January 26, 2026 – Audit Committee – Video & Transcript
January 26, 2026 - Audit Committee
Yep, we've got everybody.
We can call the meeting to order at 5.02.
And I know we have some AI tools that are being used to help us with minutes.
And Klaus, you've done a great job getting those tools up and working.
So as far as the minutes for today's call go, is a process up and running for UT on to give it a shot? Well, so here's what I propose is that I've asked the town to provide the transcripts to both myself and to Yuxian. And then to the extent that Yuxian needs my help, I'm available. But so for the time being, I think we'll be jointly responsible for doing the minutes, if that works. Okay, yeah, when the AI generates the minutes, so you can send to me, I'll look at it, and I'll get any questions. I'll work with you, and hopefully we can start to... I think that works fine. So the transcript will get sent to me, and I'm going to run it through my co-pilot, and then I'll transmit that to Yuxian, and he can finish the job. Okay, yeah.
Sounds good. And I will now review the agenda for the public. The main objective today will be just discussing the FY25 ACFR with Alina, and then we will vote to approve the minutes of our last meeting on the 12th, discuss any additional topics, and adjourn. Yeah, so are there any public comments?
Hey, Brian, is the TM going to join us or not? Yeah, that was my understanding, Klaus. I have now heard differently. Okay. So when he tunes in, we'll give him the floor? I suspect yes. Okay.
Okay.
Well, I think we can just move on to the discussion of the ACFR. Alina, I'm happy to share the presentation if you'd like, or if you would go to the screen. Oh, thank you. That also works. Well, thank you, Michael. That would be helpful if you can share the presentation.
Thank you for having me for the discussion of the Fiscal Year 25 Annual Comprehensive Financial Report, and I figured that a PowerPoint of summary highlights would be helpful in going over that. So our agenda on the next slide would be the overview of the audit, overview of the ACFR, and update on the prior year management letter comments. And I just want to clarify that the management letter, both in the prior year and in the current year, was a verbal management letter. So the standards require that any significant deficiencies or material weaknesses would be formally reported in writing in either the management letter or the governance letter. And we have considered both the control deficiencies as control deficiencies and not elevated to a significant deficiency or material weakness. So that's not necessary to be reported in a formal management letter or governance letter. But we'll go over the comments further down. We'll start with the next slide, I believe, is what the deliverables. And our deliverables are opinions on your financial statements. And as a typical independent auditor report on the local government, the opinion is on a basic financial statement, and there are multiple opinion units. Those don't include the management discussion and analysis or your other required supplementary information, because all of that is considered required supplementary information, including general fund budget versus actual pension and up-up schedules. And that is not required to be audited. Those are unaudited statements. And the final deliverable is the governance letter. We are not in the process yet to issue the remaining deliverables, the single audit or the school deliverables. They're still going on right now. But currently, we have issued the opinion on ACRA, and we have issued the governance letter. On the next slide, we just have a brief slide here on just simply stating what the audit process is, and that's basically performing procedures to obtain audit evidence that the amounts and disclosures in your financial statements are materially fairly stated. This is financial statement audit, not an internal control examination. So the opinion is not on the effectiveness of the town's internal control. But we do obtain checks and balances checks on our part. We have done a brief performance of a walkthrough annually over every internal control cycle. We also sampled all the cycles, vendor, payroll, journal entry, we've done that, and done that type of testing to basically have a good understanding of what your controls are. And on the next slide... Can I ask a question? Oh, of course. So you don't do an opinion on the effectiveness of the town's internal control. Does anybody ever do that? No, not in a financial statement audit. No, that would be a separate deliverable, like a separate contract for either internal control examination or doing what they call agreed upon procedures or an account, a specified element account type of examination. So basically whatever is agreed between the town and the auditor, there could be additional contracts for additional services. But the typical financial statement audit has an opinion on whether the amounts and disclosures are materially fairly stated. And so this is right off the independent auditor's report. If you read it, I think that kind of summarizes on what the financial statement audit is. The reason I ask is that one of our deliverables are suggestions that the town look at certain issues. And I'm always looking for ideas that we could propose in our letter to the select board, which says that, you know, in addition to all this stuff, we recommend that the town consider or recommend that the town do this. Okay. And I was looking for ideas from you on what are typical, you know, what might be an out-of-the-box deliverable that people would ask for. The only idea that I came up with this year is that, and I think I've mentioned this before, is that the town has, I don't know, roughly $20 million worth of assets or funds, or maybe more, I forget how much, but just about 90% of that stuff is in cash. And I would seriously like somebody to look at whether we're doing that job effectively. And this is not in your department, but it's an example of something that I might propose that we would propose as a committee to the select board, you know, that we make sure that somebody looks at the degrees of freedom that we have for investing town money, which is a lot of money. And if 90% of it is in cash, you're not getting a big bang for your buck unless you absolutely have to put this stuff in cash. Okay, so that's an example of something that I might propose at the end of our cycle that we recommend to the select board. The reason I brought this up is I wondered if you have some ideas that, you know, other entities have asked for in the past that would make a good, you know, a good thing to look into. And it would only be proposed by a group like ours who have a vested interest in making sure that town does things as efficiently as possible. I don't work with CBIS Advisory Services, which is another subsidiary of CBIS. We are subsidiary of CBIS CPAs. Now, I do know that a lot of the contracts they get from towns for those separate services are either reviewing their internal controls. Sometimes they put it in charts and graphs and flow charts to help the town basically have it in writing in a way that is easy for them to see how their workflows work. So I've seen, I've heard of those type of services. I've heard of a department, for example, if they would have a certain concern that there would be a specific project to look into a particular department, if there's a concern with segregation of duties in, for example, in munis, that they would be looking into items like that. I have not heard of looking into investing, cash versus investment. So that would definitely be a unique one. I have not heard that anyone hire those type of advisory services for that particular reason. So that would be unique. And I know that MGL has a lot of guidance on, well, more than, I guess you'd have to go by it on the different types of cash investments, whether it's stabilization, your school lunch, or various type of funds on what they can be invested. And I know that a lot has to be liquid and there's some other things that come into play. So that type of project sounds like it would be looking into that in comparison with compliance with MGL and how that would work. So I have not seen that. So I would think that that would be a unique type of a request. Yeah, I wasn't really asking your opinion on that. I would guess that we would be getting some other type of consultant to look at that. I'm just asking your opinion for what would be a fruitful avenue to pursue in addition to the work that you do. That's all. A lot of times the one that we recommend the most would be internal control checkups, meaning, because currently you don't have a person that strictly just does internal audits. So it would be a project to do an internal audit. You know, I've seen some that would have picked, say, a department on account on a quarterly basis or annual basis and do that type of work. What I would consider is hiring an external contractor for an internal audit over either a department a year or an account a year. That is the most common, I think, the most helpful too because one thing that I think is lacked in cities and towns is that internal audit function. That's typically not a common position that is inside a town. So that's typically something that if the town one's done, they usually hire somebody to do that. Okay, good idea. So on the next slide, GASB statements. This year, one that was new that required to be implemented was GASB 101. That was compensated absences. Now, the reason beginning balance changed by almost $4 million, and I just want to also clarify here that that change had nothing to do with your governmental funds. For example, your main fund, general fund, the only thing you would put there for compensated absences is what you already know that you're going to pay out for. For example, as you know, retirements are coming up in the next year, what you're going to pay. So anything else is just on the government-wide. So this affects accrual funds, like enterprise funds, and government-wide. So the reason why there was an increase of almost $4 million, and I just have to say, Brian did an exceptional job with implementing the standard. The biggest change was SIC, accrued SIC, because the old GASB, GASB-16, said that you have to be vested to be accruing that, where the new GASB just says that it doesn't have to even be a cash payout. But more likely than not, if an individual takes their SIC in future years, you have to accrue it. So basically, if there's over 50% chance that those employees will continue taking their SIC days, then that liability has to be accrued. It's not like in the past where you would say accrue it, and then you would only multiply it by 25%, because you think 25% will retire the town. None of that comes into play anymore. So that's why that increased. There are some other GASBs for sure that are in the works, and there are GASBs still busy, and there's more going on. But the good news is, well, some considered good, some not so good, because there are some things that were not clarified, because GASB-103 got cut down. So GASB-103 was supposed to be a major overhaul of financial reporting, like GASB-34 was back in 2003. But it was drastically cut down because citizen towns expressed their concern of having such big GASBs coming out and the ability to implement them all. So the only big change in GASB-103 is really the presentation of your enterprise funds. I mean, there's other things in there, like making sure MD&A is not boilerplate, that it's tailored and more meaningful, things like that. But for how balance sheets and income statements are presented, it really affects the enterprise funds. The governmental funds have not changed. Originally, that was supposed to be the biggest change, but that got cut out of the final GASB-103. And we can go to the next slide because, you know, you're probably going to be bored with all the GASB projects going on. One quick question on GASB-101 is, for other towns that adopted GASB-101, do they also kind of see a decrease in that position? Massachusetts, absolutely, yes. Because one of the reasons it got implemented is the inconsistency of application between states. Other states, we didn't really see an effect. But Massachusetts consistently only accrued sick based on vested amounts. So they also, pretty much all of them, saw a significant increase in liability and thus decrease in that position. And then your financial statements include, of course, opinions, which are unmodified, meaning nothing was needed to be made to your financial statements to get them to be in conformance with generally accepted accounting principles. Management discussion analysis, which talks about the financial highlights, follows that. And then you have the accrual basis of financial statements, the government-wide, which is the consolidation, and then the fund. Now, the fund financial statements, the governmental funds are not accrual basis. They're modified accrual basis, which is closer to cash basis than accrual basis. And then, but enterprise funds and fiduciary funds are accrual. Then you have notes, then you have RSI. And of course, I want to compliment you guys. And thank you, Brian, for doing such a great job every year that ACFRA had had a certificate for excellence in financial reporting for many years now. And it does include additional parts that basic financial statements would not have, parts like introductory section, statistical section, and then individual fund balance sheets and income statements. And then the next slide. And this is just some financial highlights of your ACFRA. This talks about if you are following the ACFRA as well. That one is page 30. That's coming from the balance sheet for governmental funds at the bottom there for unassigned fund balance and assigned. So the capital stabilization that you have because it has a purpose for capital, that one is included in assigned fund balance in general fund. And then you'll see that your unassigned fund balance on that governmental fund balance sheet in general fund is 17 million. And those two categories there break it out. Your typical general fund operating has 12 million and then your general stabilization because it doesn't have a specific purpose of 5 million is also included in unassigned fund balance. And you could see that this is a three-year comparison that it's been steadily increasing. It has a nice upward trend in that fund balance.
And then on the next slide, we have a percentage just as a comparison of what unassigned fund balance in general fund is as a percentage of total revenues. Those total revenues exclude the growth from Massachusetts teachers' retirement system. But that percentage is... Yeah, to put that in perspective, I do remember that the Moody's AAA, their preferred number for AAA is 30%. You remember that one, Brian? Yeah, actually, it changed recently, Klaus. Moody's also is now going forward bringing in the fund balance of the enterprise funds and the total calculation of fund balance. So the minimum they would ever be looking for is 25%. And I've had numerous conversations with the selectmen about this. So all of the enterprise funds, the water fund, the wastewater, you know, the transfer station, the fund balance of those respective accounts is now considered and calculated into Moody's overall percentage of fund balance to revenues. So it's become problematic. Whalen has held their own around 20%. Yes, I remember the 20%. Yeah. And we still got the AAA, even though we weren't at the 30%. Yeah, right. So having these other enterprise funds now considered just makes it more problematic to make sure that these other accounts maintain positive cash flows and revenues and expenses each year. And so the budget of these becomes very important. And I've gone over this, at least two meetings with the selectmen on this. Okay. So is there a plan to get up there?
One of the plans was to have the, well, one of the discussions was, was to have the board of selectmen be more involved in the water rate settings that transpire. So that was one of them. The other one really is the transfer station. As you know, there's a study going out close on that because it's had declining revenues. It's really only supported by a subsidy from the general fund, which was only supposed to be temporary, not permanent. We're heading into the fifth, going on the sixth year of giving a subsidy, which is the general funds fund balance and giving it to them and they're spending it on expenses. Now you can do that with an enterprise fund, but it wasn't supposed to be a long-term deal. So hopefully that this study will give some good recommendations on what to do with that. You mentioned the transfer station. I made a note.
Yeah. One of your exhibits, the expense of the transfer station from $24,000 to $25,000, it went from $900,000 to $500,000. Why does an expense go from $900,000 to $500,000? What was the magic to get that done? Can you repeat that again, Sloss? Yeah. On page 18 of the ACFER, there is an exhibit that shows expenses from $24,000 to $25,000 for various lines and the transfer station expense goes from $900,000 to $500,000. I was just wondering how that magic happens. I'd have to go back in. They were around in a $500,000 operation. I'd have to go back and look at that. There must have been something specific to that year. Right. $900,000 seems odd. That sounds like the wastewater fund. No, it says transfer station. Yeah. In total expenses? Yeah. Yeah, I think that's the headline of it. If I can put any perspective in that, so that is accrual basis fund transfer station and a lot of times the way the allocation by OPEP or pension is to that fund on the annual basis can really skew the comparison.
You know, I'm just curious because I am on that group that's going to look at contracting with town-wide trash hauling. So I'm just on that group. And I was focused on that number. I was very curious how you could get from $900,000 to $500,000, unless you're trying to make it look better than it really is. I'll talk to Brian about this. Yeah. And Brian, I can also quickly check to make sure there's nothing skew in it and just send you an email to make sure that it's not in line. Okay. That is, you know, strictly your typical expenses there. Well, thanks for pulling it up, Michael. Yeah, no problem.
Okay. That was great conversation on the slide. So we can go to the next one. Budget versus actual. So the revenues and transfers in. By the way, just one more comment on that. But I'm not at all sure whether Moody's would ever take, you know, would ever knock us down. But that would be a very, very significant expense if ever we try to borrow money. But right now we're doing a AAA. And if we go to the AA, it's going to be much more expensive. So I'm just saying this is very important. And it might be something that we raise with the select board, even though they've heard it before. But we might put in our two cents and say, you know, let's make an effort to keep this at least at a minimum where we're still AAA.
Okay, that's it.
Thank you. So that $1.7 million, a big part of that is investments in access of budget of 1.2. And, you know, it's vice to budget conservatively for investments, for expenditures. It's 2.3 in access in total turnbacks. And if you guys are looking at the ad front, the budget versus actual starts on page 80. And their detail for expenditures starts on page 88. So starting on page 88, you'll see that unclassified because you have reserves in there, but also public safety had a big turnback of over $500,000. But the biggest part of that, over $306,000, was turned back in police personnel costs. And then you have use of fund balance for capital. There is a lot of capital that was funded by use of for cash. Some of the bigger ones were the answering the point system, the PSAP for police for $300,000. There was $210,000 for IT, for video monitoring. There was $200,000 for DPW heavy equipment. And then there was a lot of smaller equipment that was on that list. So why does the use of fund balance for capital reduce your, I'm sorry, budget versus action? That's a great question. Yes, that's a great question because that's just using prior fund balance. So you don't have actual revenues offset in that. So you're not raising the revenues for that equipment. You're using what you had in surplus in the prior year. But doesn't capital count as a net?
Like if you use fund balance to create capital, isn't that just offset? Or what am I missing here? Variance, budget versus actual. All right, nevermind. We're not talking net position here. We're talking difference. Okay. If you bought that cap, you know, you bought that in expenditures there. So that's where it was budgeted. So that was used there. It goes against that line. On the revenue side, on the revenue side, it shows as use of fund balance, budgeted $2.6 million, but actual as zero. You would have to plug it basically. I call it a reconciling item because it's not real revenue. So you would call it a budgetary reconciling item if you want to handle it that way. But the reason actual revenue says zero, it's because it was included in prior year fund balance. And new revenues were not raised for this.
And then on the next slide,
you didn't have any new debt this year. So it continued to decrease there. So that's just your bonds and loans payable broken out by business type, that smaller portion, and then governmental, the bigger portion, and the trend for three years. So nothing new there. And then on the next slide,
Middlesex County Retirement System. And you guys know well, because you know pension extra well. So you know that could be up and down due to timing difference. Now, this measurement date is December 31, 2024. That year, calendar 24.
And I wouldn't go by that in the future because this is just timing difference. But in that year, there were projected investment earnings of $149 million. And the actual investment earnings came in at $182 million. So basically, if they come in and access what they project, it does get amortized about five years, meaning it reduces the net pension liability. So this is just a timing difference. I wouldn't think of it as it's going to go down. Right. Well, I'm sorry. You said that the investment earnings were like $40 million bigger? Yeah, they projected $149 million, but they came in at $182 million. All right. So $30 million. So you can't take that all at once? You have to sort of... Well, it reduces the liability all at once, but then it gets amortized over five years. That's the key. You can't take the whole $30 million all at once. Right. Into helping with the pension expense. Right. Anyway, it'll help you. It'll help towards in the future. You expect that... Yes. Yeah. So this looks good. Yes, because of the timing, because of the investments. Right, right. And then the next slide seems like... By the way, one more thing. One more thing. In the ACFR, there's a couple of times when I saw a calendar year 2024 with respect... In the pension section. And I was just wondering whether that was a typo or whether that was real. And, you know, I think, you know, I just don't have any idea how that, you know, that just... That's complicated for me is to figure the difference between, you know, the measurement date and the date of the valuation. I never really appreciated it, but it says 2024. I want to make sure that that's really... It meant to say 2024. Yes. And that's on OPAP. Can we go to the next slide, please, Michael? I appreciate a clause you found that typo because when you sent those edits, I narrowed right in. I knew exactly what was wrong and that one was wrong. So it should have said 2026. So basically what it was saying is that your liability, the net of OPAP liability is determined based on the fact that you will contribute $550,000 a year. But it said will, you know, expected to contribute. So if you're saying will, then you should say from 2026 and on. And I'm sorry, in a standalone OPAP financial statement, so we do say 2026, but somehow in the ACFRA, we did make a tap on say 24. So it's always there about $550,000 contribution is always there. For example, in fiscal year 25, it was $500,000 from general fund. It was $19,000 from a few special revenue funds. So it's always about that. But that sentence was saying is expected to contribute from, so it should have said 2026 instead of 24. So it's the way it was written. So we'll make sure that, you know, OPAP had that correctly. I mean, this one, ACFRA was already filed. So I'm sorry that we made that typo. And then, and then that, oh, no, I haven't talked about OPAP yet, sorry. So this one is different, of course, because it looks like it went up while the pension went down, but this is your own OPAP plan and it's really just a discount rate because the discount rate that was used in the previous year was 6.97. But for this liability for 6.3025, it was 6.25. And you guys know even a slight change in the discount rate, it does, it can significantly change the liability. So, so there was a, it did go down from 6.97 to 6.25 for discount rate. So that's the reason this one increased. That helps because I was curious why the, why the net liability went up. Yeah, yeah, it can be odd if, you know, the swings definitely can be odd in pensions and OPAPs. but, and on the next page, let's see what we have. Okay, so this is the management letter comments as I mentioned earlier that they are verbal. So last year we were pleased with the, all the projects that was made on the cash reconciliations and we were pleased that the 130,000 remaining cash reconciliation was pretty much identified to student activity funds and it's been the same one for many years. So, so we just wanted to make sure that it just had some kind of a resolution to it this past year and there were a lot of them that were identified the progress has been slow and then there's GASB on the one. So, on the updates for current year adjustments has been made to munis so the reconciliation that we audited for 63025 was reconciled so it did not show any significant variances. so, so that has been adjusted and it's now in the past and then guaranteed deposits we met with departments I believe it was October 12 our team sat with all the departments so conservation is definitely the biggest one that's you know it's really been struggling with that and just kind of frustrated all the things that happened in the past that caused that conservation didn't have current year activity because they don't even take guaranteed deposits anymore but but they still have such a huge liability last year fiscal year 24th they had 323,000 outstanding fiscal year 25 they had 291,000 outstanding so they did make some progress it did go down from 323,000 to 291,000 and it's all because they made progress because there was no current year activity but they just had so many obstacles the biggest one is lack of documentation for old balances and just clean up that's needed some memos they have in their folders that say the funds were forfeited so it just needs to be taken to revenue and then they sent some letters but they had no responses so they just need to keep following up over that and again with those things they still had some lack of documentation of who exactly should it
struggled the most with that planning was the second biggest one with the balance that went actually increased but they have activity but planning increased from 238,000 to 244,000 and that's another one that needs help cleaning up like they had some gifts that really need to be taken to revenue they're not going to deposits they have one property that is possibly in bankruptcy so they
there so I'm not sure why I put building because building is the smaller balance 56,000 the two big ones are conservation and planning what happens if you can't resolve what's the end game that was discussed because Kelsey she was really
these two big ones there has been conversations if there is really no documentation can we use the statute of limitation can we say that these are too old the time has run out we cannot take them to revenue and I thought that was all good conversations I mean I think you could use the statute of limitations but obviously I'm not in the legal field but there
balances and there is nothing to find the owners or find documentation on it this is Linda from conservation oh hi Linda I remember talking to you I guess this is the first I heard that there would be a statute of limitations I guess with my conversations with our town council it was we need to we need to we're going through a second round of notifying the applicants that of refund or their performance bond no I would definitely do second third whatever you can do to exhaust all your methods because I can say that but please don't go by me because I not a legal person plus Massachusetts also has that abandoned property division that has
contact people again so many of these are so old we don't have the records anymore there's no financial records we have no idea who wrote the check we don't have any canceled checks this was done by my predecessor and he didn't keep very good records so we're really in a loss as to how to move forward on some of these because if we can't find the
some sort of advertisement like the state does I really don't know but that's the next step but again we just keep running into the biggest hurdle now is not having the records for this anymore for some of these that are so old I
know doesn't seem like the town managers on it I don't know if you know Brian I know Brian you did a lot of work on all this and I don't know if you're familiar with any recent I know we talked to the town manager's office in October but if there's anything else that came out of that nothing since then I think Michael McCall may be on the call not the video I here in the past what we had done we had we had hired someone on a part-time basis to go through some of the files and the system we're building and Robert Hummel has been doing some work I have to get one thing in the planning board on the agenda for the select board to accept some of these as gifts ones that we verified assuming Linda can notify these people on her end we could do something similar so it's going on in the background we may have to look at hiring somebody but it's hard to find somebody with that type of special I guess almost forensic skills we coincidentally had a part-time college student who did that type of forensic accounting that worked or had some skill in that area and they were able to go back and do some of
something again like that and tighten up these last years thank you for that yeah Michael while we have you on the call I did notice I went to the website the audit committee website and the three members of the audit committee every one of our terms is up
my invitation that you might be try to recruit some new blood yes thank you what I would also suggest I'll mention that to the chair when we meet on Wednesday to go over agenda for next week you might want to shoot her quick email and
have on other boards and things to help people to participate it's a new year a lot of people want to try something different in the new year ask people who want to get involved so thank you for letting you know well I did see your newsletter and I've seen your request for recruits so I I'm glad that you're doing something I'm just raising the volume a little bit because it might be more urgent than we think understood I'll fire off an email to the select board chair right now and just give that reminder that we have to start looking for some people not only to fill the two but ensure that whether the three of you want to serve but make sure there's a appointment for attend the two well it turns out the two of us have to do the minutes and I believe this is the last slide on my presentation Michael yes so I'm just going to turn it over to you for any questions so I just want to
2024 instead of 2026 but it's not worth resending it to GFOA because of that one not at all only reason I ask is that I thought I found a couple more but they're not that important and I looked through the model class and it could have been worded better for example instead of saying budgeted revenues on a budget basis because they don't agree to what the revenue show on the income statement so there are
had was related to internal controls I know we spoke about it a little bit earlier and I think you had mentioned that there were some controls that may have had deficiencies but they weren't at a point where it needed to be mentioned so just in terms of internal controls how would you say Weyland compares to other towns and are there any specific areas with internal controls that might make sense for an internal audit or someone to come and look at It compares really well I mean that your controls are really good so I think you do better than a typical town because I can't even think of the last time we came across obstacles when we did those types of testing I
I haven't come across any of that and our team hasn't recently so there's nothing of concern that was brought to our attention it seems like the controls were functioning pretty well this past year so if you are thinking of a department or account there's a lot of ways you could look at that you could scan somebody's JL and see if there's anything that didn't make sense for purchases or have another way of maybe inquiries with various people and see and comparing their responses there are other ways you could identify how you want to select and which department to start with but without having that the bind in front of me I can't think of one that would be of particular concern so I did have one suggestion in the future like on page 19 on page 16 it says the fund balance went down by nine million dollars now it doesn't say you know I thought that was such a big number that it should have had a reason or it should have referred you
a suggestion just a minor nit okay yes that is a great question because it would be helpful to put the responses right there not oh thank you for pulling it up not everyone puts it right there because they put financial highlights first and then go into
were a bit baller plate and comparable to each other instead of you know standing out with their own unique MDNAs particularly the big ones that they've been talking about was particularly talking about underlying reasons they want to know more about the underlying reasons so that GASB would require improvements like that anyway for 63026 for it to be implemented so that's a great point and with conjunction of the new GASB you definitely should expect to see that in the next year's MDNA I don't think I have any more questions does anyone else have questions okay it looks like everyone is all set well thank you so much for giving me the chance to present it and thank you that it's Zoom because a few feet of snow outside so thank you thank you Alina thank you Alina you guys have a good evening you too okay approve minutes of the January 12th meeting Klaus I know you sent those over and then I and you had yeah you had some corrections and I thought that was great I just sent some minor updates in blue so just to put in perspective Brian and UT on most of the most I sort of copy and pasted a lot of what the AI my AI program suggested and it turns out it was a little informal in space in spots and so Michael just dialed it up a little bit and created more formality so that's basically why he caught that which I hadn't caught you know anyways most of this was very easy to go from the from the from the AI summary to the to the final minutes so that's a good thing I think it'll it'll help a lot yeah I think it did a good job kind of summarizing and and everything so it seems pretty helpful so I mean I'm the one who wrote the minutes so I think one of you guys should make the motion I'll motion to approve the minutes by second aye aye aye those are good one
there's been any updates on the RFP and then also discuss our annual reports that we're going to be working on so well with the RFP Michael McCall did review your recommendation as well as looked at the pricing and I believe he's going to be sending a
I believe he's working on our formal letter to send that out informing them that they won the RFP and we're going to be getting hopefully a contract soon from them and sign up and make it formal that's correct Brian and I and Chelsea met the other day to go over the scoring and the price proposals after the fact I was in the MMA on Friday and having been in the office we probably would have completed the letter and sent it out today most likely we done tomorrow that sounds good for our annual reports I know we have two of them one of them is to the select board and I think we
might have for the select board today and it sounded like Alina might have a suggestion for like a departmental internal audit one time per year or something like that over internal controls or different processes but it also didn't seem like she had any concerns over internal controls but I mean I do kind of feel like it would be valuable to just have someone else take a look at them just they don't really get looked at too much I completely agree I believe that this is the one area where we add value I'll remind you guys that three years ago we recommended that somebody fund a report to look at the transfer station mechanics and that is actually happening right now so I feel good that we proposed that and somebody acted on it and I do think that one of the value one of the way we add value is is to come up with suggestions that are relevant for an audit committee and draw on the expertise of an audit committee which we then propose to town management and that's one of the ways we add value and the annual report that you mentioned is not due until sometime in June or July so we have lots of time to do that but I would suggest that I'm certainly going to try to ask people what they think we should be asking for and I think you sound like you're on to something so you might want to flesh out that idea and then we can discuss it at a later point when we actually write our report and I know Brian might have some ideas as well and maybe Michael McCall has to me that's kind of where we can add value otherwise we don't do much yeah I agree Brian are there any areas that you think might make some good recommendations I really have to think about that Michael you know I know in the finance area we we have departmental policies for all different things that we do off hand I can't think of a department that or process it would be subject to where like like Alina said it was called an agreed upon procedure they would look at a specific process but I guess Michael McCall and I would have to get back to you on that if there's something some area of the town we wanted to take a look at and we did independent of your suggestion in this past year Brian and I members of his team the assessor the treasure collector worked with the select board to put together financial policies written financial policies and we did that with the guidance from Department of Revenue Division of Local Services where they came in and evaluated a lot of our processes and looked at what we were doing what we needed to prove upon and helped us codify that so those were just adopted by the board a couple of months ago so it's incumbent upon us now to ensure that people are following them but in general people are so that may address some of the concerns that we have to make sure that we
Moody's when they looked at us that we needed to have proper processes and controls in place and just Michael let me explain why I mentioned the my comments about the large amount of cash my background is among other things I was a CFA so I'm very
such a large amount of the town fund in cash it raises an alarm and make sure that we're doing and there's no reason to think we're not doing it correctly but I just want to make sure we're not leaving money on the table and so that's I just wanted to explain that understood I think Brian might be able to help me with this if I'm not mistaken I thought Brian if I have a call Moody's actually likes seeing that they like the fund balance what I what I'm I'm asking about the what the constitution of the fund balance it's got a large large amount of cash which earns zero whereas bonds will earn a lot more so I'm only about the degrees of freedom that we have for investing the money and I'm concerned that we're not being prudent in investing the money by putting too much in cash and I have no reason to think that other than
happy happy to look at it yeah so basically let's assume we had a hundred million dollars on the balance sheet I'm going to take a look I've got the balance right in front of me 99 million dollars well you just saw OPEB at 42 million dollars so OPEB or 42 percent is in is in print so that money is invested in equities in all kinds of you know liquid not liquid but basically in the stock market then you have the trust fund which is about another 10 million that's invested with Bartholomew out of Worcester and they do the same thing they invest that money in the stock market to bring back as much return as they can unfortunately with governments we're bound by mass general law where we can
would be the most aggressive of those is MMDT which is a state run program similar to print however they only really take your money they pull it into CDs treasuries money market accounts so we're bound by mass general law on where we can put the money like I said the most aggressive of those would be MMDT last year in the presentation you the investment income had a very good return part of that was because we had borrowed money to do the COA building and there was delays in construction and what we did was we took out we looked at either CDs or treasuries and we opted to take the CD and we invested the money because it wasn't being used for construction we ended up
so we put it into CDs so unfortunately there's only certain areas we can put money that relate to the general fund enterprise funds capital stabilizations is the one where we do a lot of work with Rockland Trust we do a lot of bonds with them CDs treasuries so the treasurer has to report all the cash to do our every year in
it is simply checking the box that we give it to them but Alina does look at our deposits when they do come in most of the money that we can invest in equities is being invested in equities meaning the trust funds in OPEB the other ones they're tied up with construction projects they have to be limited to
so the treasurer is very active in soliciting CDs with different people in fact we have MMDT coming into the town to visit with us in a couple of months to go over where they
got great investments and a lot of towns lost a lot of money and the AG had to step in and recover some of that money because some of these municipalities invested in this fund and it was a gray area so the mass AG and I know this because Winchester was a victim of that they lost a substantial amount of money in this investment so the AG did step in and recover some of that money so we are prudent about that but we can always present that again where the money is as of June 30th like I said Lilly our treasurer is very active
in conversation with the folks on the housing trust about CDs that they want to take out they do a lot with village bank doing six month CDs or one year so we actively also work with the committees about what they want to do with their money but again we have to follow the master of law on those I agree I did I think we should probably bring this to an end and take it offline but I noticed I think in particular the capital stabilization fund was like huge amounts of cash and I'm just wondering whether you can extend the maturity on that that's all and let's you and I maybe take it offline and talk about it sometime Michael I noticed John putting on his coat I think maybe looking to end this meeting so I will I'll move to adjourn second yes I'm still in the office I need to drive back which is a big snow I
So as far as the minutes for today's call go, is a process up and running for UT on to give it a shot? Well, so here's what I propose is that I've asked the town to provide the transcripts to both myself and to Yuxian. And then to the extent that Yuxian needs my help, I'm available. But so for the time being, I think we'll be jointly responsible for doing the minutes, if that works. Okay, yeah, when the AI generates the minutes, so you can send to me, I'll look at it, and I'll get any questions. I'll work with you, and hopefully we can start to... I think that works fine. So the transcript will get sent to me, and I'm going to run it through my co-pilot, and then I'll transmit that to Yuxian, and he can finish the job. Okay, yeah.
Sounds good. And I will now review the agenda for the public. The main objective today will be just discussing the FY25 ACFR with Alina, and then we will vote to approve the minutes of our last meeting on the 12th, discuss any additional topics, and adjourn. Yeah, so are there any public comments?
Hey, Brian, is the TM going to join us or not? Yeah, that was my understanding, Klaus. I have now heard differently. Okay. So when he tunes in, we'll give him the floor? I suspect yes. Okay.
Okay.
Well, I think we can just move on to the discussion of the ACFR. Alina, I'm happy to share the presentation if you'd like, or if you would go to the screen. Oh, thank you. That also works. Well, thank you, Michael. That would be helpful if you can share the presentation.
Thank you for having me for the discussion of the Fiscal Year 25 Annual Comprehensive Financial Report, and I figured that a PowerPoint of summary highlights would be helpful in going over that. So our agenda on the next slide would be the overview of the audit, overview of the ACFR, and update on the prior year management letter comments. And I just want to clarify that the management letter, both in the prior year and in the current year, was a verbal management letter. So the standards require that any significant deficiencies or material weaknesses would be formally reported in writing in either the management letter or the governance letter. And we have considered both the control deficiencies as control deficiencies and not elevated to a significant deficiency or material weakness. So that's not necessary to be reported in a formal management letter or governance letter. But we'll go over the comments further down. We'll start with the next slide, I believe, is what the deliverables. And our deliverables are opinions on your financial statements. And as a typical independent auditor report on the local government, the opinion is on a basic financial statement, and there are multiple opinion units. Those don't include the management discussion and analysis or your other required supplementary information, because all of that is considered required supplementary information, including general fund budget versus actual pension and up-up schedules. And that is not required to be audited. Those are unaudited statements. And the final deliverable is the governance letter. We are not in the process yet to issue the remaining deliverables, the single audit or the school deliverables. They're still going on right now. But currently, we have issued the opinion on ACRA, and we have issued the governance letter. On the next slide, we just have a brief slide here on just simply stating what the audit process is, and that's basically performing procedures to obtain audit evidence that the amounts and disclosures in your financial statements are materially fairly stated. This is financial statement audit, not an internal control examination. So the opinion is not on the effectiveness of the town's internal control. But we do obtain checks and balances checks on our part. We have done a brief performance of a walkthrough annually over every internal control cycle. We also sampled all the cycles, vendor, payroll, journal entry, we've done that, and done that type of testing to basically have a good understanding of what your controls are. And on the next slide... Can I ask a question? Oh, of course. So you don't do an opinion on the effectiveness of the town's internal control. Does anybody ever do that? No, not in a financial statement audit. No, that would be a separate deliverable, like a separate contract for either internal control examination or doing what they call agreed upon procedures or an account, a specified element account type of examination. So basically whatever is agreed between the town and the auditor, there could be additional contracts for additional services. But the typical financial statement audit has an opinion on whether the amounts and disclosures are materially fairly stated. And so this is right off the independent auditor's report. If you read it, I think that kind of summarizes on what the financial statement audit is. The reason I ask is that one of our deliverables are suggestions that the town look at certain issues. And I'm always looking for ideas that we could propose in our letter to the select board, which says that, you know, in addition to all this stuff, we recommend that the town consider or recommend that the town do this. Okay. And I was looking for ideas from you on what are typical, you know, what might be an out-of-the-box deliverable that people would ask for. The only idea that I came up with this year is that, and I think I've mentioned this before, is that the town has, I don't know, roughly $20 million worth of assets or funds, or maybe more, I forget how much, but just about 90% of that stuff is in cash. And I would seriously like somebody to look at whether we're doing that job effectively. And this is not in your department, but it's an example of something that I might propose that we would propose as a committee to the select board, you know, that we make sure that somebody looks at the degrees of freedom that we have for investing town money, which is a lot of money. And if 90% of it is in cash, you're not getting a big bang for your buck unless you absolutely have to put this stuff in cash. Okay, so that's an example of something that I might propose at the end of our cycle that we recommend to the select board. The reason I brought this up is I wondered if you have some ideas that, you know, other entities have asked for in the past that would make a good, you know, a good thing to look into. And it would only be proposed by a group like ours who have a vested interest in making sure that town does things as efficiently as possible. I don't work with CBIS Advisory Services, which is another subsidiary of CBIS. We are subsidiary of CBIS CPAs. Now, I do know that a lot of the contracts they get from towns for those separate services are either reviewing their internal controls. Sometimes they put it in charts and graphs and flow charts to help the town basically have it in writing in a way that is easy for them to see how their workflows work. So I've seen, I've heard of those type of services. I've heard of a department, for example, if they would have a certain concern that there would be a specific project to look into a particular department, if there's a concern with segregation of duties in, for example, in munis, that they would be looking into items like that. I have not heard of looking into investing, cash versus investment. So that would definitely be a unique one. I have not heard that anyone hire those type of advisory services for that particular reason. So that would be unique. And I know that MGL has a lot of guidance on, well, more than, I guess you'd have to go by it on the different types of cash investments, whether it's stabilization, your school lunch, or various type of funds on what they can be invested. And I know that a lot has to be liquid and there's some other things that come into play. So that type of project sounds like it would be looking into that in comparison with compliance with MGL and how that would work. So I have not seen that. So I would think that that would be a unique type of a request. Yeah, I wasn't really asking your opinion on that. I would guess that we would be getting some other type of consultant to look at that. I'm just asking your opinion for what would be a fruitful avenue to pursue in addition to the work that you do. That's all. A lot of times the one that we recommend the most would be internal control checkups, meaning, because currently you don't have a person that strictly just does internal audits. So it would be a project to do an internal audit. You know, I've seen some that would have picked, say, a department on account on a quarterly basis or annual basis and do that type of work. What I would consider is hiring an external contractor for an internal audit over either a department a year or an account a year. That is the most common, I think, the most helpful too because one thing that I think is lacked in cities and towns is that internal audit function. That's typically not a common position that is inside a town. So that's typically something that if the town one's done, they usually hire somebody to do that. Okay, good idea. So on the next slide, GASB statements. This year, one that was new that required to be implemented was GASB 101. That was compensated absences. Now, the reason beginning balance changed by almost $4 million, and I just want to also clarify here that that change had nothing to do with your governmental funds. For example, your main fund, general fund, the only thing you would put there for compensated absences is what you already know that you're going to pay out for. For example, as you know, retirements are coming up in the next year, what you're going to pay. So anything else is just on the government-wide. So this affects accrual funds, like enterprise funds, and government-wide. So the reason why there was an increase of almost $4 million, and I just have to say, Brian did an exceptional job with implementing the standard. The biggest change was SIC, accrued SIC, because the old GASB, GASB-16, said that you have to be vested to be accruing that, where the new GASB just says that it doesn't have to even be a cash payout. But more likely than not, if an individual takes their SIC in future years, you have to accrue it. So basically, if there's over 50% chance that those employees will continue taking their SIC days, then that liability has to be accrued. It's not like in the past where you would say accrue it, and then you would only multiply it by 25%, because you think 25% will retire the town. None of that comes into play anymore. So that's why that increased. There are some other GASBs for sure that are in the works, and there are GASBs still busy, and there's more going on. But the good news is, well, some considered good, some not so good, because there are some things that were not clarified, because GASB-103 got cut down. So GASB-103 was supposed to be a major overhaul of financial reporting, like GASB-34 was back in 2003. But it was drastically cut down because citizen towns expressed their concern of having such big GASBs coming out and the ability to implement them all. So the only big change in GASB-103 is really the presentation of your enterprise funds. I mean, there's other things in there, like making sure MD&A is not boilerplate, that it's tailored and more meaningful, things like that. But for how balance sheets and income statements are presented, it really affects the enterprise funds. The governmental funds have not changed. Originally, that was supposed to be the biggest change, but that got cut out of the final GASB-103. And we can go to the next slide because, you know, you're probably going to be bored with all the GASB projects going on. One quick question on GASB-101 is, for other towns that adopted GASB-101, do they also kind of see a decrease in that position? Massachusetts, absolutely, yes. Because one of the reasons it got implemented is the inconsistency of application between states. Other states, we didn't really see an effect. But Massachusetts consistently only accrued sick based on vested amounts. So they also, pretty much all of them, saw a significant increase in liability and thus decrease in that position. And then your financial statements include, of course, opinions, which are unmodified, meaning nothing was needed to be made to your financial statements to get them to be in conformance with generally accepted accounting principles. Management discussion analysis, which talks about the financial highlights, follows that. And then you have the accrual basis of financial statements, the government-wide, which is the consolidation, and then the fund. Now, the fund financial statements, the governmental funds are not accrual basis. They're modified accrual basis, which is closer to cash basis than accrual basis. And then, but enterprise funds and fiduciary funds are accrual. Then you have notes, then you have RSI. And of course, I want to compliment you guys. And thank you, Brian, for doing such a great job every year that ACFRA had had a certificate for excellence in financial reporting for many years now. And it does include additional parts that basic financial statements would not have, parts like introductory section, statistical section, and then individual fund balance sheets and income statements. And then the next slide. And this is just some financial highlights of your ACFRA. This talks about if you are following the ACFRA as well. That one is page 30. That's coming from the balance sheet for governmental funds at the bottom there for unassigned fund balance and assigned. So the capital stabilization that you have because it has a purpose for capital, that one is included in assigned fund balance in general fund. And then you'll see that your unassigned fund balance on that governmental fund balance sheet in general fund is 17 million. And those two categories there break it out. Your typical general fund operating has 12 million and then your general stabilization because it doesn't have a specific purpose of 5 million is also included in unassigned fund balance. And you could see that this is a three-year comparison that it's been steadily increasing. It has a nice upward trend in that fund balance.
And then on the next slide, we have a percentage just as a comparison of what unassigned fund balance in general fund is as a percentage of total revenues. Those total revenues exclude the growth from Massachusetts teachers' retirement system. But that percentage is... Yeah, to put that in perspective, I do remember that the Moody's AAA, their preferred number for AAA is 30%. You remember that one, Brian? Yeah, actually, it changed recently, Klaus. Moody's also is now going forward bringing in the fund balance of the enterprise funds and the total calculation of fund balance. So the minimum they would ever be looking for is 25%. And I've had numerous conversations with the selectmen about this. So all of the enterprise funds, the water fund, the wastewater, you know, the transfer station, the fund balance of those respective accounts is now considered and calculated into Moody's overall percentage of fund balance to revenues. So it's become problematic. Whalen has held their own around 20%. Yes, I remember the 20%. Yeah. And we still got the AAA, even though we weren't at the 30%. Yeah, right. So having these other enterprise funds now considered just makes it more problematic to make sure that these other accounts maintain positive cash flows and revenues and expenses each year. And so the budget of these becomes very important. And I've gone over this, at least two meetings with the selectmen on this. Okay. So is there a plan to get up there?
One of the plans was to have the, well, one of the discussions was, was to have the board of selectmen be more involved in the water rate settings that transpire. So that was one of them. The other one really is the transfer station. As you know, there's a study going out close on that because it's had declining revenues. It's really only supported by a subsidy from the general fund, which was only supposed to be temporary, not permanent. We're heading into the fifth, going on the sixth year of giving a subsidy, which is the general funds fund balance and giving it to them and they're spending it on expenses. Now you can do that with an enterprise fund, but it wasn't supposed to be a long-term deal. So hopefully that this study will give some good recommendations on what to do with that. You mentioned the transfer station. I made a note.
Yeah. One of your exhibits, the expense of the transfer station from $24,000 to $25,000, it went from $900,000 to $500,000. Why does an expense go from $900,000 to $500,000? What was the magic to get that done? Can you repeat that again, Sloss? Yeah. On page 18 of the ACFER, there is an exhibit that shows expenses from $24,000 to $25,000 for various lines and the transfer station expense goes from $900,000 to $500,000. I was just wondering how that magic happens. I'd have to go back in. They were around in a $500,000 operation. I'd have to go back and look at that. There must have been something specific to that year. Right. $900,000 seems odd. That sounds like the wastewater fund. No, it says transfer station. Yeah. In total expenses? Yeah. Yeah, I think that's the headline of it. If I can put any perspective in that, so that is accrual basis fund transfer station and a lot of times the way the allocation by OPEP or pension is to that fund on the annual basis can really skew the comparison.
You know, I'm just curious because I am on that group that's going to look at contracting with town-wide trash hauling. So I'm just on that group. And I was focused on that number. I was very curious how you could get from $900,000 to $500,000, unless you're trying to make it look better than it really is. I'll talk to Brian about this. Yeah. And Brian, I can also quickly check to make sure there's nothing skew in it and just send you an email to make sure that it's not in line. Okay. That is, you know, strictly your typical expenses there. Well, thanks for pulling it up, Michael. Yeah, no problem.
Okay. That was great conversation on the slide. So we can go to the next one. Budget versus actual. So the revenues and transfers in. By the way, just one more comment on that. But I'm not at all sure whether Moody's would ever take, you know, would ever knock us down. But that would be a very, very significant expense if ever we try to borrow money. But right now we're doing a AAA. And if we go to the AA, it's going to be much more expensive. So I'm just saying this is very important. And it might be something that we raise with the select board, even though they've heard it before. But we might put in our two cents and say, you know, let's make an effort to keep this at least at a minimum where we're still AAA.
Okay, that's it.
Thank you. So that $1.7 million, a big part of that is investments in access of budget of 1.2. And, you know, it's vice to budget conservatively for investments, for expenditures. It's 2.3 in access in total turnbacks. And if you guys are looking at the ad front, the budget versus actual starts on page 80. And their detail for expenditures starts on page 88. So starting on page 88, you'll see that unclassified because you have reserves in there, but also public safety had a big turnback of over $500,000. But the biggest part of that, over $306,000, was turned back in police personnel costs. And then you have use of fund balance for capital. There is a lot of capital that was funded by use of for cash. Some of the bigger ones were the answering the point system, the PSAP for police for $300,000. There was $210,000 for IT, for video monitoring. There was $200,000 for DPW heavy equipment. And then there was a lot of smaller equipment that was on that list. So why does the use of fund balance for capital reduce your, I'm sorry, budget versus action? That's a great question. Yes, that's a great question because that's just using prior fund balance. So you don't have actual revenues offset in that. So you're not raising the revenues for that equipment. You're using what you had in surplus in the prior year. But doesn't capital count as a net?
Like if you use fund balance to create capital, isn't that just offset? Or what am I missing here? Variance, budget versus actual. All right, nevermind. We're not talking net position here. We're talking difference. Okay. If you bought that cap, you know, you bought that in expenditures there. So that's where it was budgeted. So that was used there. It goes against that line. On the revenue side, on the revenue side, it shows as use of fund balance, budgeted $2.6 million, but actual as zero. You would have to plug it basically. I call it a reconciling item because it's not real revenue. So you would call it a budgetary reconciling item if you want to handle it that way. But the reason actual revenue says zero, it's because it was included in prior year fund balance. And new revenues were not raised for this.
And then on the next slide,
you didn't have any new debt this year. So it continued to decrease there. So that's just your bonds and loans payable broken out by business type, that smaller portion, and then governmental, the bigger portion, and the trend for three years. So nothing new there. And then on the next slide,
Middlesex County Retirement System. And you guys know well, because you know pension extra well. So you know that could be up and down due to timing difference. Now, this measurement date is December 31, 2024. That year, calendar 24.
And I wouldn't go by that in the future because this is just timing difference. But in that year, there were projected investment earnings of $149 million. And the actual investment earnings came in at $182 million. So basically, if they come in and access what they project, it does get amortized about five years, meaning it reduces the net pension liability. So this is just a timing difference. I wouldn't think of it as it's going to go down. Right. Well, I'm sorry. You said that the investment earnings were like $40 million bigger? Yeah, they projected $149 million, but they came in at $182 million. All right. So $30 million. So you can't take that all at once? You have to sort of... Well, it reduces the liability all at once, but then it gets amortized over five years. That's the key. You can't take the whole $30 million all at once. Right. Into helping with the pension expense. Right. Anyway, it'll help you. It'll help towards in the future. You expect that... Yes. Yeah. So this looks good. Yes, because of the timing, because of the investments. Right, right. And then the next slide seems like... By the way, one more thing. One more thing. In the ACFR, there's a couple of times when I saw a calendar year 2024 with respect... In the pension section. And I was just wondering whether that was a typo or whether that was real. And, you know, I think, you know, I just don't have any idea how that, you know, that just... That's complicated for me is to figure the difference between, you know, the measurement date and the date of the valuation. I never really appreciated it, but it says 2024. I want to make sure that that's really... It meant to say 2024. Yes. And that's on OPAP. Can we go to the next slide, please, Michael? I appreciate a clause you found that typo because when you sent those edits, I narrowed right in. I knew exactly what was wrong and that one was wrong. So it should have said 2026. So basically what it was saying is that your liability, the net of OPAP liability is determined based on the fact that you will contribute $550,000 a year. But it said will, you know, expected to contribute. So if you're saying will, then you should say from 2026 and on. And I'm sorry, in a standalone OPAP financial statement, so we do say 2026, but somehow in the ACFRA, we did make a tap on say 24. So it's always there about $550,000 contribution is always there. For example, in fiscal year 25, it was $500,000 from general fund. It was $19,000 from a few special revenue funds. So it's always about that. But that sentence was saying is expected to contribute from, so it should have said 2026 instead of 24. So it's the way it was written. So we'll make sure that, you know, OPAP had that correctly. I mean, this one, ACFRA was already filed. So I'm sorry that we made that typo. And then, and then that, oh, no, I haven't talked about OPAP yet, sorry. So this one is different, of course, because it looks like it went up while the pension went down, but this is your own OPAP plan and it's really just a discount rate because the discount rate that was used in the previous year was 6.97. But for this liability for 6.3025, it was 6.25. And you guys know even a slight change in the discount rate, it does, it can significantly change the liability. So, so there was a, it did go down from 6.97 to 6.25 for discount rate. So that's the reason this one increased. That helps because I was curious why the, why the net liability went up. Yeah, yeah, it can be odd if, you know, the swings definitely can be odd in pensions and OPAPs. but, and on the next page, let's see what we have. Okay, so this is the management letter comments as I mentioned earlier that they are verbal. So last year we were pleased with the, all the projects that was made on the cash reconciliations and we were pleased that the 130,000 remaining cash reconciliation was pretty much identified to student activity funds and it's been the same one for many years. So, so we just wanted to make sure that it just had some kind of a resolution to it this past year and there were a lot of them that were identified the progress has been slow and then there's GASB on the one. So, on the updates for current year adjustments has been made to munis so the reconciliation that we audited for 63025 was reconciled so it did not show any significant variances. so, so that has been adjusted and it's now in the past and then guaranteed deposits we met with departments I believe it was October 12 our team sat with all the departments so conservation is definitely the biggest one that's you know it's really been struggling with that and just kind of frustrated all the things that happened in the past that caused that conservation didn't have current year activity because they don't even take guaranteed deposits anymore but but they still have such a huge liability last year fiscal year 24th they had 323,000 outstanding fiscal year 25 they had 291,000 outstanding so they did make some progress it did go down from 323,000 to 291,000 and it's all because they made progress because there was no current year activity but they just had so many obstacles the biggest one is lack of documentation for old balances and just clean up that's needed some memos they have in their folders that say the funds were forfeited so it just needs to be taken to revenue and then they sent some letters but they had no responses so they just need to keep following up over that and again with those things they still had some lack of documentation of who exactly should it
struggled the most with that planning was the second biggest one with the balance that went actually increased but they have activity but planning increased from 238,000 to 244,000 and that's another one that needs help cleaning up like they had some gifts that really need to be taken to revenue they're not going to deposits they have one property that is possibly in bankruptcy so they
there so I'm not sure why I put building because building is the smaller balance 56,000 the two big ones are conservation and planning what happens if you can't resolve what's the end game that was discussed because Kelsey she was really
these two big ones there has been conversations if there is really no documentation can we use the statute of limitation can we say that these are too old the time has run out we cannot take them to revenue and I thought that was all good conversations I mean I think you could use the statute of limitations but obviously I'm not in the legal field but there
balances and there is nothing to find the owners or find documentation on it this is Linda from conservation oh hi Linda I remember talking to you I guess this is the first I heard that there would be a statute of limitations I guess with my conversations with our town council it was we need to we need to we're going through a second round of notifying the applicants that of refund or their performance bond no I would definitely do second third whatever you can do to exhaust all your methods because I can say that but please don't go by me because I not a legal person plus Massachusetts also has that abandoned property division that has
contact people again so many of these are so old we don't have the records anymore there's no financial records we have no idea who wrote the check we don't have any canceled checks this was done by my predecessor and he didn't keep very good records so we're really in a loss as to how to move forward on some of these because if we can't find the
some sort of advertisement like the state does I really don't know but that's the next step but again we just keep running into the biggest hurdle now is not having the records for this anymore for some of these that are so old I
know doesn't seem like the town managers on it I don't know if you know Brian I know Brian you did a lot of work on all this and I don't know if you're familiar with any recent I know we talked to the town manager's office in October but if there's anything else that came out of that nothing since then I think Michael McCall may be on the call not the video I here in the past what we had done we had we had hired someone on a part-time basis to go through some of the files and the system we're building and Robert Hummel has been doing some work I have to get one thing in the planning board on the agenda for the select board to accept some of these as gifts ones that we verified assuming Linda can notify these people on her end we could do something similar so it's going on in the background we may have to look at hiring somebody but it's hard to find somebody with that type of special I guess almost forensic skills we coincidentally had a part-time college student who did that type of forensic accounting that worked or had some skill in that area and they were able to go back and do some of
something again like that and tighten up these last years thank you for that yeah Michael while we have you on the call I did notice I went to the website the audit committee website and the three members of the audit committee every one of our terms is up
my invitation that you might be try to recruit some new blood yes thank you what I would also suggest I'll mention that to the chair when we meet on Wednesday to go over agenda for next week you might want to shoot her quick email and
have on other boards and things to help people to participate it's a new year a lot of people want to try something different in the new year ask people who want to get involved so thank you for letting you know well I did see your newsletter and I've seen your request for recruits so I I'm glad that you're doing something I'm just raising the volume a little bit because it might be more urgent than we think understood I'll fire off an email to the select board chair right now and just give that reminder that we have to start looking for some people not only to fill the two but ensure that whether the three of you want to serve but make sure there's a appointment for attend the two well it turns out the two of us have to do the minutes and I believe this is the last slide on my presentation Michael yes so I'm just going to turn it over to you for any questions so I just want to
2024 instead of 2026 but it's not worth resending it to GFOA because of that one not at all only reason I ask is that I thought I found a couple more but they're not that important and I looked through the model class and it could have been worded better for example instead of saying budgeted revenues on a budget basis because they don't agree to what the revenue show on the income statement so there are
had was related to internal controls I know we spoke about it a little bit earlier and I think you had mentioned that there were some controls that may have had deficiencies but they weren't at a point where it needed to be mentioned so just in terms of internal controls how would you say Weyland compares to other towns and are there any specific areas with internal controls that might make sense for an internal audit or someone to come and look at It compares really well I mean that your controls are really good so I think you do better than a typical town because I can't even think of the last time we came across obstacles when we did those types of testing I
I haven't come across any of that and our team hasn't recently so there's nothing of concern that was brought to our attention it seems like the controls were functioning pretty well this past year so if you are thinking of a department or account there's a lot of ways you could look at that you could scan somebody's JL and see if there's anything that didn't make sense for purchases or have another way of maybe inquiries with various people and see and comparing their responses there are other ways you could identify how you want to select and which department to start with but without having that the bind in front of me I can't think of one that would be of particular concern so I did have one suggestion in the future like on page 19 on page 16 it says the fund balance went down by nine million dollars now it doesn't say you know I thought that was such a big number that it should have had a reason or it should have referred you
a suggestion just a minor nit okay yes that is a great question because it would be helpful to put the responses right there not oh thank you for pulling it up not everyone puts it right there because they put financial highlights first and then go into
were a bit baller plate and comparable to each other instead of you know standing out with their own unique MDNAs particularly the big ones that they've been talking about was particularly talking about underlying reasons they want to know more about the underlying reasons so that GASB would require improvements like that anyway for 63026 for it to be implemented so that's a great point and with conjunction of the new GASB you definitely should expect to see that in the next year's MDNA I don't think I have any more questions does anyone else have questions okay it looks like everyone is all set well thank you so much for giving me the chance to present it and thank you that it's Zoom because a few feet of snow outside so thank you thank you Alina thank you Alina you guys have a good evening you too okay approve minutes of the January 12th meeting Klaus I know you sent those over and then I and you had yeah you had some corrections and I thought that was great I just sent some minor updates in blue so just to put in perspective Brian and UT on most of the most I sort of copy and pasted a lot of what the AI my AI program suggested and it turns out it was a little informal in space in spots and so Michael just dialed it up a little bit and created more formality so that's basically why he caught that which I hadn't caught you know anyways most of this was very easy to go from the from the from the AI summary to the to the final minutes so that's a good thing I think it'll it'll help a lot yeah I think it did a good job kind of summarizing and and everything so it seems pretty helpful so I mean I'm the one who wrote the minutes so I think one of you guys should make the motion I'll motion to approve the minutes by second aye aye aye those are good one
there's been any updates on the RFP and then also discuss our annual reports that we're going to be working on so well with the RFP Michael McCall did review your recommendation as well as looked at the pricing and I believe he's going to be sending a
I believe he's working on our formal letter to send that out informing them that they won the RFP and we're going to be getting hopefully a contract soon from them and sign up and make it formal that's correct Brian and I and Chelsea met the other day to go over the scoring and the price proposals after the fact I was in the MMA on Friday and having been in the office we probably would have completed the letter and sent it out today most likely we done tomorrow that sounds good for our annual reports I know we have two of them one of them is to the select board and I think we
might have for the select board today and it sounded like Alina might have a suggestion for like a departmental internal audit one time per year or something like that over internal controls or different processes but it also didn't seem like she had any concerns over internal controls but I mean I do kind of feel like it would be valuable to just have someone else take a look at them just they don't really get looked at too much I completely agree I believe that this is the one area where we add value I'll remind you guys that three years ago we recommended that somebody fund a report to look at the transfer station mechanics and that is actually happening right now so I feel good that we proposed that and somebody acted on it and I do think that one of the value one of the way we add value is is to come up with suggestions that are relevant for an audit committee and draw on the expertise of an audit committee which we then propose to town management and that's one of the ways we add value and the annual report that you mentioned is not due until sometime in June or July so we have lots of time to do that but I would suggest that I'm certainly going to try to ask people what they think we should be asking for and I think you sound like you're on to something so you might want to flesh out that idea and then we can discuss it at a later point when we actually write our report and I know Brian might have some ideas as well and maybe Michael McCall has to me that's kind of where we can add value otherwise we don't do much yeah I agree Brian are there any areas that you think might make some good recommendations I really have to think about that Michael you know I know in the finance area we we have departmental policies for all different things that we do off hand I can't think of a department that or process it would be subject to where like like Alina said it was called an agreed upon procedure they would look at a specific process but I guess Michael McCall and I would have to get back to you on that if there's something some area of the town we wanted to take a look at and we did independent of your suggestion in this past year Brian and I members of his team the assessor the treasure collector worked with the select board to put together financial policies written financial policies and we did that with the guidance from Department of Revenue Division of Local Services where they came in and evaluated a lot of our processes and looked at what we were doing what we needed to prove upon and helped us codify that so those were just adopted by the board a couple of months ago so it's incumbent upon us now to ensure that people are following them but in general people are so that may address some of the concerns that we have to make sure that we
Moody's when they looked at us that we needed to have proper processes and controls in place and just Michael let me explain why I mentioned the my comments about the large amount of cash my background is among other things I was a CFA so I'm very
such a large amount of the town fund in cash it raises an alarm and make sure that we're doing and there's no reason to think we're not doing it correctly but I just want to make sure we're not leaving money on the table and so that's I just wanted to explain that understood I think Brian might be able to help me with this if I'm not mistaken I thought Brian if I have a call Moody's actually likes seeing that they like the fund balance what I what I'm I'm asking about the what the constitution of the fund balance it's got a large large amount of cash which earns zero whereas bonds will earn a lot more so I'm only about the degrees of freedom that we have for investing the money and I'm concerned that we're not being prudent in investing the money by putting too much in cash and I have no reason to think that other than
happy happy to look at it yeah so basically let's assume we had a hundred million dollars on the balance sheet I'm going to take a look I've got the balance right in front of me 99 million dollars well you just saw OPEB at 42 million dollars so OPEB or 42 percent is in is in print so that money is invested in equities in all kinds of you know liquid not liquid but basically in the stock market then you have the trust fund which is about another 10 million that's invested with Bartholomew out of Worcester and they do the same thing they invest that money in the stock market to bring back as much return as they can unfortunately with governments we're bound by mass general law where we can
would be the most aggressive of those is MMDT which is a state run program similar to print however they only really take your money they pull it into CDs treasuries money market accounts so we're bound by mass general law on where we can put the money like I said the most aggressive of those would be MMDT last year in the presentation you the investment income had a very good return part of that was because we had borrowed money to do the COA building and there was delays in construction and what we did was we took out we looked at either CDs or treasuries and we opted to take the CD and we invested the money because it wasn't being used for construction we ended up
so we put it into CDs so unfortunately there's only certain areas we can put money that relate to the general fund enterprise funds capital stabilizations is the one where we do a lot of work with Rockland Trust we do a lot of bonds with them CDs treasuries so the treasurer has to report all the cash to do our every year in
it is simply checking the box that we give it to them but Alina does look at our deposits when they do come in most of the money that we can invest in equities is being invested in equities meaning the trust funds in OPEB the other ones they're tied up with construction projects they have to be limited to
so the treasurer is very active in soliciting CDs with different people in fact we have MMDT coming into the town to visit with us in a couple of months to go over where they
got great investments and a lot of towns lost a lot of money and the AG had to step in and recover some of that money because some of these municipalities invested in this fund and it was a gray area so the mass AG and I know this because Winchester was a victim of that they lost a substantial amount of money in this investment so the AG did step in and recover some of that money so we are prudent about that but we can always present that again where the money is as of June 30th like I said Lilly our treasurer is very active
in conversation with the folks on the housing trust about CDs that they want to take out they do a lot with village bank doing six month CDs or one year so we actively also work with the committees about what they want to do with their money but again we have to follow the master of law on those I agree I did I think we should probably bring this to an end and take it offline but I noticed I think in particular the capital stabilization fund was like huge amounts of cash and I'm just wondering whether you can extend the maturity on that that's all and let's you and I maybe take it offline and talk about it sometime Michael I noticed John putting on his coat I think maybe looking to end this meeting so I will I'll move to adjourn second yes I'm still in the office I need to drive back which is a big snow I