Town of Summerhill – Fund Balance and Budget Monitoring (2013M-27)

Issued Date
May 17, 2013

Purpose of Audit

The purpose of our audit was to review the Town’s financial management and budgeting practices, and its resultant financial condition for the period January 1, 2009, to December 31, 2012.

Background

The Town of Summerhill is located in Cayuga County and has approximately 1,200 residents. The Town is governed by the Town Board, which comprises four elected members and an elected Town Supervisor. For the 2012 fiscal year, the Town’s budgeted appropriations were approximately $743,000.

Key Findings

  • The Board did not adopt structurally balanced budgets or monitor the budget during the year. Generally, the Board’s estimates of surplus fund balance to be appropriated in the budgets exceeded the amounts actually available. As a result, the general fund balance declined by $82,000 from 2008 to 2012. Consequently, the general fund had to borrow money from the highway fund in 2012 so it could pay its obligations.
  • Four of the five Board members did not receive budget status reports during the year. As a result, budget amendments were not made until the last Board meeting of the year, after the over-expenditures had already occurred. The general fund ended 2012 with a cash balance of $15,630.

Key Recommendations

  • Establish a policy and develop procedures for preparing realistic and structurally balanced budgets, using actual financial results from prior years and other relevant and available data.
  • Review budget-to-actual reports on a monthly basis and use them to monitor current-year results against budget estimates throughout the year. The Board should make appropriate budget adjustments prior to accounts becoming over-expended.