Despite minor procedural issues, the town's accounting practices are "much better" than they used to be, according to the latest audit report released last week.
Marcia Marien, an accountant with O'Connor Davies, a regional certified public accounting and consulting firm, presented some of the report's findings at the Town Council meeting March 27.
The report covers fiscal year 2013, which ended on June 30.
In fiscal year 2012, the agency found several problems with the town's accounting practices. Marien told the town council in April 2013 that a good deal of money had been mislabeled or otherwise incorrectly stated, which led to material misstatements.
"Things are much better this year than they were last year," she told the Town Council last week.
Marien listed a number of items that were corrected throughout the 2012-13 fiscal year. Unlike the previous year, tax collections are now programmed properly, payroll transactions are being reconciled, bank accounts are being balanced in accounting records, reserves are no longer treated as liability and other material weaknesses have been fixed, according to the report.
"There were huge adjustments there," Marien said.
She also noted that the town administration and Board of Education recognized the issues and have been working to fix them.
"There are a lot of things that have been corrected and there are some things that are still being corrected," Marien said.
Fiscal year 2013 was Dawn Norton's first full year as the town's chief financial officer.
Norton said her department has been able to make such improvements due to "a lot of hard work."
At the request of Town Council members, who said they had received the report the day before the presentation, Marien said she would come back in May or June to discuss the other part -- a nine-page management letter describing some deficiencies with the town's accounting practices.
Among other issues, the letter states that "the senior staff's skill sets and responsibilities are not appropriately aligned resulting in delay and inaccurate posting of activity required to close the books."
"Management did not have adequate financial reporting to make decisions and comply with budgeting rules and regulations in the town's charter," the letter stated. "The financial reports that were being produced were materially misstated." Read Full Article
The letter recognized improvements made over the 2012-13 fiscal year, including the fact that the Finance Department was able to balance the records "more thoroughly and more accurately" than for the previous year.
According to the letter, the agency found that the town's current monthly closing process is inadequate due to improperly skilled accountants.
The letter lists a series of "significant issues," including postings to incorrect accounts and double postings, that could've been prevented "with proper skilled accountants."
"The monthly close procedures and check list need to be enforced and staff held more accountable for their work," the letter stated. "Skill sets of senior staff should be reviewed and evaluated for appropriateness."
Norton declined to comment on the letter.
Town Council Chairman Bill Walbert also declined to comment on the content of the letter, at least until Marien returns, but he noted that the size of the letter -- nine pages compared to last year's 36 -- is a good sign.
"Clearly, we're not as tight a ship as we would like, but we're still tighter than we were in past years," he said at the meeting.
The town's total expenditures in 2012-13 were under spent by $3.4 million, which according to Marien, was an improvement from the previous fiscal year.
"The expenditures were very good," Marien said. "And I don't know if you remember the schedule from last year, but there were a lot of negatives on the schedule, where things were over expended and you really did a nice job this year of monitoring the budget."
In fiscal year 2013, the town collected 99.7 percent of the tax levy. Marien said the number is "about average" for New Canaan, which has the highest rate of tax collection in Fairfield County.
The town had projected a 98 percent tax collection for fiscal year 2013. Because tax collection has consistently been above 99.2 percent in recent years, Marien said, the town could consider changing the projected tax collection to 99 percent.
The town, however, did not collect as much back taxes as it had projected.
"It's a little over $400,000, not as much as the town had expected," Marien told the council. In fiscal year 2013, the town had projected a $650,000 back tax collection.
Long-term debt, which was higher than the town's revenues in 2011, has decreased to 90 percent of the revenues. The number is the second highest in Fairfield County.
Bridgeport is the highest, with an approximate 120 percent debt-to-revenue rate.
According to Marien, the statewide average is 61 percent, but she said that "it's tough to compare Fairfield County to the rest of the state."
Overall, the council agreed that town's finances in 2012-13 were better than the fiscal year.
"It's still not perfect, but we're certainly making progress," Walbert said. "There's still some work to do, no doubt about that."
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