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.