Published on April 24, 2024
The Town Council Finance Committee received a presentation on the town's and school's FY 2023 Financial Audit from Jennifer Conners of Runyon Kersteen Ouellette (RKO) at the April 23, 2024 Town Council Finance Committee Workshop. The audit was performed over two weeks beginning August 21, 2023. The report was issued on March 22, 2024. The audit was conducted in accordance with auditing standards applicable to financial audits contained in Government Auditing Standards (GAS), issued by the Comptroller of the United States.
Conners said that,"The audit did go well. The Financial Statements received an unmodified opinion which is a clean opinion on the financial statements." In addition to the financial statements, a report required by GAS was also provided. Under those standards, RKO is required to review the internal controls for the town and school department as they relate to financial reporting. "Under those standards, there were no material weaknesses and no significant deficiencies."
The Uniform Guidance Report was also issued because the town receives and spends over $750 thousand in federal grants, which requires the town to undergo a single audit. Conner said that in FY 2023, RKO tested the Child Nutrition Cluster Grant (otherwise known as the school lunch program) and found, "No compliance findings and no internal controls findings." Last year, the same grant did have a finding related to how claim forms were completed and the retention of the records for those claim forms. "This year there no issues with that," she said.
Connors pointed out that the Town's current Fund Balance Policy sets a targeted unassigned fund balance of 12.5% of annual General Fund Revenues. The targeted unassigned fund balance based on FY 2023 revenues would be $6,147,248. However, the FY 2023 unassigned fund balance was lower than the Town's targeted unassigned fund balance by $2,316,261. The unassigned fund balance has also steadily lowered over the last five fiscal years.
Town Manager Matthew Sturgis explained that the primary driver behind decreasing fund balances has been capital funding. "We haven't used it to lower the town's tax rate; we have used it to invest in the town's infrastructure," he said. Sturgis added and that he and Finance Director Kristie Bradbury are actively considering different ways to look at the fund balance. Bradbury said, "Most municipalities go with fund balance policies based on expenditures; they are a lot more level." Basing the policy on revenues creates much greater flux year to year as taxes change. "I was surprised to see this policy and I'm hoping we can change it. I think it's a better, more fiscal responsible way of keeping that fund balance on target."
All audit materials are listed below:
FY 2023 School Department Financial Statements
FY 2023 Statement of Assurance