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Audit Objective

Determine whether the South Mountain Hickory Common School District (District) Trustee and District Treasurer (Treasurer) demonstrated effective financial management.

Key Findings

The Trustee and Treasurer did not demonstrate effective financial management. The Trustee and Treasurer:

• Developed and adopted unrealistic budgets. Had more reasonable budgets been developed, the Trustee and Treasurer could have used surplus fund balance to reduce the tax levy, rather than increasing the 2021-22 school year levy by approximately 37 percent, or $53,000.
• Allowed surplus fund balance as a percentage of the next year’s appropriations to exceed the 4 percent statutory limit.
• Prepared unreliable annual financial reports.

Key Recommendations

• Establish budget appropriations based on historical expenditures that are adjusted for reasonably anticipated increases or decreases.
• Comply with the surplus fund balance limit established by New York State Real Property Tax Law Section 1318.
• Develop accurate and reliable annual reports and account for all District assets.

District officials generally agreed with our recommendations and indicated they planned to initiate corrective action.