By BILL CHAISSON
[email protected]
WEATHERSFIELD, Vt. — Fred Duplessis of Sullivan Powers & Co., the town’s auditor, attended the May 6 meeting to explain the transition from an adverse to a clean opinion in their evaluation of the town’s books.
“I’d like you to walk through the gap between the first letter and one we have now,” said Kelly Murphy, the chair of the select board, “and what changed the opinion.”
Duplessis said that a year ago there was a different town finance director. “I never met him,” he said, “but I spoke with him a number of times.” After the director left, Duplessis said, “there were a number of corrections to be made. Frankly it was a mess. Our staff worked with you [the board] and Ed [Morris, the town manager] to get everything together and you did that.”
The accountant said that his firm had more time to look at town’s books this year, but the town brought in a new finance director and Duplessis said that there were still “a number of questions.” With more time, Sullivan Powers took a closer look at the accounts and determined “things you considered trust funds, or separate funds as for the library or cemetery, did not meet the definition of being separate funds.”
Duplessis sent a letter to the town in mid January with this information in it, but did not receive a reply. He also admitted that his firm had perhaps not explained the situation adequately.
In February Morris contacted the firm and asked them what the town needed to do. “You have to reshuffle the deck,” Duplessis told the town manager. “You have funds that you think qualify as special reserve funds, but they don’t. They need to be part of the general fund because they aren’t funded by restricted funds; they are just town money.”
Murphy asked why the library funds were not restricted, since many of the grants that funded it were restricted. Duplessis said that the library was not primarily funded by restricted funds; it is largely funded by tax money.” He said he had seen this error in many towns.
Steve Hier, the town treasurer, said that the town staff had thought that an adverse opinion was something worse than the auditors really intended. In fixing the accounts he compared their former scheme to wearing cargo pants with funds in multiple pockets and the new, recommended scheme as wearing regular pants with many fewer pockets.
“A number of years ago another auditor recommended combining all these funds,” Hier said, “but the board said no and there was no adverse opinion associated with it.”
Selectboard member Mike Todd asked if there were only problems with money being in the wrong places. “You had the cash that you were supposed to have,” said Duplessis, “but a number of the fund balances were incorrect. Government accounting is much different from commercial accounting; it is more difficult by far.”
Darlene Kelly, the new finance director, said it had been difficult for her to arrive in the middle of a budget process because she had to figure out what people were thinking when they made certain entries; she hadn’t not been present to hear the reasoning. “Now that I’ve been involved in the budget process,” she said, “I think it is going to be much different.”
Selectboard member David Fuller recalled past experiences of having people come into the town offices and want to know the balance and the interest on specific accounts. “It took a lot of time,” he said, “if they weren’t in separate accounts.” Duplessis said that if that system worked for the town, they were welcome to stick to it, but his firm was still going to have to issue an adverse opinion because it is not recognized as best practice.
Hier said that he and Kelly had worked out so that the town can make the changes that Sullivan Powers was urging them to make and still keep the funds separate for the convenience of the town.
Murphy brought up the importance of having a manual, which still has not been made, that provides a “roadmap” that keeps the decision-making consistent over time.
Selectboard member John Arrison asked if the town would have an audit report by mid November this year, because that is when they needed to know where they stood financially as they made the new budget. Duplessis told him that if the town made the manual and followed it, they shouldn’t have to wait for an audit to know how much money they had and where it was. “As auditors,” he said, “we should just be verifying what you already know.”
Pike Road contract
Pike Industries of Barre, Vermont submitted the low bid for the repaving of Center Road. At $398,632.55 it was far lower than the $550,000 that the town had budgeted for the job. Consequently, Morris asked Pike how much it would cost if they also repaved Reservoir Road, which is in very bad condition. The town manager described a combination of sources that could be brought together to pay for the project.
He explained that the town had enough cash to borrow the needed money from itself and pay itself back with interest. The alternative would be the more conventional route of borrowing from a bank and paying the interest to them.
Duplessis, who had been asked to stay and comment on the discussion, explained that when a town borrows from a bank it is considered revenue in government accounting—but not in business accounting—because it represents more money coming in, but when you borrow from yourself it is not revenue. If the town borrowed from itself the highway budget would have to show the loan as a liability, which would not be the case if they borrowed from a bank.
Hier and Morris assured the selectboard that the town had the cash flow to pay itself back without any funds going into the red. Fuller was doubtful and preferred to go to a bank for the loan. He said that turnover in town staff could “confuse things” if the town was repaying itself, but a bank would keep them on track. He was the lone dissenter when the board voted on the resolution to borrow $190,000 from itself.
Another discussion ensued about the propriety of repaving Reservoir Road without a separate bidding process. Murphy wished that Morris had gone back to the other bidders and not just Pike. The town’s policy, however, allows the board to waive the bidding process and several people noted that it was too late in the season to start another RFP; bids would be fewer and higher.
“Were not doing this to save money,” said Murphy. “We’re doing this [having a bidding process] to be clean.”
Murphy and Fuller voted against waiving the bidding process, but a majority carried the resolution and both Center and Reservoir roads will be paved later this season.
The meeting continued with a discussion of the fire department funding situation. That will be presented in a separate article in tomorrow’s Eagle Times.
As your daily newspaper, we are committed to providing you with important local news coverage for Sullivan County and the surrounding areas.