Purpose of Audit

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

Background

The Town of Lincoln is located in Madison County and has a population of approximately 2,000. The Town is governed by the Town Board which consists of four elected Board members and an elected Town Supervisor. The Town’s 2012 operating expenditures totaled $212,501 for the general fund and $332,686 for the highway fund.

Key Findings

• As of December 31, 2012, the Board accumulated unexpended surplus funds in the general fund totaling $458,698, which were excessive compared to the 2013 budget of $255,420. This primarily occurred because the Board underestimated budget revenues in previous years and did not adopt a policy to govern the level of fund balance to be maintained.
• The Board also did not develop a long-term financial plan or establish reserves to ensure unexpended surplus funds will be used as this Board intends, or in other ways to benefit taxpayers.
• The Board did not audit the records and reports of the Supervisor or Town Clerk-Tax Collector.

Key Recommendations

• Develop a formal plan to use the unexpended surplus funds in the general fund in a manner that will benefit taxpayers. Adopt budgets with realistic estimates of anticipated revenues and fund balance available for appropriation. Adopt a fund balance policy that addresses the level of unexpended surplus funds to be maintained in the Town’s operating funds.
• Develop a long-term plan that projects operating and capital needs and financing sources over a three- to five-year period. The plan should be monitored and updated on an ongoing basis.
• Audit or engage an independent auditor to audit the books, records and reports of the Supervisor and Clerk.