Purpose of Audit

The purpose of our audit was to examine the Town’s financial condition for the period January 1, 2012, to December 31, 2012.

Background

The Town of Forestport is located in Oneida County and has approximately 1,500 residents. The Town Board is composed of four elected council members and an elected Town Supervisor. The Town’s 2012 operating expenditures totaled $867,387 for the general fund, $1,035,144 for the highway fund, $79,388 for the water fund and $44,158 for the sewer fund.

Key Findings

The Board needs to improve its budgeting practices and enhance its oversight of the Town’s finances.

• The Board has not adopted realistic budgets for the general fund primarily because it repeatedly under-estimated revenues. As a result, at the end of 2012, fund balance in the general fund had increased to $741,000 or 67 percent of the ensuing year’s appropriations.
• Portions of the fund balance set aside as a funding source for subsequent years’ budgets were not used as planned.
• The water and sewer districts were not properly funded, resulting in the general fund having to make interfund loans to these districts to support their operations.
• The Board did not have a policy to govern the level of fund balance that should be maintained and has not adopted long-term financial plans.

Key Recommendations

• Develop and adopt budgets that include realistic estimates for revenues and expenditures and fund balance available for appropriation. Use the unexpended surplus fund balance in the general fund in a manner that benefits taxpayers.
• Adopt a fund balance policy governing the level of unexpended surplus funds to be maintained in the Town’s operating funds.
• Ensure that interfund loans between funds with different tax bases are paid with interest to the respective funds.
• Develop long-term financial and capital plans that project operating and capital needs and financing sources for a three- to five-year period.