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Audit Objective

Determine whether the Town officials effectively managed the financial condition of the water and sewer districts by reasonably estimating budgets and ensuring positive financial results.

Key Findings

Town officials did not effectively manage the financial condition of the water and sewer districts. We found the following:

• Officials did not budget accurately nor raise sufficient revenues to fund water and sewer operations, which resulted in five districts incurring unplanned operating deficits annually.
• Five of the seven water and sewer districts had deficit fund balances ranging from $13,620 to $113,900 as of December 31, 2018. These deficit fund balances ranged from 14 to 217 percent of 2019 budget appropriations.
• Officials relied on interfund advances to finance operations in the five districts during the past three years. The Board did not approve these advances, which totaled more than $312,000 at the end of 2018.

Key Recommendations

• Review water and sewer billing rates annually and revise them as necessary to ensure sufficient revenues are generated to cover expenditures.
• Develop reasonable revenue and expenditure estimates and monitor the budgets throughout the year.
• Develop a plan to address the negative fund balances in the water and sewer districts and repay the interfund loans.

Town officials agreed with our recommendations and indicated they planned to initiate corrective action.