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Audit Objective

Determine whether the Board and Town officials effectively managed financial condition.

Key Findings

• Budgeting practices resulted in an increase in fund balance from $2.4 million in 2014 to $4.1 million in 2018.
• The Board appropriated fund balance totaling $1.4 million of which only $340,000 (25 percent) was used to finance appropriations from 2014 through 2018.
• The Board underestimated revenues and overestimated expenditures in the general, water and sewer funds each year.

Key Recommendations

• Include more realistic estimates of revenues and expenditures when adopting the annual budget.
• Discontinue the practice of adopting budgets with appropriation of fund balance that will not be used to fund operations.
• Develop and adopt a fund balance policy to ensure levels of fund balance are reasonable.

Town officials agreed with our recommendations and have initiated or indicated they planned to initiate corrective action. Appendix B includes our comments on issues that were raised in the Town’s response letter.