[read complete report – pdf]

Audit Objective 

Determine whether the Town of Guilford (Town) Town Board (Board) developed realistic budgets.

Key Findings 

The Board did not develop realistic budgets. Estimated revenues were underestimated and appropriated fund balance was not used, resulting in unrestricted fund balance in the general and highway funds that exceeded the Town’s fund balance policy (policy) limit.

• Actual revenues exceeded estimated revenues by an average of $210,000 (42 percent) in the general fund and $180,000 (17 percent) in the highway fund.
• The Board adopted budgets that planned for using $228,000 of fund balance to offset projected operating deficits in the general fund. Instead, the general fund incurred operating surpluses each year for a combined total of $378,991.Therefore, appropriated fund balance was not used as intended.
• Unrestricted fund balance for the general and highway funds exceeded the maximum allowable limit, per the Town’s policy, ranging from $464,000 to $709,000 in the general fund and $168,000 to $225,000 in the highway fund.

Key Recommendations 

• Adopt budgets that contain realistic revenue estimates based on available current data and historical trends.
• Appropriate fund balance when needed.
• Reduce unrestricted fund balance amounts to within the amounts allowed by the Town’s policy.

Town officials agreed with our recommendations and indicated they will take corrective action.