Audit Objective 

Determine whether the Town of Gorham (Town) Board (Board) adopted realistic budgets. 

Key Findings 

The Board did not develop and adopt realistic budgets, a financial plan or fund balance and reserve policies. As a result, the Town maintained unreasonable fund balance levels and likely levied more taxes than necessary. 

• From fiscal years 2020 through 2022, the Town-wide (TW) general, Town-outside-Village (TOV) general, TOV highway, sewer and water funds combined generated a total of $1.6 million in operating surpluses. 
• In 2021, sales tax revenues totaling $230,000 were inappropriately recorded in the TW funds instead of the TOV funds, given property taxes were levied in the TOV funds. 
• An excessive $1.5 million of unrestricted fund balance was maintained in the TW general fund as of December 31, 2022. 
• Budget transfers were made at year end, rather than as necessary throughout the fiscal year, resulting in appropriation accounts being over expended. 

Key Recommendations 

• Use historical trends and/or other known factors to develop and adopt annual budgets that contain more accurate revenue and expenditure estimates. 
• Develop a plan to reduce the amounts of excessive unrestricted fund balance in a manner that benefits Town taxpayers. 
• Make timely budget transfers so that budget line items are not over expended. 

Town officials agreed with our findings and indicated they plan to initiate corrective action.