Internal controls over the Clerk were not appropriately designed or operating effectively, which allowed a shortage of $4,134 to occur and not be detected. The Clerk had no record of payment or enforcement of unpaid sewer bills totaling approximately $8,500 including her own, which totaled $950 and is included in the $4,134. Furthermore, the Clerk discarded tax stubs which prevented us from verifying if she paid $970 of her own taxes, and the Clerk backdated tax collections to avoid imposing late penalties totaling $569, including her own which totaled $102. Finally, the Clerk received apparent duplicate payments for tax bills resulting in overpayments totaling approximately $2,600 that have not been refunded to the appropriate taxpayers or banks. The Board failed to provide oversight including performing an adequate audit of the Clerk's records and documenting the records reviewed and the results of the audit in the minutes. The Board members and the Clerk failed to address similar findings in our 1999 and 2001 audit reports. Had they done so, the shortage may have been prevented.

The Board audits District claims; however, the audit of some claims was not in compliance with Town Law. Although the Board approves claims at its monthly meetings, the Treasurer processes and pays certain claims prior to the Board's audit. In addition, District officials passed a resolution to pay “recurring” bills prior to the Board's audit instead of the specific exceptions allowed by Town Law.

City officials did not exercise proper oversight of cash receipts from waste water, park and recreation, or building permit fees. City officials did not establish comprehensive written policies and procedures that provide adequate guidance and internal controls over the cash receipt function. For example, invoices for payment of sludge fees were not always billed to customers. Due to the lack of the use of sequential receipts there is no guarantee that all payments for building permits and parks and recreation fees are being remitted to the Clerk. In addition, internal controls over the issuance of parking tickets were not established to provide reasonable assurance that all tickets were accounted for. Procedures for the collection and payment of delinquent taxes are not in compliance with the Law. Finally, City officials did not adopt a comprehensive IT security plan, disaster recovery plan and breach notification policy.

The Town receives a fleet discount by purchasing fuel from a national gas station chain. We reviewed the Town's fuel purchases from January 2011 through June 2012 totaling approximately $184,850 and found that Town officials made purchases in excess of the bidding threshold without obtaining competitive bids. This happened because the Highway Superintendent did not adhere to GML or the Board-adopted procurement policy when making fuel purchases. However, although the Highway Superintendent did not seek competition for the Town's fuel purchases, we found that the Town paid the lowest price compared to available State and County contract prices.

The District spent more than $50,000 on a contract with a certified public accountant (CPA) to provide services as the District's claims auditor and the CPA did not perform the services in accordance with the obligations set forth in the contract. Of the 50 claims we reviewed, 29 claims totaling $210,190 were approved without the necessary documentation to support the claim being audited. In addition, the District purchased services for web hosting, spam, and virus filtering totaling $8,205 from a company owned by a District employee. Although this did not result in a prohibited conflict of interest, the employee did not disclose his interest in the company in writing to the supervisor or the Board as required by law. Further, because the purchasing agent did not effectively monitor the District's purchasing process, District staff made purchases totaling $110,010 that did not comply with District policies and may not be the most economical use of taxpayer moneys. Finally, we found that users were granted access to functions of the financial software applications that they did not need in order to fulfill their day-to-day job responsibilities.

We identified weaknesses in the controls over the collection, recording, reconciliation, and enforcement of parking ticket fines. The Village does not participate in the New York State Department of Motor Vehicle (DMV) Scofflaw Program for addressing unpaid violations. By participating, the Village could potentially increase its parking fine revenues by nearly $23,000. We also found that the Court's case files and bail records are not accurate and complete, and the two Justices do not maintain an accurate computerized bail list or perform monthly bank reconciliations and accountabilities. As a result, there are discrepancies between the accounting records maintained for bail, the Court's manual check register, and the computerized court case records. Further, neither the manual check register nor the computerized accounting records agrees with the bail on deposit in the bail bank account.

We found that the Board did not adopt reasonable budgets that were based on realistic estimates of revenues and expenditures. The Board did not allocate adequate revenues to the TOV highway fund, which caused the TOV highway fund to report a deficit fund balance since 2007. At the same time, the Board appropriated nonexistent fund balance in the highway fund budget for three of the last five fiscal years, all the while knowing that the TOV highway fund had a deficit fund balance. Furthermore, the Board did not audit or contract with an independent accountant to audit the books and records of the Supervisor or Town Clerk and did not develop a multi-year financial plan to address the Town's long-term operational needs. In addition, the Board has not adopted comprehensive IT policies and procedures or a disaster recovery plan to follow in the event of emergency. The Town did not designate an administrator over the Town's financial software application who is independent of the financial recordkeeping functions. Finally, the Town does not maintain an inventory of its IT assets.

The Town's accounting records are in poor condition and do not provide an accurate portrait of its financial condition. In fact, the Town's general fund was overstated by a total of $247,036 in fiscal year 2011, which was 30 percent of the budgeted revenues. This overstatement occurred because the Town did not properly account for property and sales tax revenue. The Supervisor did not maintain complete, accurate and up-to-date accounting records and has not filed the AUD for 2010 and 2011. Town officials have not performed bank reconciliations for 2011 or 2012. Finally, former employees still had online banking user accounts, and the Supervisor and bookkeeper had excessive online banking privileges because the Board failed to establish policies and procedures for online banking.

Controls over the Company's fiscal activities were weak. The Board failed to provide adequate guidance to those responsible for receiving and depositing cash and exercised little oversight of the Treasurer and other officials who performed these duties. We also found that check registers are not maintained to document bank deposits, withdrawals, or cash balances. A revenue ledger is not maintained, bank reconciliations are not performed, and the bank statements are not reviewed by anyone other than the Treasurer. Adequate internal controls have not been established over fundraising activities. Furthermore, the Board did not review and approve all bills prior to payment or evidence their approval in the minutes. Finally, we found no authorization in the minutes or elsewhere for $7,500 of non-check bank withdrawals that occurred during our audit period.

Controls over the Company's fiscal activities were weak. The Board failed to provide adequate guidance to those responsible for receiving and depositing cash and exercised little oversight of the Treasurer and other officials who performed these duties. Check registers are not maintained to track bank deposits, withdrawals, or cash balances. Furthermore, revenue and expenditure ledgers are not maintained, bank reconciliations are not performed, and the bank statements are not reviewed by anyone other than the Treasurer. Furthermore, there is no record that Audit Committee audited and approved the bills for payment, as the warrant listing the bills to be paid was unsigned. Finally, adequate internal controls have not been established over fundraising activities.

We found that the Supervisor has not fulfilled even the most basic of financial responsibilities. Financial records are incomplete or missing and there is no way to accurately determine the Town's financial condition. Given the lack of records and the Supervisor's control over all aspects of the Town's finances, there is no way to be sure that all funds have been accounted for and used solely for Town purposes. In addition, the Supervisor has ignored and not complied with State laws and requirements. For example, the Supervisor has not filed an AUD for 2008 or any of the subsequent years and did not file its 2012 property tax cap computation with OSC. Our calculation of the property tax cap limitation resulted in the Town property tax levy exceeding the cap limit by approximately $11,800. Finally, the Board did not audit the books and records of the Supervisor or Town Clerk.

We found that the current Justices have developed adequate internal controls over the Court's financial operations, with the exception of performing accountabilities. Both the Justices and the Board provided adequate oversight and balanced their checkbooks to ensure that cash was properly safeguarded. However, the Justices did not perform accountabilities reconciling Court assets to known liabilities. Also, one Justice failed to close his bank account as required when he resigned.

The Supervisor did not maintain accurate computerized accounting records. Because the bookkeeper did not always enter all transactions in the computerized accounting system, adjusted bank balances were approximately $997,800 less than cash balances in the Town's computerized accounting records. In addition, the Justice did not properly oversee Court operations. Accountabilities were never performed and deposits were not always made timely. As a result, the Court's liabilities exceeded assets by $1,442 at June 29, 2012. We identified the cause for $560 of the shortage; however, the cause of the remaining $882 has not been identified.

We reviewed the internal controls over Court operations and the Justices' records and reports and found that the duties were not segregated because the Justices performed all duties including handling of cash receipts. The lack of segregation of duties make the annual audit even more important, However, Town officials failed to provide sufficient evidence that annual audits of the Justices' books and records were conducted, and the Justices did not always enforce unpaid tickets or report transactions to DMV in a timely manner.

The Board did not adopt a policy or develop procedures to govern the level of fund balance maintained. Additionally, the Board had not developed accurate budget estimates or a formal, comprehensive multi-year financial and capital plan to adequately address the Town's long-term operational and capital needs. As a result, the general fund has retained excessive amounts of unexpended surplus fund balance.

City officials have severely mismanaged the CDBG program and have put significant public funds at risk. City officials have disbursed CDBG funds without the most basic of documentation to support the expenses and have used the funds at times to pay for a variety of miscellaneous expenses that have no connection to the CDBG program. Most disturbing is that some of these transactions have been recorded in a manner to apparently hide the true nature of the transactions.