Purpose of Audit

The purpose of our audit was to evaluate the Town’s financial condition for the period January 1, 2012, through July 16, 2013.

Background

The Town of Chautauqua is located in Chautauqua County and serves about 4,460 residents. The elected five-member Town Board is the legislative body responsible for managing Town operations. The Town’s budgeted appropriations for the 2013 fiscal year were approximately $1.3 million.

Key Findings

• The Board did not develop reasonable budget estimates for the general town-wide fund and did not properly monitor and control actual activity against those estimates, allowing appropriations to be over-expended.
• The Board aggregately over-estimated revenues for mortgage tax by $154,157 and the rental of real property by $77,580 in the three most recent fiscal years (2010-2012). Because of the revenue shortfalls and over-expended appropriations, the general town-wide fund experienced operating deficits in the 2010, 2011, and 2012 fiscal years. Consequently, the general town-wide unrestricted fund balance declined from $450,949 at January 1, 2010, to a deficit of $107,587 at December 31, 2012.
• The Board and Town officials have not developed a comprehensive multiyear financial plan to adequately address the Town’s operational and capital needs.

Key Recommendations

• Ensure that the annual budget includes all necessary appropriations and that the amounts budgeted are reasonable.
• Monitor the actual revenues received against the revenue estimates in the adopted budgets and make amendments, as necessary, to the budget when revenue shortfalls become known. Implement a plan to eliminate the unrestricted fund balance deficit.
• Develop a comprehensive multiyear financial plan to establish long-term objectives for funding long-term needs.