Town finances in proper order, says audit report
Town financial records for the unique 16-month period that ended June 30, 2005 were in proper order, according to the town auditors, Parmelee, Poirier and Associates of Warwick.
The audit report showed numerous account overexpenditures, especially for the town solicitor and the Department of Public Works, but there were more than enough underexpenditures and excess income to offset the extra costs. The net overexpenditure was $192,000. In their report, the auditors did not comment on any overspending.
The audit and the town financial records will be part of the Town Council session next Tuesday, Jan. 17, at which the council will also sit as the Board of Water and Sewer Commissioners.
The 96-page audit report was released at the council meeting this week, but no comments were made on its contents.
The auditors wrote: “as part of obtaining reasonable assurance about whether the Town’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance which could have a direct and material effect on determination of financial statement amounts. . . . The results of our tests disclosed no instances of noncompliance that are required under Government Auditing Standards.”
The auditors also said: We noted no matters involving the internal control over financial reporting and its operation that we consider to be a material weakness.”
“Material weakness” was defined by the auditors as “a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in the amounts that would be material in relation to the financial statements being audited may occur and not be detected in a timely period by employees in the normal course of performing their assigned functions.”
Among other business at this week’s council meeting, Councilman William Kelly asked about the pattern of high monthly billings by the town solicitor. Kelly was concerned that the pattern could be a forewarning of another instance of account overexpenditure. That account last year totaled $174,000, when only $105,000 was budgeted. The account for the current year was set at $95,000, because of some expectations that legal costs would be less.
Town Solicitor J. William W. Harsch told the council this week that some costs have continued, especially the $1.1 million suit the town has against Siegmund Associates of Providence, the engineering firm the town fired from its $7 million sewer-work contract in 2004. Siegmund has a $50,000 counter suit against the town for unpaid contract costs. The case is currently going through arbitration.
Harsch also said that some unexpected extra costs involve the resignation of Town Administrator Mark Haddad in mid-2004, and the subsequent extra work needed to advise both the interim administrator and the administrator search committee.
The town solicitor also cited extra costs to help the town fire department and the ambulance association, now called Jamestown Emergency Medical Services, to develop new documentation about services and property tax exemptions for the volunteers who serve on those organizations. He also attributed higher-than-expected costs to meeting the challenges posed by the relatively new high groundwater regulations, with the work being done by associate solicitor Lauriston Parks.
Despite extra costs, Harsch also suggested that the high billings represent a non-repeatable “bulge” because billing had backed up but was now being updated.