Based on the results of our review, except for certain items, we found that the significant revenue and expenditure estimates contained in the proposed budget were reasonable. While the Council submitted a corrective action plan for the 2017-18 budget review and did implement certain corrective actions, the Council and City officials have not implemented certain other corrective actions that the Council indicated would be undertaken. For example, Council and City officials should restore the contingency appropriation to at least the previously recommended levels. The City also currently faces pending litigation relating to the North Union Street capital project that may require additional funds of approximately $1.3 million, the City estimates, to cover projected costs. The City's proposed budget does not include any appropriations for these potential costs. Additionally, as of May 31, 2017, the City reported seven completed capital projects with deficit balances totaling approximately $900,000 that may require money from the general fund to close out, which could result in a further reduction of general fund balance. Furthermore, the City's outstanding debt has grown by 36 percent in one year, increasing from approximately $33.4 million as of May 31, 2016 to approximately $45.3 million as of May 31, 2017. Finally, in adopting the 2018-19 budget, the Council should be mindful of the legal requirement to maintain the tax levy increase to no more than the tax levy limit as permitted by law, unless it obtains the proper voter approval to override the tax levy limit.

The three Justices did not prepare monthly bank reconciliations or accountabilities. Therefore, we prepared bank reconciliations from January 1, 2016 through May 31, 2017 and conducted a cash count and accountability analysis on June 14, 2017. We found that errors went undetected and uncorrected. In addition, the Court did not ensure timely adjudication and reporting of vehicle and traffic cases. We reviewed the TSLED pending ticket report for the period January 1, 2016 through June 21, 2017 and identified 2,069 pending tickets, of which 245 (12 percent) were referred to the Scofflaw Program because of nonpayment or no appearance at Court.

The Board adopted a resolution designating the Board President and another Board member to audit claims on its behalf and evidence their audit by signing the warrant. The Board President told us he reviews claims to ensure they contain adequate supporting documentation and are for legitimate purposes, and then signs the warrant to evidence his review. He acknowledged, however, he does not review every claim. Rather, the Board President reviews specific claims only when questions arise such as unrecognized vendors or unreasonable or high dollar amounts as shown on the warrant. In addition, he acknowledged that he reviews claims after several warrants have been generated. Therefore, claims are paid prior to audit. The Board President communicates the results of his review and any findings to the rest of the Board during its meetings. District officials indicated that the second Board member appointed to audit claims serves as a back-up and does not routinely audit claims. Therefore, all 100 claims we reviewed, totaling $1,517,352, were paid prior to audit.

District officials accurately paid employees' salaries and wages in accordance with Board-approved contracts, resolutions and CBAs. We commend District officials for establishing a well-designed system for processing payroll to ensure employees are accurately paid the salaries and wages to which they are entitled.

District policies require student treasurers to be directly involved with extra-classroom activities (ECA) funds and activities. However, we found that faculty advisors were completing required documentation, such as deposit and disbursement forms and maintaining the ledgers, instead of the student treasurers. We reviewed 45 disbursements totaling $27,237 and 45 deposits totaling $19,853 in the Treasurer's records and student treasurers' ledgers. We found all were accurately recorded in the Treasurer's records, but 19 deposits totaling $9,954 and 14 disbursements totaling $9,194 were not accurately recorded in student treasurers' ledgers. In addition, five clubs were not maintaining ledgers and instead relied on the Treasurer's reports as a substitute for their own records. In addition, faculty advisors did not ensure student treasurers issued duplicate press-numbered receipts or admissions receipts when collecting cash at fundraisers or during events. Finally, disbursements did not always have adequate supporting documentation attached or required signatures but were for appropriate ECA purposes.

Although the District's unassigned fund balance exceeded the statutory limit from 2014-15 through 2016-17, unassigned fund balance as a percentage of ensuing year's appropriations decreased by 2 percentage points (from 6.9 to 4.9 percent). District officials adopted reasonable budgets over these years (with average revenue variances of less than 3.7 percent and average expenditure variances of less than 6.4 percent), which included appropriated and subsequent use of fund balance. From 2014-15 through 2016-17, District officials used unassigned fund balance totaling $1.3 million. As a result, the amount of unassigned fund balance that exceeded the statutory limit declined significantly during each of these years (from 2.9 to .9 percentage points). In addition, the District's real property tax levy has remained relatively stable during these years. Finally, the debt service fund, employee benefit accrued liability reserve (EBALR) and retirement contribution reserve were not used as budgeted and overfunded by $5.7 million as of June 30, 2017.

Library officials told us that the Board does not review claims, except in rare cases when a claim listed on the warrant appears unreasonable. The Board reviews and approves the warrants without auditing each individual claim to ensure that the claims represent legitimate Library expenditures. We found that eight of 19 claims reviewed totaling $75,163 required soliciting competitive pricing. However, Library officials did not have documentation available to show they obtained the required number of quotations or proposals for five purchases totaling $27,129.

The Board has not developed realistic budgets and has not adequately monitored the budgets. As a result, from 2014 through 2016, fund balance in the general fund declined from about $478,000 to $51,000 (89 percent) and declined in the Sleepy Hollow sewer district fund from $31,503 to $3,521 (89 percent). The highway fund also had a deficit unrestricted fund balance during this period of as much as $66,491. In addition, the Board has not adopted multiyear financial and capital plans. Finally, the Board did not adopt IT breach notification policies and procedures, back-up procedures and a disaster recovery plan.

Neither the Justices nor the Court clerks prepared monthly bank reconciliations or accountabilities. Instead, the Court clerk kept an annual check register in a computerized spreadsheet that detailed deposits and checks. The register inaccurately noted when checks cleared. Therefore, we performed reconciliations of the Justices' bank statements with their records of bail for pending cases, cash books and Justice Court Fund reports for the period January 1, 2013 through June 12, 2017 and found errors that went undetected and uncorrected. Finally, as of February 28, 2017, there were 426 (31 percent) pending cases before the Court that were not adjudicated within 60 days and eligible for referral to the Scofflaw Program. The clerks referred 205 pending tickets between May 16, 2017 and August 9, 2017, but 221 tickets were not referred as of June 12, 2017. When we brought this to the Court clerk's attention, she referred 168 of the 221 tickets to the Scofflaw Program during our fieldwork.

Town officials appropriately sought competition for nearly $1.4 million in purchases that were over the competitive bidding thresholds. However, Town officials did not consider the aggregate amount to be expended for storm water remediation projects that totaled $401,510 over a two-year period. In addition, they did not seek competition for three professional service contracts totaling $332,262. Finally, Town officials did not comply with the procurement policy requirements for obtaining quotes and documenting emergency and sole source determinations for 10 purchases totaling $82,928.

The Clerk did not regularly issue duplicate receipts for fees collected. We reviewed collections made during the months of January, August and September 2016 totaling $10,709 and found that the Clerk did not issue duplicate receipts for eight collections totaling $533. In addition, on three occasions, the Clerk did not deposit collections totaling $1,995 within three business days of collections exceeding $250 as required. Finally, the Board is not annually auditing the Clerk's books, records and documents.

The Board and District officials did not properly manage finances, ensure budgets were realistic or properly plan for and use fund balance. Officials overestimated appropriations each year by an average of $3.7 million (12 percent). These budgeting practices resulted in the District's unrestricted fund balance exceeding the 4 percent statutory limit by 13 to 16 percentage points. Furthermore, when unused appropriated fund balance is added back, the recalculated unrestricted fund balance exceeded the statutory limit by amounts ranging from $7.2 million to $7.6 million, or 23 to 25 percentage points. As a result, the tax levy was higher than necessary. Additionally, four reserves totaling approximately $1.6 million were overfunded and a debt reserve ($493,000) was not being used as required.

As a result of combining funds from the Oppenheim-Ephratah School District and the St. Johnsville School District after the merger, the District began the 2014-15 fiscal year with fund balance in excess of the 4 percent limit. However in 2014-15 and 2015-16, the District's practice of overestimating appropriations caused the general fund to realize operating surpluses and fund balance to increase. Because the combination of the two school districts created a new entity, it was prudent for the Board to budget conservatively for the first year of operations. However, after that first year, appropriations should have been budgeted realistically, and accumulated fund balance could have been used to reduce the tax levy, finance one-time expenditures, fund needed reserves or pay off debt. We reviewed six months of fuel inventory records and found they did not reconcile with the amounts of fuel pumped according to tank readings. We found that 10,269 gallons of unleaded fuel were pumped from the tanks, but only 9,475 gallons were accounted for on the fuel use charts. We found that during 26 weeks, the drivers recorded that they pumped 8,855 gallons of diesel fuel, but the tank readings indicated that 8,961 gallons had been pumped from the tank. The Transportation Supervisor was unsure what caused these discrepancies. He told us they might have been due to recording errors or the fuel pumps not having been calibrated. Therefore, District officials cannot be sure they measure fuel dispensed accurately.

The District's adopted Length of Service Award Program (LOSAP) point system does not comply with New York State General Municipal Law because it does not award the correct amount of points for some activities. The 2016 LOSAP records for 15 active members were inadequate to support 917 of 1,176 points earned by members. In addition, while District officials used competitive bids, they did not always follow their policy when obtaining a minimum number of quotes for purchase and public works contracts. District officials did not obtain the required number of written quotes for 12 purchases totaling $100,127 made during the audit period.

The Board did not adopt policies and procedures relating to cafeteria collections. We reviewed all 233 daily sales reports with cafeteria collections totaling $74,594 and found the collections were generally deposited timely and accurately recorded in accounting records. However, 43 daily sales reports totaling $17,862 contained variances between the amount of cash and checks recorded and deposited totaling $3,610. We determined $3,360 of these collections were for checks that were inaccurately recorded as cash collections in the point of sales system. These collections were related to the District's snack program and other miscellaneous receipts. We also identified four instances when cafeteria collections totaling $250 were not deposited intact.

The City's leave accrual processes are decentralized and not administered uniformly, resulting in errors in employees' leave accruals. In addition, officials did not adequately oversee the department payroll clerks who maintained employee leave accrual records, or periodically review leave records to determine whether leave used was properly recorded. City officials did not follow established City policy and collective bargaining agreements (CBAs) regarding employees' vacation balance carryover limit. In the six departments we audited, 31 of the 120 employees' records reviewed exceeded the maximum amount of vacation that City policy or CBAs allowed them to carry over to 2017, by a total of 9,707 hours with an estimated cost of $431,000. The City also paid over $903,000 in police overtime to cover compensatory leave, contrary to CBAs. Finally, supervisors did not always review time and attendance records for accuracy or pre-approve overtime and review overtime hours reported.

Each department tracked hours worked differently. Therefore, we reviewed the time records of all 109 employees, including time sheets, vouchers and time cards. While half of employees (50 percent) used some form of time record to record the number of hours worked, 11 full-time employees did not use any time records to document the hours worked and 43 seasonal Recreation department workers were not required to use time sheets or timecards. Seasonal employees' time was submitted by their supervisor who submitted the total hours these employees should be paid but the Recreation department supervisor did not maintain any documentation showing the hours the employees actually worked. In addition, leave request forms were not used to monitor paid leave time.

The Board did not effectively manage town-wide (TW) fund balance levels. From 2014 through 2016, actual revenues exceeded actual expenditures by a total of nearly $148,000 (or 6 percent). Each year, the adopted budgets included planned deficits averaging $573,000. For 2017, we project a surplus of more than $665,000 while the adopted budget planned for a deficit of more than $643,000. As a result, the TW fund balance is excessive and will continue to increase unless the Board takes action. The majority of the operating surpluses occurred because the Board did not develop sound budget estimates for either revenues or expenditures, and also received significant new revenues for gaming-related revenues from the Casino. These gaming-related revenues, totaling almost $500,000, were not included in the Town's budget estimates. Officials told us they did not believe in the reliability of the gaming-related revenues, and therefore, did not include them in the budgets. In total, between 2014 and 2016, the Town received $1.26 million (or 95 percent) more than was estimated in the adopted budgets, averaging $418,000, and actually spent $609,000 less (or 20 percent) than anticipated, averaging $203,000. Based on historic spending levels, the Town's TW fund balance could cover more than two years of expenditures. In fact, the 2017 quarterly gaming-related revenues alone represent 4.2 years of TW real property tax levies. Therefore, the Board needs to create long-term capital and financial plans that set forth the Town's long-term goals.

District officials did not always obtain the number of quotes required by their policy. When officials obtained quotes, the supporting information was not always documented and retained. Although the purchases we reviewed were for appropriate District purposes and some of these purchases contained quotes, the Board did not ensure that required number of quotes were always obtained. District officials indicated they discarded some quotes that were obtained. Without such information the Board is unable to determine whether District officials complied with the policy when it conducts an audit of claims.

District officials did not seek competition or properly administer or award competitive bids for purchases totaling $13 million. The District also did not seek competition for eight professional services providers paid approximately $1.4 million. Furthermore, an unauthorized employee was allowed to override the approval process for 31 purchases totaling $913,856. The District allowed improper access to its accounting software and vendor files were inaccurate. In addition, the District paid 49 claims totaling $1.0 million without proper documentation. Finally, claims totaling $2.4 million were paid without the claims auditor's authorization.