2020 Financial Audit
In late 2020, the Office of Financial Administration led an effort to secure a new Financial Auditing firm after five years utilizing Vachon Clukay & Company PC. This effort was in keeping with best practices. In January, the Select Board awarded the scope to Plodzik & Sanderson CPAs. They began work in March on the Town’s 2020 Financial Audit.
The diligent work of the Office of Financial Administration throughout 2020 resulted in a limited number of journal entries required this year compared to recent years. Additionally, the new auditor applauded the Town’s policies and internal controls which contributed to an accurate accounting of Town funds.
An important role of an independent auditor is to identify areas of improvement. The Office of Financial Administration worked with the auditor on a few changes of practice they would prefer we consider. This was expected due to the fresh set of eyes with a new auditor. The auditor memorialized these changes in the Management Letter. I will summarize each below.
- Adjusting Journal Entries
- The auditor asked for a formal sign-off sheet in order to track all approved journal entries. This is a simple process adjustment which is already in progress.
- Financial Close and Reporting Policies and Procedures
- The auditor asked to formalize our current financial close process into a policy or procedure. They feel that memorializing the practice will improve transparency and the transfer of institutional knowledge. The Office of Financial Administration will work with the auditor over the coming year to fine-tune and draft the policy.
- IT Policies and Procedures
- The auditor noted a lack of policy documentation for our data security and backup protocols. While these protections are in place, the supporting policies play an important role in their ongoing success. This was also a recent finding in the Town’s cybersecurity audit. The Technology Committee is working with the documents provided by the cybersecurity team to address the Town’s deficiencies in this area.
- Trustee of Trust Funds – Principal and Income Allocation
- The auditor noted that the combination of principal and interest is for Trustee accounts is inconsistent with the requirements of the State reporting. The Office of Financial Administration will work with the elected Trustees of the Trust Funds to remedy this concern.
- Library Disbursements
- The auditor noted concerns with the Library purchasing gift cards without established procedures. The Office of Financial Administration will work with the Library Staff and Library Trustees to address this concern.
- Payroll Liabilities
- The auditor asked for a monthly reconciliation of all payroll liabilities. The Office of Human Resources has begun implementing monthly audits/reconciliations of each payroll liability as recommended by the auditor.