Purpose of Audit

The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the Town’s preliminary budget for the 2015 fiscal year are reasonable.

Background

The Town of Cherry Valley is located in Otsego County. Our Office completed a review of the Town’s preliminary budget for the 2015 fiscal year. The objective of the review was to provide an independent evaluation of the preliminary budget.

Key Findings

• We performed this budget review because the Town was categorized as being in "moderate fiscal stress" in a report issued as part of the Comptroller’s Fiscal Stress Monitoring System (FSMS).
• Based on the results of our review, we found that revenue and expenditure projections in the preliminary budget are reasonable, except for the estimated revenues from Federal Emergency Management Agency (FEMA) reimbursements totaling $20,000.
• The 2015 preliminary budget includes estimated revenues for the FEMA reimbursements that also are included in the 2014 adopted budget, but have been received. If the Town does not receive the reimbursements in 2014, Town officials should create a receivable at the end of the 2014 fiscal year. Otherwise, this lack of revenue would create a revenue shortfall in the 2014 budget, which would result in an unplanned decline in fund balance.
• Town officials did not include a contingency amount in the budget, which would provide for anticipated events and could help to improve the Town’s financial position.
• The Town has adopted a local law to override the tax levy limit in 2015. This local law allows the Town’s preliminary budget to include a tax levy of $779,117, which makes the 2015 tax levy an increase of 4 percent over the 2014 tax levy of $747,773.

Key Recommendations

• Town officials should not include the $20,000 FEMA reimbursement as a revenue in 2015 and, instead, record it as a revenue for 2014.
• Town officials should consider including a contingency amount in the budget, which would provide for anticipated events and could help to improve the Town’s financial position.