Auditors give town a ‘clean’ opinion on 2016-17 year

“We have issued an unmodified or ‘clean’ opinion,” Vanessa Rossitto of Blum Shapiro, the town’s independent auditing firm, told the finance board.

“No material weaknesses, no significant deficiencies to talk to you about,” said Leslie Zoll, another Blum Shapiro representative.

“We have no issues to report to you.”

Rossitto and Zoll discussed Blum Shapiro’s draft audit report on the town’s 2016-17 fiscal year with the finance board at its Dec. 19 meeting. They said the final audit report would be filed before the end of the year.

For 2016-17, the fiscal year that ended June 30, the town came in close to $1 million under budget — $976,747, to be exact. The town and schools spent $138,191,340 of a 2016-17 budget approved by voters at $139,168,087.

The town ended the year with a fund balance of $17.4 million, although $2.9 million of that is “assigned” — earmarked for specific purposes — leaving about $14.5 million in the “unassigned fund balance.”

That June 30 fund balance represented 9.4% of the 2016-17 general fund expenditures. This is slightly above the finance board’s guideline to keep the fund balance at 8% to 9% of the total town and school budget. But Finance Board Chairman Dave Ulmer noted that there was a conscious decision to allow the fund balance to grow a little larger than the guideline in anticipation of possible negative financial impacts to the town stemming from the state’s well-known financial difficulties.

Of that $2.9 million in fund balance that’s “assigned,” there’s $1.8 million that the finance board designated for use as non-tax revenue in the current 2017-18 budget, and the rest is tied up in “encumbrances” — bills expected to come in for prior commitments. Rossitto said $772,000 is in Board of Education encumbrances and $446,000 is in encumbrances by town departments.

Revenue figures for the year showed property tax collections $1,768,000 above what had been expected in the budget, while “intergovernmental” revenue — state grants, mostly — ran $873,000 below what had been budgeted. With it all added up, revenues came in at $138,489,000, which is $1,301,000 more than the budgeted revenues, excluding the impact of use of the fund balance.

Ulmer noted that the bulk of extra revenue collections came from the fall 2016 tax sale — mostly delinquent property owners paying up to avoid being part of it.

The town, once again, underspent its budget — it’s legally not allowed to overspend, and underspending is the obvious way to avoid that.

Expenditures for the 2016-17 year came in $976,747 below the $139,168,089 that had been allocated, for year-long spending of $138,191,340.

Finance board member Sean Connelly asked Rossitto if she had any advice to pass along, as someone who does auditing work for a large number of Connecticut municipalities.

“Keep doing what you’re doing,” Rossitto replied. “The budget results were great this year.”

Fraud assessment

Although Leslie Zoll of Blum Shapiro had said repeatedly that she’d found no problems — “no material weaknesses, no significant deficiencies” — she did suggest the town consider having a fraud assessment done.

“Fraud is always something in the back of our minds,” she said. “A fraud assessment would just let you know where the risks are.”

“I think one of the biggest risks now is cybersecurity,” added Rossitto.

“We do have a ‘fraud hotline’ published to everyone in the town and Board of Education,” Controller Kevin Redmond said. “They pick up the phone and it goes right to the police.”

He added that town Information Technology Director Andrew Neblett alerted users of the town’s computer network of various hacking attempts that can come in the daily email.

“For cybersecurity, Andrew does an excellent job: Here’s what’s out there, watch out for this …”

“Do not open this,” added board member Dick Moccia.

The finance board thanked Rossitto and Zoll for their efforts on behalf of the town. Paying for the annual audit, which is required each year by the state, is an $80,000 expense in the town budget.

“As always,” Ulmer said, “there’s a lot to digest.”