Purpose of Audit

The purpose of our audit was to review the Town’s financial management for the period January 1, 2009, to August 15, 2012.

Background

The Town of Lindley is located in Steuben County and has a population of approximately 1,800. The Town Board consists of the Town Supervisor and four Board members and is the legislative body responsible for overseeing the Town’s operations, finances, and overall management. The Town’s 2013 budgeted appropriations for the general and highway funds totaled $860,661.

Key Findings

• The Board did not develop and adopt accurate budgets that were based on realistic estimates of revenues and expenditures. Even though the Board received monthly budget-to-actual reports from the Supervisor, they consistently underestimated revenues and overestimated expenditures. As a result, fund balance that was appropriated as a funding source was not used, taxes were unnecessarily levied, and the Town accumulated $309,369 and $399,024 of unrestricted surplus funds in the general and highway funds, respectively. These amounts are excessive in comparison to the Town’s expenditure levels, representing 108 percent and 69 percent of the 2013 budgeted expenditures for the general and highway funds, respectively. The Board accumulated $117,463 in a reserve fund for highway equipment and $18,606 in an unemployment reserve without documenting any planned use.
• We found no evidence that the capital reserve and the unemployment reserve were created pursuant to General Municipal Law.

Key Recommendations

• Take immediate action to strengthen the Town’s control environment and develop, adopt, and implement written policies and procedures to control and monitor the Town’s financial operations including establishing written policies and procedures governing the budget process and the accumulation and use of reserve funds. Use the unexpended surplus fund balance in a manner that benefits taxpayers.
• Research the origin of the existing capital and unemployment reserves. If unable to determine the origin of the reserves, reestablish the reserves in conformance with General Municipal Law.