FY2005 town audit details findings, reportable conditions
Published on November 8th, 2006
STONEHAM, MA -A recently released audit of the town’s financial accounting in FY’05 detailed 22 findings, including two trends that the outside firm characterized as reportable conditions.
According to the report, which primarily outlined minor troublesome accounting practices such as retirement system contribution payment problems that are related to a common glitch in computer software, Stoneham does have a significant problem in its failure to reconcile cash and receivable balances on a regular basis.
The second significant finding underscored the importance of separating the Town Treasurer’s office, which collects cash and receivables, from the responsibility of accounting for that money (in this case through the town’s accounting software).
Discussing the report at a recent Selectmen’s meeting, Town Administrator Ron Florino claimed that the majority of the findings were directly related to staff turnovers and layoffs in Town Hall’s key financial offices.
And while the Town Administrator admitted that something needed to be done immediately to correct the more significant problems, he advocated against hiring those staff members back.
“I think we can correct these findings. We can try to address some of the more severe issues,” Florino remarked. “But I don’t think this is the time to bring back all these positions and say, ‘Okay, let’s spend $150,000 and layoff another cop or educator.’”
Disagreeing with the Town Administrator, Selectman Paul Rotondi believed that the audit report revealed a significant problem in the manner by which the town manages itself.
According to Rotondi, who was extremely concerned with the description of what a “reportable condition” constituted, Stoneham will never be able to turn its financial ship around if it is governed in an inefficient manner.
“One of the most disturbing things for me with this whole report is the sentence that says, ‘Reportable conditions...involve significant deficiencies in the design or operation of the internal control structure,’” the first-term Selectman said.
“I think that’s a pretty damning sentence. And we’re going to really have to look at that [possibly hiring back some personnel]. If the town can’t run efficiently if we can’t manage it efficiently,” Rotondi added.
Emphasizing that the reportable conditions did not indicate any form of fraud or financial mismanagement, Florino claimed that when it came to reconciling cash and receivables, the town tended to be six-months behind schedule.
And because that process was being done on a bi-annual rather than monthly basis — as recommended by the audit firm — the Town Accountant and Treasurers’ offices had to scramble at-times to identify inconsistencies in their figures.
As for the second reportable condition, which raised a red-flag over having the Town Treasurer manage cash and receivables and the accounting software where that data was inputted, that problem should disappear since Town Meeting recently approved funding for a MIS or computer person, Florino said.
“I want to put everybody’s mind at ease. It’s not that we don’t reconcile cash and receivables. It might take us six months to do it, but it is done. There’s no mismanagement of misappropriations of money,” the Town Administrator stressed. “The funds are there and the money is accounted for.”
“The person who controls the assets can’t control the books for those assets. So last night was a major thing, passing that $25,000 for the MIS [department],” Selectman John DePinto said of the second major finding. “But we can’t afford to keep on getting these
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