Purpose of Audit

The purpose of our audit was to evaluate the Town’s budgeting practices for the period January 1, 2008, through April 8, 2013.

Background

The Town of Humphrey is located in Cattaraugus County and has a population of approximately 700 residents. The elected five-member Town Board is responsible for managing Town operations. The Town’s 2013 budgeted appropriations total $557,004, funded primarily by real property tax, sales tax, and State aid.

Key Finding

• We reviewed the general and highway fund budgets and found that overall, they were reasonable and supported, except for sales tax and fund balance estimates in the general fund. The Board has been adopting budgets that consistently underestimate sales tax revenues. In addition, on an annual basis, the Board appropriates fund balance as a financing source to balance the budget. However, because the Town’s operations generally resulted in surpluses, where revenues exceeded expenditures due primarily to the underestimation of sales tax, fund balance was not needed to finance operations. Due to the operating surpluses experienced by the Town, unexpended surplus funds have increased even further in the general fund.

Key Recommendation

• Develop and adopt budgets that include more realistic estimates for revenues and fund balance.