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HomeMy Public PortalAboutBrewster 2005 Management Letter TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 30 , 2005 4 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 , 2005 and have issued our report thereon dated April. 21 , 2006 . 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 , %. E. 33wwa cam paj Certified Public Accountants April 21 , 2006 i i TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 30 , 2005 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 Assessor ' s department 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 This project will be resolved by FY2007 year end , The Assessing Department is the tax bill generating office . The Accounting Department will consult with the Assessing Department and adjust their records accordingly , i I TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 309 2005 WATER DEPARTMENT RECONCILIATION OF USER FEES RECEIVABLE Findings 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 . While reconciliations did occur, they were not always performed on a monthly and timely basis . • 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 . Recommendations The Water and Accounting departments should reconcile the outstanding detail list to the general ledger on a periodic basis . • 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 • Reconciliation is performed upon receipt of general ledger spreadsheet material from the Accounting department . We will contact the Accounting department immediately if figures do not match or if there are questions/concerns , • The Water Department is in the process of writing specifications for an RFP (Bid) for new billing software . As part of the specifications within the billing software a computerized cash register is mandatory . i - 2 - TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 30 , 2005 AMBULANCE ACCOUNTS RECEIVABLE Finding The ambulance receivable system is maintained by Comstar Inc . Currently the receipts are brought into ambulance revenue on a cash basis . The Town should convert this to a full accounts receivable system maintained in the general ledger . Recommendation The Town should record the ambulance accounts receivable balances on the Town ' s general ledger . The Town should work with the ambulance billing vendor so that the Town receives the necessary information to record receivable commitments, cash receipts , abatements due to insurance agreements and write off of uncollectible accounts . Once established , the Board of Selectmen should establish a policy to approve any write off of uncollectible accounts . Management Response The Accounting Dept has been receiving monthly printouts from Comstar, Inc . , during FY07 . By FY2007 year end, the receivable will be on the Town ' s books . Current policy has the Fire Chief and the Board of Selectmen corresponding on billing issues . - 3 - TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 309 2005 DISASTER RECOVERY PLAN Finding The Town does not have a disaster recovery plan for financial operations , Recommendation The Town should consider implementing a disaster recovery plan . This plan would coordinate how the Town business would operate if faced with a major computer failure or natural disaster , • Identify critical functions and personnel for continued operations and recovery , • Planning for alternative worksites for critical operations , • Identify and document manual procedures required in the event of loss of data processing systems , Management Corrective Action Plan The Town will consult with our Information Technology department and consider a plan, Currently backups are performed daily via cassette tape , These tapes are kept in the Town vault and periodically a set is taken off site , i - 4 - TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 30 , 2005 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 2009 , 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 . In order to comply with this standard, an actuarial study will have to be performed to calculate the preliminary liability as of July 1 , 2008 . Management Plan The Town of Brewster is a member of the Cape Cod Municipal Health Group and the Barnstable County Retirement System . The Barnstable County Retirement Board has retained Segal Company to perform actuarial consulting services regarding OPEB liabilities under GASB45 for the member units . i - 5 -