town of bridgewater audit exit conference – board of selectmen roselli, clark & associates...
TRANSCRIPT
Town of Bridgewater
Audit exit conference – Board of SelectmenRoselli, Clark & AssociatesNovember 17, 2009
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Contents
Presenters:– Tony Roselli, Partner– Terenzio Volpicelli, Manager
Introduction
Comparative data to the peer group
Informational items
Findings
Conclusion
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Introduction -
What is an audit?
Performed in accordance with GAGAS (Yellow Book).
Requires review of internal control over major transactions.
Requires risk assessment and enhanced procedures in identified material areas.
Clean opinion verse qualified opinion.
Prior audits (2003 – 2007) did not have clean opinions.
Caused concern with bond rating agencies.
Current audit cures this concern.
Peer comparisons
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Peer group comparison Criteria to be designated as part of the peer group. (1)
- Must be a Massachusetts community. - Must have a population between 20,000 and 27,000. (2)
- Must have average annual household income between $55K and $75K. (2)
12 total communities met this criteria. Total residential tax levy by community was compared. Average total residential tax levy of the group was compared. Residential tax per household was compared. Commercial, industrial and personnel property taxes were deducted for purposes of this
analysis. Expenditures for critical services in total are compared. Average of expenditures for critical services is compared. Bond rating is compared.
(1) Tax levy data was obtained from the Massachusetts Department of Revenue, Division of Local Services – 2009 At a Glance Reports.(2) Per US Census 2000.
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Peer comparison – Tax levy
2500
3000
3500
4000
4500
5000
5500
Average tax per household
Dedham
Walpole
Easton
Canton
Mansfield
Stoneham
Danvers
Sandwich
Wakefield
Wilmington
Bridgewater
Saugus
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Peer comparison – Tax Levy
15.017.019.021.023.025.027.029.031.033.035.0
2009ResidentialTax Levy
Average ofpeer group vs
Town
Average($34.4Million)
Bridgewater($26.2Million)
3.0
3.5
4.0
4.5
5.0
2009 average taxper household
Average($4,525)
Bridgewater($4,033)
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Peer comparison – critical services (2008 expenditures per Massachusetts Department of Revenue Division of Local services web site)
2.02.53.03.54.04.55.05.5
Police
Danvers
Dedham
Saugus
Walpole
Wilmington
Wakefield
Canton
Easton
Mansfield
Sandwich
Bridgewater
Stoneham
1.0
2.0
3.0
4.0
5.0
Fire
Dedham
Danvers
Canton
Sandwich
Wakefield
Saugus
Wilmington
Walpole
Mansfield
Easton
Stoneham
Bridgewater
15.0
20.0
25.0
30.0
35.0
40.0
Education
Mansfield
Wilmington
Walpole
Dedham
Sandwich
Easton
Danvers
Wakefield
Canton
Saugus
Stoneham
Bridgewater
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Public Works
Dedham
Wakefield
Saugus
Danvers
Wilmington
Mansfield
Walpole
Canton
Stoneham
Easton
Sandwich
Bridgewater
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Peer comparison – critical services
1.0
2.0
3.0
4.0
5.0
Police
Average
Bridgewater
1.0
2.0
3.0
4.0
5.0
Fire
Average
Bridgewater
10.0
15.0
20.0
25.0
30.0
Education
Average
Bridgewater
0.0
1.0
2.0
3.0
4.0
5.0
Public Works
Average
Bridgewater
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Peer comparison – bond rating (per Massachusetts Department of Revenue Division of Local Services web site)
Canton Aa2
Danvers Aa2
Wakefield Aa3
Dedham Aa3
Walpole Aa3
Mansfield A1
Sandwich A1
Stoneham A1
Easton A2
Saugus Baa1
Bridgewater
Baa2
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Peer group comparison conclusion
Bridgewater had the lowest total residential tax levy in 2009 for the peer group. Bridgewater trailed the peer group in this area by 23.9%. Bridgewater ranked next to last in the peer group when comparing average real estate tax
per household. Bridgewater trailed the average of the peer group on a real estate tax per household basis
by 10.9% or approximately $500. This has resulted in a reduced level of critical services. This in turn has resulted in the lowest bond rating of the peer group. (Only 1 community in
the entire State has a lower bond rating and only 3 others are equal to Bridgewater.) Moody’s also cited in a recent bond down grade that, lack of financial leadership,
reductions in critical services and lack of annual audits has contributed to the reduced bond rating.
The lack of a material commercial and industrial presence is also adversely impacting Bridgewater.
The residential taxpayer is not leveraging this void like other similar communities with a lower commercial and industrial presence like Easton and Stoneham
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Informational items
GASB 45 - OPEB
SAS #112 – Internal Control
Consideration of fraud and theft
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Findings
Lack of documented internal control policies (Significant deficiency)
- Cash receipt handling and turnover at the department level.
- Payroll and benefit policies
- Purchasing policies
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Findings - continued
Overall organizational structure and layout
- Eliminate elected Treasurer/Collector and create appointed combined position.
- Consider creating a Finance Director position.
- Town Manager verse Municipal Administrator.
- Physical layout of operations.
- Data processing improvements.
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Findings - continued
Internal audit function.
Annual audits (significant deficiency).
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Findings - continued
Authorization of payroll warrants.
Payroll processing controls.
Fidelity bonds.
Use of volunteers.
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Findings - continued
Treasurer/Collector
- Automated processing
- GASB 31
- Quarterly billing
- Lock box
- Tailings
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Findings - continued
Ambulance
Transfer station (Significant deficiency)
Golf course
Foreclosed properties
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Conclusion – Blue print for improvement
Policies need to be documented.
Enhance revenue through override or other means to close gap between Town and peer group.
Financial infrastructure needs to be improved to make it easier to attract talented individuals who will not resign abruptly.
Appoint consultant. - Handle day to day responsibilities.
- Document policies and procedures.
- Assist with system conversion.
- Assist hiring new financial personnel.