Purpose of Audit

The purpose of our audit was to review the Village’s budgeting practices for the period of June 1, 2011, to March 13, 2013.

Background

The Village of Unadilla is located in Otsego County. The Village is governed by an elected five-member Board of Trustees, which is composed of a Mayor and four Trustees. The Village budgeted appropriations were $684,497 for the general fund, $243,285 for the water fund, and $19,535 for the library fund for the 2012-13 fiscal year.

Key Finding

• The Board consistently adopted budgets that included overestimated expenditures, underestimated revenues, and the appropriation of fund balance to finance operations; but for three of the last six years, these appropriated funds were not available. As of May 31, 2012, the Village’s general fund balance was at a deficit of $56,633, after the planned use of $94,653 to finance operations. We project the available surplus funds at the end of the 2012-13 fiscal year to be approximately $25,500. Budgetary variances were caused by the Board’s failure to consider historical revenues and expenditures and/or current known needs as they developed the budgets, and the Board did not effectively monitor the actual results against their operating budgets during the year. Surplus fund balance is no longer available for use as a financing source for Village operations. The Board will be faced with decisions of reducing expenditures or identifying revenues or other financing sources.

Key Recommendations

• Adopt realistic budgets that are based on the previous years’ trends in actual revenues and expenditures.
• Estimate the ending fund balance, avoid plans to use more than fund balance than available, and maintain it at a sustainable level.
• Monitor Village budgets and amend budgets or reduce spending, when revenue estimates are not being realized or expenditures reach the amounts appropriated.