The Carlisle Mosquito Online

Friday, June 23, 2000


Auditor suggests changes in town recordkeeping

Certified public accountant Tim Craven presented the results of his annual audit to the board of selectmen at their June 13 meeting. "Everything is in order," he observed. "Nothing was missing. All employees were cooperative." There were, however, several issues that warrant town management's attention.

First was the untimely reconciliation of cash and receivables. During the course of the audit, Craven noted that various cash and receivable reconciliations were not completed in a timely manner. Although they were accurate and complete, they were often more than a month late. This prevented the accountant from providing timely budget information, current status of grants, and increased the risk that appropriations might be overspent (as evidenced by the recent spending freeze instituted by town administrator Madonna McKenzie). Reasons cited by Craven for the time "erosion" include a change in personnel in the treasurer's office, new accounting and payroll systems, and additional activities as required by the relentless increase in the complexity of town financial management.

Craven recommended that management review the reconciliation process to ensure timeliness and provide adequate support to the treasurer and accountant. He concluded, "Such support may need to include accounting training for treasury personnel, additional resources for part-time staff as may be needed, and more training for all personnel involved in using the various [accounting] software."

A second issue identified by Craven involves incorrect reports submitted to the Department of Revenue, Bureau of Accounts. During the course of his audit, he noted that numerous reports submitted to the Bureau of Accounts contained errors, were incomplete or were filed late. These problems included incorrectly identifying the fiscal year of a Special Town Meeting on the tax recap sheet, failure to include debt on the balance sheet submitted by the town for purposes of determining free cash, failure to allocate cash to the various fund types on one of the reports, and the submitted debt not agreeing with the actual debt outstanding. As a result of the incorrectly reported items related to the town's debt, the bureau held up certification of free cash for a considerable period of time.

Craven recommended that all reports submitted to the state have an independent second party review prior to submission. He observed that many of these problems have existed in prior years, "but the Bureau of Accounts has not been particularly aggressive in pushing for corrections until the current year's filings." As if the town didn't have enough complexity to deal with in its financial management, Craven warned that things will only get worse. The Governmental Accounting Standards Board is requiring wide-ranging changes to the presentation of information in the town's financial statements, including a town-prepared Management Discussion and Analysis. In addition, the state has now decided to require certain school reports to be audited (over and above the town's financial statement audit) using a Department of Education Compliance Supplement. All of these items are likely to require staff training and increased audit efforts.

Financial outlook

Town treasurer Nancy Koerner reported to the selectmen that, in accordance with previous Town Meeting votes, $189,043 was transferred from free cash to support FY00 operating expenses, followed by a transfer of $284,469 to support FY01 expenses. This left a balance of only $350,000 in free cash on May 2, although this is expected to increase to approximately $500,000 by June 30, the end of FY00. This situation was sufficient for the town to maintain its Moody's bond rating of Aa2, which the town has held since 1997.

Moody's sees Carlisle as an extremely wealthy residential community with a full value per capita of $135,732, reported Koerner. The rating agency stated that, despite the recent drawdowns of the general fund reserves, the agency expects that town management will continue to take appropriate steps to restore reserves to prior levels and stabilize operations. Beginning in FY96, reserves as a percentage of revenues began to fall, due to capital costs and education-related expenses resulting from sharp population growth. From a high of 16.9 percent in FY95 this percentage fell to a low of 9.6 percent in FY98. Moody's credited new controls and the bi-weekly finance team meetings as improving departmental accountability and budgetary oversight. Although it may be wishful thinking, Moody's concluded that Carlisle's future debt plans are limited. After the recently bonded $3.9 million for the Gleason Library, Wang-Coombs land and pumper truck, the town has less than $500,000 of authorized unissued debt outstanding for the department of public works' roll-off truck and Carlisle School's air quality control improvements.

2000 The Carlisle Mosquito