The Town of Evans has lacked financial oversight, and multiple accounting errors and practices over the past five years left officials without reliable information to make informed fiscal decisions.

That's the upshot of a much-anticipated audit released by the State Comptroller's Office, which examined the town's finances from 2007 to March of this year.

More specifically, the audit criticizes the town's handling of its multimillion-dollar water project, as well as its water system, which repeatedly runs at a deficit.

Both have put the town in a precarious financial situation.

In 2007, the town borrowed $12.6 million to install new water lines, hydrants and a water storage tower, but rather than put that money in a separate account, as required, the town combined the money with the rest of the town's funds, the audit showed.

As a result, more than $2 million designated for the capital project was used to cover other operating expenses, mostly for the town's troubled water operations.

Now the water project still isn't completed, and the town is short on funds.

"The board and supervisor did not provide adequate oversight of the town's financial activities, or monitor the use of debt proceeds to ensure they were appropriately used and properly accounted for," the audit states.

Town water operations, meanwhile, had been losing money for years - more than $423,000 between 2009 and 2001 - because officials didn't raise water rates to cover rising expenditures, the audit ?showed.

Instead, the town used money from other operating funds - including money designated for the water project - to keep the water system afloat.

To make matters worse, the town failed to include in this year's budget $635,000 in water-debt payments, an oversight that will only increase the deficit.

Evans officials - who have been waiting for the state report to get a better handle on the town's fiscal condition - didn't argue with the state's findings, but they indicated they are in the process of trying to correct the problems.

Meanwhile, there's a lot of finger pointing.

When fiscal troubles connected to the water project emerged last year, then-Supervisor Francis J. Pordum blamed his predecessor, Robert Catalino II.

Supervisor Keith E. Dash - who took over as supervisor in January - placed blame on both of the previous administrations.

"There was a lack of communication from directors of finance to the rest of the Town Board, almost to the point of putting us in the darkness of ignorance," said Dash, who served as a councilman before his election as supervisor. "One of the biggest reasons we welcomed an audit from the Comptroller's Office was to get to the bottom of it."

The entire scenario has created a cash-flow problem for the town.

Because Evans was spending other funds to plug the water issues, the town was forced to take out a short-term loan of more than $2 million to keep municipal government running this year.

It remains to be seen what impact that will have on the town moving forward, as town officials continue to put a budget together for next year.

While Dash warned that the town isn't out of the woods, he has begun to address the comptroller's recommendations.

The town recently raised ?water rates 50 cents per thousand gallons and is considering additional hikes to address ?the deficit in the water fund. The supervisor also has been negotiating with the Erie County Water Authority to take over the town's water system once the extensive water project is completed.

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The state audit pointed out other accounting miscues:

. The town paid for $150,000 in road improvements in 2007 and then borrowed that money in 2008 when it needed operating funds.

. Likewise, officials used more than a quarter-million dollars in municipal funds to buy four town vehicles in 2010, but they then secured financing through a lease-purchase agreement in 2011 to help cover expenses.

"By relying on debt proceeds to address ongoing operating deficits, town officials are not managing public funds in a prudent manner and are not always in compliance with statutory requirements," the audit continues.

. The state also was critical of the town's previous finance directors for numerous errors in financial records that had to be corrected by the town's external auditors.

"Without reliable, complete and up-to-date records, town officials do not have the information they need to assess the town's financial condition and take appropriate action," the report states, "and the financial reports based on those records are potentially inaccurate."