TOWN OF WALPOLE
MEETING OF THE SELECTBOARD
2016 FINANCIAL AUDIT
OCTOBER 26, 2017
Selectboard Present: Peggy Pschirrer (Chair); Steven Dalessio; Cheryl Mayberry
Staff Present: Rich Kreissle, Tom Goins, Sarah Downing
CALL TO ORDER: Mrs. Pschirrer called this meeting of the Selectboard to order at 5:30 PM in the Walpole Town Hall. She advised this meeting is being recorded. There were no members of the public in attendance.
Mrs. Pschirrer advised this Public Meeting was scheduled to discuss the 2016 Financial Audit. Basically it was a good audit. She feels financial audits should be reviewed by the people in charge. This meeting is about focusing on the deficiency worksheets. They are easy to take care of. Some corrections were made from the previous audit. Mrs. Pschirrer found it easy to work with the auditors from Vachon Clukay & Company PC. They were accessible and helpful. If the Selectboard, Manager of Finance and/or Town Treasurer object to something, a letter will be written to the auditors. This Selectboard already dealt with Nos. 1, 2 and 3. They had discussed proper procedures with the Manager of Finance.
The auditors felt the Town had left too much uninsured money at the end of the year. Mr. Goins explained this is collateralization. He had spent a considerable amount of time with the auditors talking to them about PDIP, the $250,000 General Fund and that he got the Savings Bank of Walpole (SBW) to give us collateral. The SBW started out saying “no problem” and they would give the Town up to $4,000,000. Later the CO of the SBW said they were not going to do that because it would cost them too much money. Mr. Goins has an email from the SBW to confirm they negotiated $500,000. He does not know if the auditors considered the $500,000 on top of the $250,000. He had a lengthy conversation with the auditors as he does not feel any town should have to go out and pay for collateralization. Mr. Kreissle and Mr. Goins work together closely and they are committed to having the least amount of money in the General Fund. Mrs. Pschirrer advised if Mr. Goins wants to write a note to the auditors stating he disagrees with this, she would not have any trouble with that. The Selectboard already signed off on their comments. They had adopted procedure PT-004 which collateralizes all funds in excess of $750,000 with the SBW; the procedure was adopted in October 2017. Mr. Goins said it does not speak to the level of collateral; when he wrote the policy he thought he had $4,000,000. He wants to respond and will draft something for the Selectboard to review. Mr. Dalessio feels they should respond with a package. They can revise the three comments they replied to in July. Mr. Kreissle mentioned if they had less than the $250,000 at the end of the year, the auditors would not have commented. Mr. Goins noted they do not have to collateralize PDIP. He wants to be sure the auditors know what the Town did. The auditors will continue to write us up unless there should be dialogue that a decision was made to not pay for collateral. There was discussion relative to asking for a waiver. Ms. Mayberry pointed out the auditors are going by a standard set of rules. They are rigid with their rules and recommendations. Mr. Goins does not feel an adverse report is good year-after-year; he would try to make it go away Mr. Dalessio feels the question to ask is how does the Town stop this. Mrs. Pschirrer noted there are many favorable comments in this audit. Mr. Kreissle pointed out if someone were to come in to look at the audit they would see the adverse opinion but would also see the over-all favorable comments/opinion. Mrs. Pschirrer is in favor of trying to talk to the auditors about how an adverse report can be eliminated. Mr. Goins summarized it makes him and Mr. Kreissle feel they made a big mistake but they have not done that.
No. 4 is the Library credit card issue. Mrs. Pschirrer will take the auditor’s notes to show members of the Library Board. They use the credit card a great deal and pay the credit card bill from their checking account. Mr. Dalessio would like to see their written procedure step-by-step. There should be a deadline date when this will be done. Mrs. Pschirrer will bring this up again with the Library Board. They are Town employees.
No. 5 is an audit of cash. Reconciliation and trial balances at the year end. Mr. Kreissle advised this has been a battle since 2011. There was an inaccurate conversion in 2011. They would like to identify different pieces each year. He is aware of this on-going process and both he and the auditors will continue to work on this. They are looking for the variance; is it consistent. If so, it gives the auditors a lead. Mr. Dalessio summarized this is an on-going process and the Town of Walpole and auditors are well aware of it. Mr. Goins mentioned there is no allowance for doubtful accounts. Mrs. Pschirrer has spent hours working with Mr. Kreissle and Mrs. Karen Galloway on unraveling the Hooper items because the auditors found discrepancies. They continue to work on this.
No. 6 is various cash disbursements. The auditors concluded there are opportunities to strengthen controls. They noted 36 instances of expenses and expenditures without approval of purchase, account coding, supporting documentation and discrepancies in the total amount. Mr. Kreissle feels this is going away because he implemented and explained his new procedure. Mr. Dalessio noted there are still invoices with no purchase orders. Why are Department Heads purchasing without purchase orders? Mrs. Pschirrer said there is an inconsistency from one department to another. Where do they want the mail to go? It arrives in this office first. Mr. Kreissle thought when Mrs. Daigle opens the mail the invoices get put in the appropriate boxes. Mr. Goins noted the Accounts Payable person, who is Mr. Kreissle, should not pay a bill unless he had a purchase order or receiving report and an invoice. Mr. Kreissle is now doing this. Mr. Dalessio mentioned invoices should have a purchase number on them. Mr. Goins felt this will go away with this process. Mrs. Pschirrer will discuss this with department managers during the December Staff Meeting. The Recycling Center is the only department without a part-time administrative assistant, who are a big help.
No. 7 is payroll processing from various payroll transactions throughout the year. There are opportunities to strengthen controls. A total of 52 deviations were noted of areas where controls can be strengthened. These include incorrect pay received, missing signatures from employees and/or department heads for approval, inaccurate hours reported on time cards, inaccurate hours paid to employees, invalid documentations or unavailable documentation of rate of pay and check information not matching against check cleared on bank statement. Mrs. Pschirrer mentioned department managers have been reminded of this and will need to continue to be reminded. Mr. Kreissle noted some of these are department manager issues. Ms. Mayberry said if there is a discrepancy they need to correct, they should put it aside and write a note advising the department supervisor to come in to sign or take care of what needs to be corrected. Mrs. Pschirrer summarized they are working on it and it continues to get better.
No. 8 references credit card activity – noting an opportunity to strengthen controls. Mrs. Pschirrer mentioned needing a procedure. She would never pay a bill unless the receipt has all the information on it. It needs to have the name of the person who used it and who was involved.
No. 9 is the result of examination of water and sewer activity noting an opportunity to strengthen controls. Mrs. Pschirrer pointed out they have done a lot on this during the current year. It is doubtful they will find anything wrong this year.
Mrs. Pschirrer started to do a summary. They are working on No. 4 through 9. Mr. Goins will send the Selectboard an email on how he would address this so a letter can be written to the auditors. Mrs. Pschirrer said they will then know the Selectboard is paying attention to the comments.
Mr. Kreissle advised there is good news. There has been a question about the MS-434 and the TransCanada money; this does not go against the budget appropriations and does not need to be included in the MS-434. Mr. Goins noted that $97,000+- was transferred from the Conservation Commission savings account into a PDIP account.
Mr. Dalessio asked if the Capital Reserves were in PDIP would they have to have a special meeting to take money out. Mrs. Pschirrer mentioned if the Trustees of the Trust Funds had all the paperwork, they would contact Cambridge Trust and a check would be issued. There were no special meetings when funds were withdrawn for the Fire Department, Fall Mountain Region School District or the North Walpole Village. Mr. Goins feels PDIP is just another place to put their money. Mrs. Pschirrer feels Capital Reserve funds are the same; when needed the funds are spent. It depends on whether or not the Town has adopted RSA 41:14. The Town should also adopt RSA 35:15. More interest is earned in a PDIP account than a Capital Reserve fund.
Mrs. Pschirrer declared this Selectboard meeting adjourned at 6:24 PM.
Regina Borden, Recording Secretary