[read complete report – pdf]

Audit Objective 

Determine whether the Village of Cato (Village) Board (Board) and Village officials (officials) effectively managed the financial operations of the water fund. 

Key Findings 

The Board and officials did not effectively manage the financial operations of the water fund, establish adequate reserves or develop long-term financial and capital plans until the Cayuga County Health Department forced the Board to submit a plan. In addition: 

• $42,696 in unauthorized billing adjustments were made. 
• Of 464 water bills reviewed (totaling $134,852), 71 bills had calculation errors totaling $7,903 which included $6,607 that should have been billed and collected and $1,296 in overbillings. 
• 27 percent of the water produced (at a cost of approximately $20,000), or 9.4 million gallons, is considered unauthorized non-revenue water or lost water.
• Long-term capital water needs were not appropriately planned for. 

Key Recommendations 

• Establish written policies and procedures to provide adequate guidance for billing, collecting and enforcing water charges. 
• Ensure all adjustments made to water customer accounts are reviewed and approved. 
• Ensure penalties are correctly assessed. 
• Regularly reconcile water produced and purchased to water billed to identify any variance. 
• Review water rates and assess reserve balances to determine whether they are sufficient for future needs. 

Village officials generally agreed with our recommendations and have initiated, or indicated they planned to initiate corrective action.