HomeMy Public PortalAboutBrewster 2004 Management Letter TOWN OF BREWSTER, MASSACHUSETTS
MANAGEMENT LETTER
JUNE 309 2004
R. E . BROWN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
P. O. Box 230 - 25 CEMETERY STREET
Mendon , Massachusetts 01756
Phone ; (508) 478 -3941 Fax: (508 ) 4784779
To the Honorable Board of Selectmen
Town of Brewster, Massachusetts
We have audited the general-purpose financial statements of the Town of Brewster, Massachusetts
for the year ended June 30 , 2004 and have issued our report thereon dated July 1 , 2005 . As part of
our audit we reviewed and tested the Town of Brewster' s internal control structure . This
management letter is critical in nature and does not identify the strengths of the financial systems .
Internal control structure refers to the method by which the Town safeguards its assets , utilizes the
assets for the purposes intended, insures commitments are made in accordance with Federal, State,
and local authorizations , records financial transactions accurately and in a timely manner, and
complies with Federal , State and local guidelines , statutes , and by-laws .
The purpose of this management letter is to comment on observed internal control structure
weaknesses noted during the audit field work; as such, our tests would not necessarily disclose all
weaknesses in the system . We have reviewed the contents of this report with the appropriate
representatives of the Town. We wish to thank the Town of Brewster officials and their staff for
their cooperation while conducting the audit .
We will be pleased to discuss the contents of this report and will be available to assist in
implementing any suggested changes .
This report is intended for the information of the audit committee , management and federal
awarding agencies and pass-through entities . However, this report is a matter of public record and
its distribution is not limited .
Respectfully,
S. E. wwn & eam p an*
Certified Public Accountants
July 1 , 2005
TOWN OF BREWSTER, MASSACHUSETTS
MANAGEMENT LETTER
JUNE 30 , 2004
ASSESSORS DEPARTMENT
RECONCILIATION OF WATER AND ROAD BETTERMENTS
Finding
The Assessor ' s department maintains detail accounts for road and water betterments outstanding .
Periodic reconciliations between the Assessor ' s detail and the Town Accountant' s general ledger
were not performed . .
Recommendation
We suggest that the offices prepare monthly detail listing of all betterments receivable and reconcile
the list to the Town Accountant' s general ledger . The departments should establish a static variance
before any adjustments are proposed to the Town Accountant' s general ledger .
Management Response
We will continue our attempt at reconciling assessor detail with the Town Accountant' s general
ledger .
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TOWN OF BREWSTER, MASSACHUSETTS
MANAGEMENT LETTER
JUNE 30 , 2004
WATER DEPARTMENT
RECONCILIATION OF USER FEES RECEIVABLE
Finding
During our review of the water department, we noted the following :
• Water user charges receivable — The Water and Accounting departments have a policy to
reconcile accounts receivable balances on a monthly basis . This reconciliation was not
always performed . As of June 30 , 2004 we noted several minor misclassifications or
unmatched items between the two departments information.
• A cash register or similar point of sale device is not utilized for accepting payments at the
water department . The Water Department collects all water user fees and water service fees .
Recommendation
• The ,Water department should reconcile the outstanding detail list to the general ledger on a
periodic basis . Any variance or change in a historical variance should be identified and
corrected . Once the historical variance remains constant the Town Accountant can consider
adjusting to the actual detail .
• We recommend that a computerized cash register system be installed at the water
department . All payments should be processed with the cash (or billing) receipt produced
and provided to the customer .
Management Response
• The Water De artment will review the General Ledger Detail report sent by the Town
P
Accountant on a monthly basis and identify and note or correct any variance necessary .
• Currently each payment is processed with a cash (or billing) receipt. Exception to the rule is
the System Developement fee which is paid when a new service application is procesed, in
this case a photocopy of the payment is placed in the file folder . For each deposit a duplicate
calculator slip is generated for receipts and money (including system developement fee
payment) . These slips must match against each other . The receipt slip is kept with the
receipts and the payment slip is kept with a copy of the deposit form (9) which is sent to the
Treasurer with each deposit. At the May 2005 Annual Town meeting the department
requested funding to purchase a new billing software program . When the department reviews
for this billing software we will inquire about a cash register system to be part of the
package .
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TOWN OF BREWSTER, MASSACHUSETTS
MANAGEMENT LETTER
JUNE 309 2004
GASB #34 COMPLIANCE
FIXED ASSETS
Finding
The Town did not establish Fixed Assets in a timely manner . This delay caused the Town ' s audit to
be delayed in FY03 .
Recommendation
The recording of Fixed Assets is now a permanent part of the financial compliance requirements for
the Town . The records must be updated annually for inclusion in the financial statements .
Management Response
Management will update annually all fixed assets .
i
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TOWN OF BREWSTER, MASSACHUSETTS
MANAGEMENT LETTER
JUNE 30 , 2004
FUTURE CHANGES IN LAW AND ACCOUNTING STANDARDS
OTHER POST EMPLOYMENT BENEFITS
The Government Accounting Standards Board (GASB) has issued new guidelines for the recording
of post employment benefits . In fiscal year 2008 , the Town will be required to estimate the cost
associated with future benefits of current and retired employees . In most cases , this will be the
future cost of health insurance . The Town will be required to perform an actuarial study every two
years to comply with this accounting standard .
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