Audit Objective
Determine whether Chautauqua County (County) officials adopted realistic budgets, routinely monitored financial operations and took appropriate actions to maintain the North Chautauqua County Water District’s (District’s) fiscal stability.
Key Findings
The District Board (Board), County Legislature (Legislature) and other County officials did not adopt realistic budgets, routinely monitor the District’s financial operations or take appropriate actions to maintain the District’s fiscal stability. As such, all County taxpayers have been indirectly funding District operations instead of just the real property owners who benefited from the District’s services. County officials:
- Overestimated revenues by a total of $1.6 million, an average of $410,000 or 29 percent each year, from 2019 through 2022.
- Did not enforce collection of water usage billed to Chadwick Bay Intermunicipal Water Works (CBI), resulting in a balance owed of $1.4 million.
- Spent $5.2 million from the general fund for District operations and did not repay the general fund, as required, because the District did not have sufficient funds.
- Did not thoroughly review budget-to-actual reports and did not prepare cash flow analyses.
Because officials were not monitoring the District’s financial operations, the District had a growing negative cash balance totaling over $5 million as of December 31, 2022, was experiencing, on average, $150,000 operating deficits each year, and owed the general fund $5.2 million, plus related interest.
Key Recommendations
- Adopt realistic budgets and develop a plan to collect amounts owed.
- Closely monitor the District’s finances by reviewing budget-to-actual reports and cash flow analyses to prevent further decline in financial condition.
County officials generally agreed with our findings. Appendix B includes our comment on issues raised in the County’s response.