Purpose of Audit

The purpose of our audit was to review the Town’s financial condition for the period January 1, 2012, through March 31, 2013.

Background

The Town of Fishkill is located in Dutchess County. The Town is governed by the Town Board which comprises the Town Supervisor and four Board members. The Town’s total budgeted appropriations were approximately $13.5 million for the 2012 fiscal year.

Key Findings

• The Town is currently in fiscal stress, due to the Board’s failure to adopt realistic budgets over the past four years. The Town’s year-end fund balance for its five major operating funds, combined, was in a $2.2 million deficit at the end of 2012. This resulted from overestimated revenues in 2009 and 2010 and underestimated expenses in 2010 and 2011. The town-wide general fund balance deficit increased from $384,000 in 2009 to a $1.4 million deficit at the end of 2011. To cover operating expenses, Town officials loaned moneys between multiple funds, resulting in $10.3 million of outstanding interfund loans at the end of 2012. Further, the sewer fund’s fund balance dropped from a surplus of $765,000 in 2009 to a $1.3 million deficit in 2012, primarily because sewer revenues were not sufficient to cover operating costs; and the town-outside-village general fund had a $2.4 million fund balance deficit at the end of 2012.
• The Town did not use nearly $782,000 in donated funds as stipulated by the donors, but instead applied these funds to the Town’s general and sewer operations. Town officials did not maintain proper accounting records and did not segregate the donated funds for the exclusive purposes intended.

Key Recommendations

• Work to reduce the deficits in all the major funds and develop a realistic plan to accumulate fund balance so that the Town is prepared for unexpected expenses or revenue shortfalls. Adopt structurally balanced budgets that are based on reasonable revenue and expenditure estimates. Review all interfund advances, determine the actual amount owed each fund and ensure that all interfund borrowings are repaid in a timely manner.
• Determine how the $758,000 of funds intended for the sewer extension and the $23,750 balance of funds intended for use in affordable housing trust fund were actually expended. Replace and use the funds for their intended purposes.