. In addition, although the Assessor certified the assessment roll was accurate, including exemptions granted prior to his tenure, he did not review the exemptions granted by previous Assessors to ensure the exemptions had the necessary supporting documentation, are correctly calculated and remained eligible. The Assessor also did not require or maintain supporting documentation for the exemptions he granted.

District officials established procedures to ensure that most claims were adequately documented and supported and for appropriate purposes. Except for debit card purchases, which bypass the claims audit process, the claims auditor conducted a thorough examination of each claim to determine whether it was for appropriate purposes, the goods or services were received and the claim were adequately documented and supported (i.e., with an itemized invoice, purchasing requisition, purchase order and documentation showing the receipt of goods or services) before payment. District officials used a debit card to make 36 purchases totaling $8,036 during our audit period. Although District officials use a separate bank account for debit card transactions and the card is secured in the business office safe when not in use, the use of a debit card prevented the claims auditor from auditing and approving these purchases.

The Supervisor and Board did not properly oversee the processing of the Town's financial transactions. As a result, the Town incurred $14,551 in excess costs. For example, we determined that the Board inappropriately approved the payment of $11,320 in fuel taxes. We also found the former Highway Superintendent was overpaid $1,269 because an extra check was issued upon his retirement. In addition, we found a $90 check issued by the State in January of 2018 was not deposited. The Supervisor told us he had not seen the check and would contact the State to obtain a duplicate. We also found a check from the Justice for April 2017 was lost and not discovered and replaced until June 2018. These issues occurred because the Supervisor did not deposit receipts in accordance with statute and the Board has not performed an annual audit of the Supervisor's records. Finally, the Supervisor did not maintain accurate financial records and as a result, did not provide the Board with the necessary information to assess the Town's financial position.

The Board conservatively estimated revenues and appropriations for the 2015 through 2017 general and highway fund budgets. Further, the Board did not fund reserves or request fund balance analyses for budget development because it did not adopt fund balance, reserve or budgeting policies that established the levels of fund balance to be maintained. In addition, rather than actively monitor the budget during the year, the Board did not make budget amendments and transfers until year-end. As a result, from January 1, 2015 through December 31, 2017, the fund balance of the general fund grew by $159,501 or 52 percent. During the same period, the highway fund balance grew by $291,740 or by over three times. As of December 31, 2017, the general and highway fund balances were the equivalent of 78 percent and 30 percent of 2017 expenditures respectively. These increases were the result of operating surpluses in each of the years. In addition, the Board did not adopt multiyear financial and capital plans.

District officials did not effectively ensure the accuracy of employee salaries and wages paid. We found that two teacher assistants were not paid the correct pay rates. The collective bargaining agreement (CBA) for teacher assistants required a 1.75 percent salary increase for its members in 2017-18. However, one teacher assistant received the same salary for 2016-17 and 2017-18 (20 months) and did not receive any increases, as required by the CBA. Although the other teacher assistant received an increase, the District Clerk miscalculated the increased biweekly salary as $1,161 instead of $1,172. As a result, these two employees were underpaid by nearly $800 in 2017-18. Furthermore, because the Director did not periodically review or reconcile the accrued leave records, we found 16 discrepancies between her records and the leave tracking system for 11 of the 33 employees tested (33 percent).

District officials did not always procure goods and services in accordance with Board policy. Officials properly sought competition for 10 purchases totaling $1.2 million that exceeded General Municipal Law's bidding requirements. However, officials did not provide documentation that they obtained quotes prior to making three purchases totaling $18,174. Finally, officials were unable to provide documentation supporting their selection of four professional service providers paid a total of $76,781.

We attempted to trace the 53 assets to their locations to determine whether they were in the District's possession and appropriately tagged. While we were able to locate and identify 39 of these assets, we were unable to locate 14 assets totaling $17,402 because either the asset was in the possession of a teacher on summer vacation, lacked a serial number and inventory tag or had a serial number that did not agree with the invoice. None of the 39 assets valued at $242,673 that we located were tagged. Officials told us that the provider comes to their location every five years to tag the assets and their next visit is scheduled for 2019. The process of tagging assets only once in five years is inadequate. Computer equipment, for example, is valuable when it is new and should be tagged as District property. However, by the time it is five years old it is of little value leaving little point to tagging it as District property. Additionally, because the Business Administrator was unaware that the policy assigned the business office as property control manager, a current up-to-date asset list was not maintained. Although we did not find any indication of fraud, without an accurate and up-to-date asset list officials cannot be sure that assets are protected against loss or unauthorized use and that the District is not incurring unnecessary insurance costs.