Audit Objective
Did the Village of Churchville (Village) Board of Trustees (Board) effectively manage fund balance?
Audit Period
March 1, 2022 – October 30, 2025
Understanding the Audit Area
A key measure of a village’s financial condition is its level of fund balance, which represents the difference between revenues and expenditures accumulated over time. Fund balance should be effectively managed to ensure financial stability, maintain essential services and be transparent with residents and taxpayers. Effective management helps protect a village from unforeseen financial risks, helps maintain a favorable credit rating, and enables long-term financial planning. Maintaining a reasonable amount of unrestricted fund balance within operating funds is an important financial consideration for village officials, because it is available for appropriation to reduce taxes, fund one-time expenditures and other uses.
As of February 28, 2025, the Village’s unrestricted fund balance totaled $866,628 in the general fund and $53,289 in the sewer fund and the Village’s reserves totaled $912,440 in the general fund and $397,827 in the sewer fund.
Audit Summary
The Board did not effectively manage fund balance in accordance with its fund balance policy. This resulted in the general fund’s unrestricted fund balance exceeding the 30 percent maximum limit for the past three fiscal years. For example, when adding back unused appropriated fund balance in the general fund, the Village exceeded the 30 percent maximum limit by 14 percentage points in the 2025-26 fiscal year budget.
In addition, for the sewer fund’s 2025-26 fiscal budget, the Village fell below the 20 percent minimum limit by 13 percentage points. In addition, the Board did not treat taxpayers and sewer customers equitably. The Board inappropriately allocated Board member and Village Attorney (Attorney) salaries and benefits totaling $117,709 to the sewer fund instead of the general fund in the 2022-23 through 2024–25 fiscal years. As a result, there is an inaccurate depiction of the actual financial condition of the general and sewer funds.
The Board also did not adopt or develop comprehensive, written, multiyear financial or capital plans, or a written reserve policy, or receive and review budget status reports, which could have assisted in developing and adopting more accurate budgets and planning for the Village’s financial future. In addition, the Board’s resolutions did not always provide targeted funding levels or address how or when reserves would be funded, used or replenished.
The report includes eight recommendations that, if implemented, will improve the Village’s financial management. Village officials generally agreed with our recommendations, and their response is included in Appendix B. Appendix C includes our comment on issues raised in the Village’s response letter.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the Office of the New York State Comptroller’s (OSC) authority as set forth in Article 3 of the New York State General Municipal Law (GML). Our methodology and standards are included in Appendix D.
The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to our office within 90 days, pursuant to Section 35 of GML. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. We encourage the Board to make the CAP available for public review in the Clerk-Treasurer’s office.