TOWNSEND -- The town has made significant progress toward addressing material weaknesses in its accounting system, according to the results of its fiscal year 2013 audit.
Eric Demas of accounting firm Melanson & Heath explained the results of the audit to selectmen last Tuesday.
"There was improvement where we hadn't seen it in the prior year. However, there is still work to be done," Demas said. "If the town stays on the current plan and executes it as intended, you're going to get there."
In its fiscal year 2011 audit, Melanson & Heath had identified four material weaknesses that the town is still working to address.
Demas said the town has improved the cash reconciliation process by working to balance the town's general ledger, although some old items still needed to be reconciled. The town has also begun to develop a formal risk assessment process to help avoid fraud. The town has also worked to provide a detailed list of tax-title accounts so that they can be addressed, Demas said.
Town Administrator Andrew Sheehan said he is pleased with the progress the town has made and that the town's financial situation itself remains strong.
"We're in a much better position on those management or procedural standpoints, and we're continuing to make progress. I'm pretty confident that by the time the next audit is done, hopefully in five or six months, we'll be able to eliminate these material weaknesses," Sheehan said.
A recommendation to move the collection process for water billing to Town Hall has gone unaddressed.
Sheehan said the recommendation would segregate the duties related to Water Department billing, which are currently handled internally. However, he said he did not know if it would be addressed due to resistance from the Board of Water Commissioners.
"It becomes sort of a permanent black eye on the town if it's there. It just keeps showing up year after year and people look at it and they go, 'why aren't you addressing it.' It's a pretty easy workaround. I don't think it's a diminution of the Water Department's authority, I think it makes them stronger and is a good management practice," Sheehan said.
Chairman of the Board of Water Commissioners Niles Busler said that the board is not opposed to making changes, but said there has been a lack of communication from the selectmen's office about doing so.
"It's a possibility, but we need to look at it and explore it before we throw our hands up and say that's the way we have to go," Busler said.
Busler said the Water Department already separates duties among different employees in the office, and has never had any issues or improprieties associated with the process.
The fiscal 2013 audit did identify one new weakness -- improving controls over the Recreation Department's petty cash. According to the audit, the department has been using receipts to make purchases when its petty cash fund becomes depleted.
Sheehan said he believes this can be fixed quickly by working with the Recreation Commission to develop a formal policy and possibly increasing the petty cash fund.
"There's been no misappropriation or misspending, it's just not an ideal practice," Sheehan said.
Sheehan said that although the town is in good financial shape, it is important to address the weaknesses so they don't become problems down the road.
"Even if you're showing a positive balance at the end of the year, we want to make sure we have a positive balance for the right reasons. There was some progress that needed to be made to make sure that we would be in a positive position year after year," he said.
The positive audit result is also a good indicator that Townsend will get its bond rating back in the coming months, Sheehan said. However, he's in no rush to apply for the rating.
The town's bond rating from Moody's was revoked last summer due to a delay in completion of the town's audit after the town switched auditing firms.
Sheehan said the town would most likely apply for a bond rating in late summer or early fall, just before going out to borrow.
"The audit results reinforce the financial position of the town. I'm really not concerned about what the rating will be. I know it's going to be good and know it will come through in a quick and timely fashion once we're ready," Sheehan said.
Although Sheehan said he has also considered being rated by Standard & Poor's, at this time he is planning to have the Moody's rating re-established because of the town's relationship with that agency.
Being rated by Standard & Poor's at this point, without an imminent plan to borrow, would cost a fee of $10,000, Sheehan said. He did not know if a similar fee was associated with reapplying for the Moody's rating.
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