2006 - Town of Longmeadow

To the Citizens of Longmeadow:
AUDIT COMMITTEE
The Audit Committee serves the citizens of Longmeadow by working to ensure the credibility and transparency of
all Town fiscal procedures and thereby to raise the level of public trust in and support of the Town’s operations.
The Committee’s specific duties are enumerated in its page on the Town’s website, www.longmeadow.org. Readers
will see there that “audit” concerns are far wider than ensuring the accuracy of financial record keeping and reports.
In today’s world, auditing concerns now encompass any and all risks that might have adverse and material effect on
the financial condition of an entity, here the Town of Longmeadow.
The Audit Committee completed its first full calendar year of operation in 2006. It was a very busy year for us as
we have developed an overview and have become more aware of the financial procedures and issues affecting
various Town operations. We held many meetings during the year, the subject matters of which are presented in our
minutes, also available on the Town website. Because of the multitude of financial elements in Town operations,
late in the year we worked with the Select Board to identify top priorities to concentrate on.
To ensure that the Audit Committee will be an effective operation we obtained outside input and studied reports of
the roles and responsibilities of audit committees. We especially reviewed aspects of the Sarbanes-Oxley Act
(Federal law dealing with governance and accounting practices of corporations) and the state-level proposed Act to
Promote the Financial Integrity of Public Charities (regarding audit responsibilities for non-profits). While these do
not apply directly to government entities, the issues raised in them have clear implications for municipalities.
This year we worked with the Finance Director to develop a “request for proposal” to obtain proposals from
independent auditing firms to provide the annual independent audits for the Town for the three fiscal years 2007 to
2009 (covering July 1, 2006 to June 30, 2009). We reviewed the proposals and made our recommendation to the
Select Board. The contract was awarded to the Town’s incumbent independent auditor, Thomas J. Scanlon &
Associates, CPA, whom we had recommended. We will work with Scanlon & Associates to review the scope and
plan of work to be performed and major areas of interest. (As this is written in late January 2007, the Committee had
its initial meeting with Scanlon & Associates on the status of the audit for the fiscal year ended June 30, 2006.) We
will also review the final audit report and provide our evaluation to the Select Board.
We reviewed Scanlon & Associates’ Report of the Examination of Basic Financial Statements for the fiscal year
ended June 30, 2005 and were pleased that the auditor could issue an unqualified opinion of their fairness and
accuracy. We also reviewed outstanding issues raised in Management Letters from past audits. (In Management
Letters the auditor raises concerns and presents recommendations regarding operational practices pertaining to
financial reporting and compliance.) As a result, the Committee requested status reports from, and had discussions
with, Town officials to ensure that appropriate action has occurred or that plans are being made to address any open
issues. Through minutes of our meetings this has been communicated to the Select Board and Town management.
Some outstanding concerns from prior Management Letters that we are continuing to study and review include the
Town’s internal control structure, the Town’s liability for promised postretirement benefits other than pension
benefits (mostly health-care) under the GASB 45 accounting requirement, and the cost and unfunded liability of
employee pension plans.
Late in the year we started a review of a study and recommendations made by the Abrahams Group for the financial
operations of the School Department. We have obtained information from both the School and Town Finance
Director about the status of various recommendations made in that report.
The Committee also reviewed the Town’s insurance coverage with industry experts. Coverage limits, provisions and
umbrella coverage were discussed with the Finance Director, who made some changes as a result.
During the year the Committee established working contacts with many Town parties and committees. These
included the Select Board, the Town Manager, the Finance Committee, the Capital Planning Committee, the School
Committee, and the Finance Director and others in his office. By increasing contact and open communication with
these and others, we will be able to ensure open and informed dialogue in order for the Audit Committee to more
effectively fulfill its purpose.
The Audit Committee presented an advisory paper to the Select Board and the Town Manager on “Enterprise Risk
Management.” The paper specifically addressed the Energy Risk and potential financial impact to the Town.
The Committee also worked with the Director of Finance to review and revise the Town’s Investment Policy
Statement.
13