Purpose of Audit

The purpose of our audit was to review the Town’s financial management for the period January 1, 2010, to May 1, 2013.

Background

The Town of Big Flats is located in Chemung County and has a population of approximately 7,700. The Town is governed by a five-member Town Board (Board) consisting of the Town Supervisor and four Board members. The Town’s 2013 budgeted appropriations totaled approximately $6.8 million.

Key Findings

• Even though the Board received monthly budget-to-actual reports from the Supervisor, it did not develop and adopt accurate budgets that were based on realistic estimates of revenues and expenditures.
• The Board has not adopted a policy, and Town officials have not developed procedures, to govern the level of unexpended surplus funds maintained. As a result of the flawed budget process, the Town has accumulated excess unrestricted fund balances in the general and water funds.
• The general fund’s excess unrestricted fund balance is 128 percent of the ensuing year’s budget and the water fund’s excess unrestricted fund balance is 75 percent of the ensuing year’s budget. Furthermore, the Board’s poor budgeting has generated operating surpluses of almost $1.86 million in the general fund.

Key Recommendations

• Adopt budgets with realistic estimates of anticipated revenues, expenditures, and fund balance available for appropriation.
• Adopt a fund balance policy governing the level of unexpended surplus funds to be maintained in the Town’s operating funds and develop a formal plan to reduce the unexpended surplus funds in the general and water fund.
• Consider using formally establishing authorized reserves to accumulate money for a future purpose.