The President did not ensure disbursements were made for proper company purposes. The President allowed the Treasurer to pay bills without evidence of Company approval for the majority of the transactions we tested. Seventy-six payments totaling $27,600 of the 100 disbursements we tested had no evidence of company approval. Nine of the 40 checks totaling $8,700 and 20 of the 60 debit card transactions totaling $7,500 had no documentation available to identify the purposes of the payments. These deficiencies occurred because the Treasurer performed all duties related to cash disbursements without adequate oversight.

During 2011, the County paid $230,686 for inmate healthcare services for inpatient and outpatient care. We reviewed 59 vouchers totaling $93,038 for inmate healthcare services and found discrepancies with 18 claims totaling $88,540. These discrepancies occurred because County officials did not have adequate procedures to review invoices for inpatient hospital services provided to County inmates and verify that the correct Medicaid Diagnostic Related Group (DRG) rates were used.

During the period January 1, 2011, to October 31, 2012, City Departments other than the Treasurer's office collected and reported cash amounting to $3.6 million. Each Department used a different process to collect, report and remit cash to the Treasurer. No one maintained general ledger accounting records or performed formal bank reconciliations for the Clerk's bank account. Each of the other Departments we reviewed procured and issued its own duplicate or triplicate receipts for cash transactions without maintaining a log of these receipts. Certain Departments issued permits, which were the supporting documentation for several of these cash transactions that were generated from standard computer forms and printed on multi-use paper with numbers that were handwritten. Furthermore, one of the Departments did not maintain logs of the permit numbers issued.

The Board has not properly monitored budgets and managed fund balance in the general fund. The Board has consistently relied on fund balance to fund operations, which has depleted Town resources. Although fund balance has rebounded some in 2012, there has been a steady decline of 69 percent in reported unassigned fund balance since 2008. Further, the Board did not approve budget amendments for the 2012 budget until January 2013, one month after the budget lapsed.

The District procured goods and services in accordance with its policy and the statutory requirements. We reviewed 36 claims totaling $1,199,894 that were subject to the District's procurement policy during the period July 1, 2011 to January 31, 2013, and found only minor issues which were discussed with District officials.

The Board did not establish adequate internal controls over the billing, collection and accounting for water and sewer rents. For example, the Board did not properly segregate the duties of the water clerk. As a result, the water clerk billed, collected, recorded, deposited and adjusted water and sewer bills with only limited oversight. The Board also did not ensure that large meters were tested and calibrated on a regular basis to help ensure that bills, especially those for the Village's largest customers (the correctional facility and other municipalities), were accurate. We analyzed water usage trends and noted that they were inconsistent. Finally, the water clerk did not deposit moneys intact or timely or issue duplicate receipts to provide accountability for set-up fees paid by new customers. As a result, there is high risk that errors or irregularities could occur and go undetected.

Based on our limited procedures, it appears that the City has made some improvements. Of the three audit recommendations, one recommendation was fully implemented, one recommendation was partially implemented, and one recommendation was not implemented.

The Board and Town officials did not properly manage the financial condition of the town-wide general fund. The Board did not adopt structurally balanced budgets; instead, budgeted expenditures were consistently under budgeted and reliance was placed on non-recurring revenues such as fund balance appropriations and inter-fund loans to fund recurring operating expenditures. Consequently, the Town's financial position has declined over several years, but has shown some improvement in 2012.

Town officials did not verify that they received the correct State contract prices for the four loaders they purchased in 2011, 2012 and 2013. Town officials did not obtain the relevant State contract price lists, apply the appropriate contract discounts, or compare the resultant prices with the invoice prices. Therefore, Town officials cannot demonstrate that they are paying the correct prices for the loaders. As a result, the Town was overcharged $10,563 by the vendor for two loaders.

We found the City's procurement policy was not reviewed by the Council annually, as required by law, or consistently followed by City officials. The Board of Public Utilities (BPU) did not seek bids for purchases from six vendors who were paid $387,763 and the City did not seek bids for purchases from one vendor who was paid $65,864. In addition, BPU officials did not seek competition, such as using requests for proposals (RFPs), when procuring $596,763 in professional services from five vendors, and could not provide written agreements with two of those vendors. We also found that purchases totaling approximately $83,569 were made without requesting quotes, as required by the City and BPU purchasing policies. The City has also failed to segregate duties or provide adequate oversight of the cash receipt process. Users of the six electronic collection systems can collect, record, prepare deposits and make adjustments in the system with minimal or no oversight. In addition, City and BPU officials could not provide a reasonable explanation for 47 missing receipts. Utility customer accounts and payments were adjusted and parking fines were dismissed without supervisory approval and had no supporting documentation. Finally, we found that cash collections were substituted with personal checks.

Town officials did not always properly plan and finance the acquisition of capital assets and projects. The Board did not have a formal multiyear capital plan or a long-term financing plan in place. Instead, Town officials relied on annual requests from department heads seeking to fulfill their immediate capital needs and primarily issued debt to finance the capital expenditures they approved. As a result, over a ten-year period the Town's outstanding debt more than doubled, from $9 million in 2002 to over $18 million in 2012. Without a formal comprehensive plan to guide the Board's decision-making process, there is limited assurance that the purchase, maintenance, or replacement of capital assets is in the best interest of the Town.

The Treasurer does not perform monthly bank reconciliations, or present bank statements or cancelled checks to the Board. This resulted in a bank balance that was about $34,100 higher than reported on the Department’s books.

Village officials have not made a substantive effort to use available resources to gain a better understanding of wastewater treatment processes and costs and do not adequately review invoices, analyze lab reports, repair identified sewer main breaks, or adequately document property inspections for improper connections. The Town bills the Village for its share of all wastewater processing costs. Retirees from the Town's Wastewater Department comprise 4.5 percent of total Town retirees for the five-year period 2008 through 2012, rather than the 8.2 and 8.4 percent that the Town applied for 2011 and 2012. Therefore, the Village's overall share of wastewater processing costs would be reduced by $27,800 in 2011 and $30,000 in 2012, or a two-year savings of $57,800. We also found that the Superintendent of DPW does not review wastewater lab reports and neither he nor the Clerk-Treasurer adequately review the wastewater invoices from the Town for accuracy. Further, our review of the sewer camera log maintained by the Village DPW from July 5, 2011 through November 13, 2012 documented 20 sanitary sewer main breaks. However, the corresponding log of sewer line repairs for the same period did not include any repairs. Finally, the Board has not established policies and procedures for remote access to the Village's network to ensure that computerized data is properly safeguarded. The IT vendor can access the Village's computers at any time, without restriction or monitoring, which increases the risk of inappropriate transactions.

We found the District established adequate internal controls over payroll. District officials implemented specific procedures to ensure that individuals reported and paid on the payrolls were paid at their approved salaries and wages, and they received only the benefits to which they were entitled.

County officials are spending more money to operate their current jail than if they were to build a new jail with a more efficient design and a larger capacity. The cost of a new jail would be fully offset by payroll, inmate boarding and facility cost savings within 33 years, with projected savings over the 50-year life of the new jail of $108 million.

Although the Board and District management believed they were effectively managing the District's financial condition, the adopted budgets continually included overestimated revenues and appropriations. While recognizing that the actual results of the District's operations were reasonably close to the estimates each year, the cumulative effect of these variances resulted in a 52 percent increase in the District's fund balance. The Board continued to adopt budgets that included annual real property tax levy increases even though the District had funding surpluses for four of the last five completed fiscal years.

The highway fund's financial condition has diminished in recent years because of revenue shortfalls, and the Board allowed budgets to be over-expended. Specifically, the highway fund experienced unplanned operating deficits in 2011 and 2012 of $49,263 and $71,979, respectively. Consequently, the highway fund balance declined from $83,179 at January 1, 2011 to a deficit of $38,059 at December 31, 2012. The general fund currently had a positive fund balance of $33,550 as of December 31, 2012. However, because the general fund is directly impacted by borrowings from the highway fund, it is even more important that the Board properly oversees fiscal operations to ensure the Town's financial stability.

The Supervisor did not maintain adequate accounting records or provide the Board with accurate financial reports. Examples include balance sheets for operating funds that did not balance, with differences totaling $339,000 and $487,000 as of September 2012. In addition, cash on the Supervisor's monthly reports did not agree with bank balances or accounting records for any of the 17 months we reviewed, with differences ranging up to $300,000 during 2011. The Supervisor's AUDs did not agree with bank records, resulting in, for example, general fund cash being over-reported by $98,438 in 2011. Finally, the Board members did not audit the books and records of the Supervisor, which could have made them aware of differences between cash accounts and bank accounts and the numerous mispostings to the accounting system made by the former bookkeeper. The lack of adequate records, reports and annual audits makes it difficult for the Board to evaluate the Town's financial activities and can obscure the Town's true financial condition.

Generally, the Board conducts a thorough and deliberate audit of claims before payments are authorized in order to ensure that Village funds are being spent efficiently. Our examination revealed only minor deficiencies, which we discussed with Village officials.

The Board needs to improve its oversight of District financial activities. The Board did not ensure that the Secretary-Treasurer maintained complete and accurate financial information in order to provide the financial information necessary to develop accurate budgets and to properly monitor the District's operations. The Board has not adopted a code of ethics or an investment policy. Finally, the Board did not properly audit claims and ensure that payroll procedures and payments were appropriate. As a result, District resources were at risk of misuse without being detected or corrected.