The Village/Town's parking ticket collection rate exceeded 90 percent during fiscal years 2008 to 2012. Despite the high level of collection, the Village/Town still had $1.17 million in cumulative unpaid parking tickets outstanding as of May 31, 2012. This included 12,792 unpaid parking tickets totaling approximately $720,703 that have been outstanding for more than five years and 7,187 unpaid parking tickets totaling $450,260 outstanding for less than five years. Village officials stated that they are in the process of removing some of these parking tickets. However, as of July 25, 2012, they still remained on the unpaid parking ticket record.

The Board did not provide adequate oversight of the fiscal duties of the Clerk-Treasurer. The former Clerk-Treasurer did not create or maintain cash journals, general ledgers or subsidiary revenue and expenditure ledgers and did not provide a monthly budget-to-actual report. In addition, the Board has not audited, or caused to be audited, the Treasurer's records since at least 2007. An effective audit of the Clerk-Treasurer's records and reports would have identified the serious deficiencies in the accounting records. Also, the former Clerk-Treasurer did not complete monthly bank reconciliations and she paid claims before they were audited and approved by the Board. Finally, the Board did not take sufficient action to ensure the sale of unneeded Village-owned property to the Mayor for $500 was in the best interest of the taxpayers. In addition, if the value of the property was greater than $750, the Mayor would have had a prohibited interest in the contract for the sale of the property.

The Board did not establish procedures to ensure that the correct prices were obtained when purchasing goods through New York State Office of General Services (State) contracts. The Board did not verify that they received State contract pricing for nine purchases and overpaid approximately $5,500 for four of these purchases. In addition, the Board did not ensure that Village officials followed the Village's procurement policy or statutory bidding requirements. Village officials purchased three loaders totaling $271,491 without soliciting competitive bids.

The Board does not have a written agreement with one of the Town's IT service providers and cannot be assured the Town is receiving IT services that meet the Town's needs and expectations. Although the Board has adopted a breach notification policy, it has not designated responsible parties to implement the policy, nor educated Town officials and employees on the existence of the policy. In the event that private information is compromised, Town officials and employees may not understand or be prepared to fulfill their legal obligation to notify affected individuals. Finally, the Town does not have a disaster recovery plan.

We tested 36 claims totaling $214,207 made from June 1, 2011, to December 31, 2012, for compliance with GML and the Village's procurement policy. The policy-required checklist was not attached to any of these 36 claims. The use of the checklist will increase the likelihood that the individual making the purchase will adhere to GML or the procurement policy. Furthermore, 21 of the 36 claims did not comply with GML or the quote requirement of the Village's procurement policy.

Due to the consistent appropriation of fund balance as a budgetary funding source, the County's fund balance in the general fund decreased 68 percent from fiscal year 2007 to 2011. During that period, the unexpended funds remaining at year end declined from an $11 million surplus in 2007 to a deficit of $1.7 million at the end of 2011, leaving the County with no financial cushion for managing unforeseen events. The County has relied on short-term debt issuances in recent years for cash flow, which will cost the County $260,742 in interest payments. Lastly, the Board has not developed policies and procedures for determining and maintaining an adequate level of fund balance, and has no written multi-year plans to address long-term financial and capital needs.

The Mayor and the Board did not conduct a thorough and deliberate audit of the claims presented for payment and therefore, did not ensure that disbursements were for proper Village purposes. The Board also did not adequately segregate duties of the Clerk-Treasurer or implement sufficient compensating controls. Finally, the Board did not conduct an audit of the Clerk-Treasurer's records for the 2011 fiscal year. As a result, Village funds were at risk of misuse.

The Board and the Mayor did not meet their fiscal oversight responsibilities. For example, they did not realize that they were required to annually audit the Clerk-Treasurer's records and reports, and therefore, did not audit any of the Clerk-Treasurer's receipt or disbursement records. In addition, they have allowed the Clerk-Treasurer and Deputy to perform all of the financial functions including billing, collecting, recording and depositing cash receipts, and printing and signing checks, without anyone verifying the accuracy and completeness of the work they perform. As a result, no one can be sure that all money received is deposited in a Village bank account and that all disbursements are for proper Village purposes.

The Board did not require the Supervisor to meet the fundamental financial responsibilities of his office. The 2012 accounting records were in disarray and the 2011 accounting records could not be produced for our review. No one can be sure that all moneys received were actually recorded and deposited, and that all moneys disbursed were for proper town purposes. Cash was not reconciled, and had large unsupported adjustments in an attempt to force the accounting records to agree to the bank balance. Furthermore, monthly and the last two annual reports were not consistently provided by the Supervisor to the Board, and the annual reports filed with OSC are over one year late. In addition, the Town's unaccounted-for water of 39 percent was substantially more than the Environmental Protection Agency (EPA) industry standard, costing the Town approximately $19,000 each year. In addition, water bills were calculated inaccurately.

We found no material issues in the accuracy and timing of deposits and the recording and accounting for the Court’s moneys. However, we found that the Justices did not perform monthly bank reconciliations and accountabilities and the Board did not provide effective oversight of Court operations through an effective annual audit.

The Board did not segregate the Clerk-Treasurer's duties or provide additional oversight as a compensating control, and did not properly plan or monitor the Village's finances. The Board did not institute compensating controls and did not audit the Clerk-Treasurer's records as required. Although our tests of financial transactions found no significant discrepancies, these control weaknesses place the Village at an increased risk of errors and irregularities. We also found that the Board did not develop a long-term financial plan or adequately monitor the Village's water fund. As a result, the water fund's year-end fund balance increased from $76,272 to $194,688 from fiscal years 2007-08 to 2011-12, and is now equal to 168 percent of annual expenditures. Village officials have not addressed the intended use of these excess funds and have not reviewed water rates to assess their reasonableness.

During the last two fiscal years the Town's financial condition has improved. This improvement has been primarily the result of hiring a bookkeeper who has enhanced the development and monitoring of the annual budgets adopted by the Board by helping the Board overcome a lack of established budgetary guidance. In previous years, the Board adopted budgets which included inaccurate revenue and expenditure estimates and appropriated fund balance that was not available. We found that the Board has not adopted formal policies, and the Supervisor has not developed detailed procedures, for ensuring that financial duties are adequately segregated or that sufficient review and oversight procedures are in place. The Board also did not perform an audit of the water department and did not maintain adequate documentation of its audit of the records and reports of the Supervisor, Town Clerk, or Town Justice. Furthermore, the Board has not established policies and procedures related to acceptable use, online banking, breach notification, or disaster recovery. Additionally, there is no system in place for monitoring IT activity or changes in the system, maintaining a computer inventory, or sanitizing computer equipment before disposal.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget are reasonable. Village officials appropriately monitored the revenues and expenditures in the water fund to ensure the continued improvement of the water fund's financial condition as was recommended in the budget review report issued in April 2012. The Village's proposed budget complies with the property tax levy limit.

Based on our review, individual significant revenue and expenditure projections in the tentative budget appear reasonable. However, this tentative budget, as well as those from the last five years, is likely to produce an operating surplus. As a result, fund balance appropriated as a financing source is unlikely to be used and the District's fund balance will continue to increase. The District's tentative budget complies with the property tax levy limit.

Based on our review, individual significant revenue and expenditure projections in the proposed budget appear reasonable. The District's proposed budget complies with the property tax levy limit.

County and Department officials had not established an adequate system of internal controls over the Department's financial operations. As a result, cash receipts were not properly accounted for, secured, and deposited in a timely manner. The Department's failure to establish policies and procedures regarding driving while intoxicated (DWI) administrative fees has resulted in an inequitable assessment of fees to probationers and a lack of enforcement of inactive probationers' delinquent accounts. For example, we found that 89 inactive probationers owe at least $9,710, but as much as $58,260, to the County for unpaid DWI administrative fees. Finally, the Director's decision to not utilize the financial module of the computer program that the Department purchased in 2006 resulted in the Department utilizing computer systems that could not generate adequate monthly reports and allowed for financial transactions to be modified and deleted without audit trails.

All four bar committee members had unmonitored access to the safe where the cash from bar operations was stored. The Board did not require bar committee members to have a second member present while conducting cash counts or adding or removing cash from the safe. Bar committee members routinely paid for bar-related purchases with undeposited cash generated from bar sales. We compared bar cash register tape totals to daily cash reports and bank deposits. From January 1, 2010 to January 22, 2013, bar cash register tape totals exceeded corresponding bank deposits by $41,359. After deducting $14,708 of purchases made with cash from bar sales and $2,897 in bar cash on hand as of January 24, 2013, $23,754 in cash remained unaccounted-for. On August 21, 2012, we discussed the deficiencies that occurred with Company officials. According to Company officials, the bar committee chairman produced $10,505 in cash at the Company meeting held that evening. Company officials told us that over the last several years, the bar committee chairman was able to divert cash from the cash register in the bar without their knowledge.

Although the Department established a money-handling policy in April of 2012 providing guidance and internal controls over cash receipts and disbursements, cash receipts and disbursements were not processed in accordance with the policy. We found the civil clerk performed virtually all financial duties without sufficient oversight or other mitigating controls. We also found that bail and civil office cash receipts were not properly accounted for, secured, and deposited in a timely manner, resulting in a $6,184 overdraft in the civil office bank account in August of 2012. In addition, the civil clerk affixes the Sheriff's signature to Department checks without his direct oversight or review. We also found that bank reconciliations were not prepared properly or timely, resulting in $2,050 in bail payments not being transferred into the civil office bank account in over three months from the date of receipt and an unidentified balance in the civil office bank account of $2,567. Lastly, the Department's computer system allowed for the ability to modify and delete financial transactions, creating the opportunity for the manipulation and concealment of transactions.

We found that the Village Building Inspector did not take an oath of office and, as generally required of a Village officer, does not reside within the Village. In addition, the Village and this individual have entered into a contract, which provides for an annual fee for basic services of $8,000 plus 50 percent of certain permit fees. This type of arrangement is usually indicative of an independent contractor relationship. Requests for payment are submitted monthly by voucher. The Building Inspector receives an Internal Revenue Service Form 1099, and does not receive any fringe benefits. During our audit period, this individual received $84,197, nearly $73,000 of which was based on fees collected for building permits. Because there is no cap on the amount of fees paid to the Building Inspector, the Village cannot know whether the individual's compensation is excessive in any given year. If it is excessive (e.g., more than reasonable compensation paid to inspectors in other comparable villages), then the Village may also have made a poor business decision in basing the compensation on the amount of fees collected.

Internal controls over cash disbursement are appropriately designed and operating effectively with the exception of bank reconciliations, which have not been prepared since May 2012. Because the Town's deposits total $26 million, the lack of bank reconciliations creates a risk that errors or fraudulent transactions could occur without detection.