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HomeMy Public PortalAboutManagement Letter June 30, 2007 TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 309 2007 R. E . BROWN & COMPANY CERTIFIED PUBLIC ACCOUNTANTS 25 CEMETERY STREET — P.O. Box 230 Mendon, Massachusetts 01756 P Phone: (508) 478-3941 Fax: (508) 4784779 To the Honorable Board of Selectmen Town of Brewster, Massachusetts In planning and performing our audit of the basic financial statements of the Town of Brewster, Massachusetts , for the fiscal year ended June 30 , 2007, we considered the Town ' s internal control in order to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on internal control . However, during our audit we became aware of matters that are opportunities for strengthening internal controls and operating efficiency . The memorandum that accompanies this letter summarizes our comments and recommendations concerning those matters . This letter does not affect our report dated April 10 , 2008 , on the basic financial statements of the Town of Brewster, Massachusetts . The accompanying comments and recommendations are intended solely for the information and use by the management of the Town of Brewster, Massachusetts , and are not intended to be used by anyone other than the specified party . We will review the status of these comments during our next audit engagement. We have already discussed many of these comments and recommendations with various Town personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters , or to assist you in implementing the recommendations . Sincerely , ,%. L 1 www d eam pa * April 10 , 2008 TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 30 , 2007 STATUS OF PRIOR YEAR' S FINDING — RESOLVED DURING FY07 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 Department 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 . - 1 - TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 309 2007 STATUS OF PRIOR YEAR' S FINDING — RESOLUTION IN PROCESS 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 Information Technology Department has budgeted for an online backup solution. The heavily encrypted data would be uploaded to a secure data center off Cape Cod. Thirty (30) days worth of different versions of our files will be kept. Implementation will be in FY09 . There is a Cape town that also utilizes the same software vendor as Brewster. In the event of a disaster, we could use their worksite. Another alternate location would be in Maynard, MA where the software company is located. Currently the system is backed up three times nightly, once to tape and twice on different servers. We are still storing one copy off site and one in the vault. - 2 - TOWN OF BREWSTER, MASSACHUSETTS MANAGEMENT LETTER JUNE 309 2007 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 retained Segal Company, to perform actuarial consulting services regarding OPEB liabilities under GASB45 for the member towns . The preliminary liability has been identified. While Towns are not currently mandated to fund this liability, the Town of Brewster has set aside $ 1 million of the Stabilization Fund Balance towards funding GASB45 - 3 -