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Sutton Gets a Clean Opinion from Auditors
Outside audit for Sutton shows town staying on track

Town gets ‘clean opinion’ from firm

Scott McIntyre of Melanson and Heath, the Sutton’s outside auditing firm, delivered the audit for the 2011 fiscal year. He stated at the start the audit had gone well and it had been completed on a much more timely basis than the fiscal year 2010 audit, which took more than a year to finish. McIntyre said the 2011 audit went so well because the town had been able to close its books on a timely basis and the audit had followed suit.

McIntyre said the firm did not need to propose any significant audit entries and that everything balanced out correctly. The one future issue dealt with funding post retirement benefits such as health insurance for retirees, but the town has already begun funding this $3 million liability, though only as yet in a very small way. Still, that put them ahead of many communities. He did note this number will rise year to year until the town has money in place to cover the unfunded liability. “Not many communities are able to fund this,” said McIntyre, noting that by even addressing the issue at all, Sutton had a jump on most towns. He also noted two key events for 2011—the sale of $25 million in school bonds and the implementation of new auditing standard.

He said Melanson and Heath was issuing a “clean opinion” for the town, meaning that the statements fit in accordance with generally accepted accounting standards for municipalities. He said the town’s unassigned balance of $1,000,052 was approximately four percent of the town’s expenditures, down $400,000 from the previous year when it represented five percent of the overall expenditures. He called fiscal year 2011 “a break-even year…very stable.”

McIntyre said revenues had come in higher than expected in fiscal year 2011, leaving the town with a positive balance of $772,000. He noted that once the $650,000 in free cash was accounted for, this left about $100,000, which he saw more or less as a break-even point because the numbers don’t necessarily come out dollar for dollar. He said the total cash balance in the general fund was more or less unchanged from the previous year.

One thing he did note was that the town has been previously paying off 75 percent of its outstanding debt in 10 years or less, something he saw as highly favorable. For 2011, however, this rate dropped to 55 percent due to the purchase of the $25 million in school building bonds. He suggested this number might need to be explained to any ratings agencies noting the drop in this number.

The firm did suggest that the town improved its capital asset management record keeping, noting that town accountant Tim Harrison expects to have merged the town’s two record keeping systems by the end of June. McIntyre also noted that the town needs to develop written policies for departmental receipts to promote consistency. He noted that the town is in the process of finalizing this.

The town also needs establish formal sewer billing of non-usage charges such as sewer tie-in. McIntyre said he thought this was something that needed to be “tightened up.” The firm is also looking at auditing student activity funds “every few years” and noted that the school department has already been in touch about setting up these procedures. He also recommended that the town try to get contractors on the school building project to understand the importance of getting all invoices in before the June 30 fiscal year end cutoff. He thought it was very important that expenditures be dealt with in the same fiscal year in which they were incurred.

Mike Chizy said this only reinforced his confidence in the town’s financial team, which John Hebert echoed, adding that the selectmen should take a lot of pride in what Harrison and company were doing.

Rick Hersom had no questions, but thanked McIntyre for the presentation.

Ken Stuart told McIntyre he thought the audit proved that Sutton was handling its finances rather well in a not so favorable economic time, adding Jim Smith to the list of people deserving praise. Kevin Geraghty told McIntyre it was a great presentation “that you got down to the eighth grade level. We have a lot of confidence in Jim and Tim…We seem to be working on [the deficiencies] though we may have a resource issue.” He thanked the efforts of the financial team in continuing to work on these issues.

Town of Sutton  4 Uxbridge Rd., Sutton, MA 01590
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