By Kim Siebert MacPhail
Several areas for improvement of general control and accounting practices and of grant fund management have been recommended by Sullivan Rogers& Company, certified public accountants. The firm has just completed a third year of auditing Bedford’s finances with a reportfor the fiscal year ending June 30, 2012, and on January 7 made known its contents to the Selectmen. Matthew Hunt, a spokesman for Sullivan Rogers, called the findings “not major,” but nonetheless noteworthy.
The first four general areas identified for improvement are:
- School Lunch Revolving Fund
- Service Organization Controls, as regards third party partners with which the town works
- Student Activity Funds
- Pension Accounting and Financial Reporting
School Lunch Revolving Fund: Sullivan Rogers reports that the school lunch fund, in a snapshot taken on June 30, 2012, showed a deficit of$32,000.
Reasons for the deficit might include: an inadequate fee structure; deposit of lunch receipts not being done in a timely manner; and/or errors in recording of revenues and expenditures in the general ledger.
Sullivan Rogers recommended investigating the matter to determine the reason(s) for the deficit and to make appropriate changes. It should be noted that for fiscal year 2013, the School Committee has already voted an increase in lunch prices across the district, in an effort to remedy the situation. Food Service Director Ken Whittier will also now provide regular updates on the revolving fund’s balance.
Service Organization Controls: Like all towns, Bedford contracts with outside companies that provide financial services, such as forbilling or accounting. Sullivan Rogers recommends that these third-parties be required to submit so-called “service organization control reports” to ensure privacy and protection of employee and customer information.
The Town will identify which services this affects and request the reports.
Student Activity Funds: All four of Bedford’s schools maintain student activity funds, for which guidelines are established by Massachusetts General Laws, Chapter 71, Section 47. Audits of these accounts have been scheduled for Bedford High and the John Glenn Middle School for February. Lane and Davis school audits will be conducted in FY14 (which begins July 1, 2013).
Pension Accounting and Financial Reporting: New financial reporting requirements were issued last June that significantly changed conventional reporting practices, according to Sullivan Rogers, who state that: “For the first time, the Town will be required to recognize the long-term obligation for pension benefits as a liability in its government-wide financial statements.”
The change will necessitate a more complete measure of the costs of pension benefits; put restrictions on how projected benefits are calculated and accounted; and expand pension-related disclosures.
The Town will familiarize itself with the revisions to these governmental accounting standards in order to prepare for compulsory implementation of the new procedures in fiscal year 2015.
Grant Award Accounting:Three issues were identified by Sullivan Rogers that involved, primarily, Special Education grant fund accounting: costs amounting to about $2,600 were applied outside the grant period; required salary change documentation was not supplied; and one final report to the state was not filed on a timely basis.
Also, in one instance, an employee was miscategorized and salary expenses applied to a grant were deemed not applicable. In another instance, expense postings to a grant were not allowable within the scope of the grant. Requests for grant funds should also have been made in advance, and some requested funds were not expended within the 30-day period specified by the state.
“There are really only 6 or 7 issues as part of these findings and, again, we don’t deem any of them to be major,” summarized Hunt. “The end result was a smooth audit process and that’s a credit to the Town’s finance departments.”
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