Purpose of Audit

The purpose of our audit was to review the financial condition of the Town’s sewer fund for the period January 1, 2012 through December 19, 2013.

Background

The Town of East Fishkill, located in Dutchess County, has approximately 29,000 residents. The Town Board is the legislative body responsible for overseeing Town operations, including establishing internal controls over financial operations and maintaining sound financial condition. The Town Supervisor is a member of the Board and serves as the chief executive officer. For fiscal year 2014, total budgeted appropriations totaled $19.9 million, including appropriations of $1.56 million for the sewer districts.

Key Findings

• The Board did not effectively monitor the budgets throughout the year and did not require the Town Comptroller to present accurate and reliable financial information on a regular basis. As a result, the sewer fund’s financial condition has deteriorated in recent years.
• Town officials did not adopt realistic budgets based on historical or known trends for the Town’s three sewer districts.
• Town officials did not revise the sewer rent charges from 2009 through 2013 although two of the sewer districts had repeated operating deficits.
• The Town funded the sewer fund’s deficits with interfund advances from the general fund, which has a different tax base from the sewer fund. As of the end of fiscal year 2013, the sewer fund owed the general fund $406,579. The general fund’s subsidizing of the sewer fund creates a taxpayer inequity, as general fund taxpayers are paying for sewer services that they did not receive.

Key Recommendations

• Monitor the sewer fund’s financial condition throughout the year.
• Develop reasonable and realistic sewer budget estimates.
• Review sewer rent charges and revise them to generate sufficient revenues to pay the total costs needed to properly operate and maintain the facilities and sewer lines.
• Ensure that all interfund borrowing is repaid in accordance with the law.