Purpose of Audit

The purpose of our audit was to evaluate the Village’s financial management and the Board’s oversight of financial operations for the period June 1, 2011, through January 11, 2013.

Background

The Village of Clyde is located in the Town of Galen in Wayne County and has approximately 2,100 residents. The Village is governed by a Board of Trustees which comprises four elected Trustees and an elected Mayor. Budget appropriations for the general, water, and sewer funds in 2013-14 are approximately $2.01 million.

Key Findings

• The Board and Village officials have not developed policies and procedures to govern budgeting practices and the level of unexpended surplus funds to maintain or developed long-term financial and capital plans. As a result, the Board has adopted budgets that were not based on sound and realistic estimates of expenditures, and the Village has excessive fund balance in the general fund.
• The Board has not adopted an investment policy, which is required by law, or any policies or procedures for finance-related operations.
• The Board has not adopted any policies or procedures governing information technology (IT), including those related to acceptable use, data backup, online banking, disaster recovery, equipment disposal, and breach notification.
• The Village’s unaccounted-for water for 2011-12 was 30 percent which is significantly higher than the industry standard of 10 percent.

Key Recommendations

• Adopt and implement a policy and procedures for developing and monitoring budgets, including establishing the appropriate level of fund balance to be retained at year end. Develop long-term financial and capital plans. Adopt balanced budgets with realistic estimates of anticipated expenditures, and amounts of fund balance to be appropriated and used in the ensuing year’s budget. Use the unexpended surplus fund balance in the general fund in a manner that benefits Village taxpayers.
• Establish written policies required by law and sound business practices for Village operations, including an investment policy and policies related to the Village’s financial operations.
• Establish IT policies related to acceptable use (including internet and email), data backups, online banking, disaster recovery, equipment disposal/sanitization, and data breach notification.
• Ensure that water production and use reconciliations are performed timely, periodically review these reconciliations, and investigate any significant deviations.