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TOWNSEND — “I knew we were going to have good news,” Town Administrator Andy Sheehan said. “We’ve made a lot of good progress over the last few years.”

The annual management letter from the fiscal year 2014 audit no longer listed a material weakness identified in previous years. The yearly letter from the auditors is an internal document that identifies things the town can improve on in its accounting process, Sheehan said.

A material weakness exists when there is a reasonable possibility that a material misstatement of the financial statements will not be prevented, detected or corrected on a timely basis, according to the letter issued by the auditing firm of Melanson, Heath and Company.

The cash reconciliation process, identified as material weakness in previous years, is no longer included in the management letter.

Sheehan is not sure when the problem began with the reconciliation process, but it began before the fiscal 2013 letter was received. Money that was collected in the treasurer/collector offices was not always included in the month-end turn-overs done by the accountant.

The lag did not adversely affect the town’s bottom line.

“We were never in a deficit position,” Sheehan said. “We collected more money than we expected.”

The previous collector had fallen behind and it took a few years to get caught up, he said.

By the time the issue was first identified by the auditors, it was too late in the fiscal year to repair the problem for that year.

“We didn’t have time to fix it,” Sheehan said. “That’s why some of these things will carry over.”

One material weakness identified by the auditor the previous year is still included in the newest management letter. It is the only material weakness for 2014, Sheehan said.

“No community is perfect and we’ve still got things we can improve on,” he said. “Everyone does.”

Improvements should continue to be made on controls over water department activity, Sheehan said. The town has begun by moving collections out of the water department to Town Hall and by implementing a lock box payment system. Payments are now sent to a processing center. Both the Department of Revenue and the auditors suggested the changes, he said.

The remaining criticisms in the letter are classified as comments, having a lower level of concern than a material weakness, Sheehan said.

The town should develop a more formal risk assessment process, a need identified in the fiscal 2013 letter.

Two things have already been done to meet that goal, Sheehan said. The selectmen have adopted a fraud policy that requires adoption by the elected boards and commission. The administration now must provide collective bargaining groups with the notice and opportunity to bargain.

When the letter was under discussion in the Aug. 11 selectmen’s meeting, the selectmen also agreed to implement a hotline for employees to use to report concerns.

The fiscal 2014 management letter had one new comment: The town should improve controls over accounts payable activity.

At the time the audit was done, the accountant did not have all the original invoices in the files, but did have copies. The originals remained with other departments. The auditors’ preference is for the accountant to have the originals, Sheehan said.

“We think that’s a fairly minor item we should be able to reconcile,” he said.

Follow Anne O’Connor on Twitter and Tout @a1oconnor.