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HomeMy Public PortalAbout2019 Brewster Management Letter TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 30, 2019 ROBERT E. BROWN II, CPA CERTIFIED PUBLIC ACCOUNTANT 25 CEMETERY STREET - P.O. Box 230 Mendon, Massachusetts 01756 Phone: (508) 478-3941 Fax: (508) 478-1779 To the Honorable Select Board Town of Brewster, Massachusetts In planning and performing our audit of the basic financial statements of the Town of Brewster, Massachusetts, as of and for the fiscal year ended June 30, 2019, in accordance with auditing standards generally accepted in the United States of America, we considered the Town’s internal control over financial reporting (internal control) as a basis for designing our audit procedures for the purpose of expressing an opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Town’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weakness have been identified. This communication is intended solely for the information and use of management, the Select Board, and the Commonwealth of Massachusetts and is not intended to be and should not be used by anyone other than the specified parties. Respectfully, Certified Public Accountant March 17, 2020 TOWN OF BREWSTER, MASSACHUSETTS COMMUNICATION OF INTERNAL CONTROL RELATED MATTERS JUNE 30, 2019 - 2 - RECONCILIATION OF WATER ACCOUNTS RECEIVABLE Finding The Finance Department and the Water Department are periodically reconciling activity and balances. The Water Department is also periodically reconciling the activity and balances within the department. However, these efforts are not resulting in perfect reconciliations without preventing variances in the activity and month end balances. . Recommendation The reconciliation of accounts receivable is a very important internal control. The Water Department’s receivable report balances and activity must be reconciled to the Water Department’s own reports and the Town Accountant’s general ledger receivable balance on a monthly basis and in a timely manner. If a variance occurs, the variance must be investigated in a timely manner. Managements Response The Finance Team and Water Department staff have dedicated considerable time, effort, and energy to resolve this issue and have made good progress. Water department administrative staff are able to reconcile daily activity, manually tracked on a spreadsheet to reports generated from the water billing software, yet a timing variance exists at each month end. Software support technicians from the water billing software have not been able to explain or fix this timing issue. Management are now investigating new utility billing software, with a goal to implement this new software by 7/1/2021, which will serve to fully rectify this issue. TOWN OF BREWSTER, MASSACHUSETTS COMMUNICATION OF INTERNAL CONTROL RELATED MATTERS JUNE 30, 2019 - 3 - RECONCILIATION OF REVENUE AND EXPENSES SUBSIDIARIES – RESOLVED IN FY19 Prior Year Finding – Resolved in FY19 The revenue and expense subsidiaries for the various funds were not reconciled to the general ledger revenue and expense control balances on a monthly and timely basis. As a result of the above deficiency, there were variances between the various subsidiary ledgers and the related general ledger control accounts. At year end, several significant journal entry adjustments were made to reclassify the variances in the various funds and the general fund. Upon analysis, we have proposed several adjustments to these year-end journal entries. We have concluded that this control deficiency represents a significant deficiency in internal controls. Prior Year Recommendation – Resolved in FY19 The reconciliation of the revenue and expense subsidiaries to the general ledger control accounts is a very important internal control. The revenue and expense subsidiaries must be reconciled to the related revenue and expenditure control balances on a monthly basis and in a timely manner.