A state audit of the Town of Guernsey's finances has raised questions about the community's bookkeeping after auditors reported an apparent $1.3 million deficit and identified multiple deficiencies in the town's accounting and record-keeping practices.
Town Clerk/Treasurer Hillary Dawson, however, said the large negative number does not mean the town is missing money.
Instead, she said it reflects how nearly $4 million in grant funding for a town-wide water line replacement project was received over several years but largely spent during fiscal year 2025.
"Our entire town is not missing funds,” Dawson told Cowboy State Daily. “We're just operating in a different pool of money."
According to the 30-page audit released by the Wyoming Department of Audit Public Funds Division, Guernsey reported about $3.42 million in receipts and $4.72 million in disbursements during fiscal year 2025, resulting in an approximately $1.3 million deficit. The town's general fund ended the year with a negative cash balance of $1,265,889.
Water Project Skews Numbers
Dawson said the deficit largely reflects the timing of a major infrastructure project rather than the town's financial health.
Although Guernsey has a population of roughly 1,100 and ordinarily qualifies to perform its own financial audit, the town was required to undergo a state audit after receiving about $960,000 in federal grant funding during fiscal year 2025 for the water line project.
Over roughly three years, the town received nearly $4 million for the project, Dawson said. Most of that money was spent during fiscal year 2025.
"If you bring in $4 million on a project over three years but you spend it all in one year, it's not going to look the same on paper," she said.
She added that the town currently has about $5.9 million in its accounts, including reserves.
"That's what's sitting in our bank accounts right now," she said. "The town's money is being allocated and spent in the right place."
Audit Raises Concerns
While Dawson disputes the significance of the reported deficit, the audit also identified several accounting issues unrelated to the water project.
Auditors said they were unable to verify the town's beginning and ending cash balances because sufficient documentation was not available.
"Management has acknowledged that the cash beginning and ending balances appear misstated and that cash transfers between funds could be required to correct these balances," the report states. "Accordingly, we were unable to obtain sufficient appropriate audit evidence to determine whether beginning and ending cash balances are accurately stated at the fund level."
The auditors also noted the town's general fund reflected negative cash and reported that management "was unable to provide support or an explanation as to the cause."
The report recommends the town investigate the cause of the negative cash balances and correct any misstatements, if necessary.
Meeting Minutes, Vendor Lists
Auditors also found what they described as a "significant deficiency" in the town's meeting minutes.
According to the report, minutes posted on the town's website contained inaccuracies, including duplicated meeting minutes from one meeting to another and duplicated vendor payment listings.
Calls and emails to Mayor Ed Delgado were not returned before publication.
Guernsey resident and mayoral candidate Shawna Reichert said those findings validated concerns she has raised.
"I think the big thing that stood out to me was that even the minutes being put out to the public are not being done correctly," Reichert said. "There's no accountability. I think a lack of accountability has gotten us into the position we are currently."
Accounting Method
Another audit finding involved journal entries that reclassified expenditures.
Auditors found instances in which expenses were moved between accounting periods. Because the town uses cash-basis accounting, expenditures should be recorded when cash is disbursed rather than when the expense was incurred.
Dawson said the issue stemmed from staff mistakenly recording invoices in the month services were provided instead of the month they were paid.
For example, she said, the town received a July invoice from Wyoming Municipal Power for June electric service and initially coded the expense to June.
"We should not have done that," Dawson said. "We paid an invoice for June that we did not receive until July."
She disputed the audit's suggestion that the entries were made to move expenses out of over-budget accounts, saying none were over budget and the issue reflected confusion between cash-basis and accrual accounting.
Corrective Plan
The town has already adopted Resolution 2026-010, a corrective action plan that calls for improving cash-allocation procedures, adding reviews of journal entries, reconciling liability accounts, improving the accuracy of council meeting minutes and using a third party to review journal entries.
Reichert remains skeptical.
"I have no confidence that change will happen because they've never spoken about it in any of our town council meetings," she said of the mayor and council. "How can you fix it if you're not bringing it to the public?
"I want better for our community."
Dawson said people are welcome to ask questions of her at the town hall at any time.
“People are smart enough, if they want to ask questions, they can come in and ask questions,” she said. “A lot of us come in here and we work really hard for this community.”
Kate Meadows can be reached at kate@cowboystatedaily.com.
