Purpose of Audit

The purpose of our audit was to assess the Town's financial management and fuel inventory records for the period January 1, 2011, to July 31, 2012.

Background

The Town of Deerfield is located in Oneida County and has a population of 4,273 residents. An elected five-member Town Board which comprises the Town Supervisor and four Board members governs the Town. The Town's budgeted expenditures for the 2012 fiscal year were approximately $823,000 for the general fund, $1.1 million for the highway fund, $141,000 for the water districts (six) and $16,000 for the sewer districts (three).

Key Findings

• The Board has not implemented adequate policies and procedures for fund balance. As a result, the Town retained and/or accumulated excessive amounts of unexpended surplus funds in the general fund and the water and sewer districts that resulted from unrealistic budget estimates.
• The Board did not develop a financial and/or capital plan or establish reserves to ensure unexpended surplus funds are used as intended.
• Prior to May 2012, the Highway Superintendant maintained adequate perpetual fuel inventory records for most of our audit period that included the amount of gasoline and diesel fuel purchased and consumed. Effective May 2012, the Town installed a computerized system to maintain similar records. However, the Highway Superintendent did not review any fuel usage reports generated daily from the new computerized fuel system and did not compare a perpetual inventory record to physical inventories of fuel on hand.

Key Recommendations

• Adopt a fund balance policy governing the level of unexpended surplus funds to be maintained in its operating funds. Develop a formal plan to reduce the unexpended surplus funds in the general fund and the water and sewer districts. Adopt budgets with realistic estimates of anticipated revenues, expenditures, and fund balance available for appropriation.
• Develop and adopt a comprehensive multi-year financial and capital plan to establish the goals and objectives for funding long-term operating and capital needs. The plan should be monitored and updated on an ongoing basis.
• Maintain perpetual inventory records and review recorded fuel usage for reasonableness.