Sunday, November 3

Observations from a reader

Dear Kevin:

I’ve now reviewed Scanlon’s September 30 Management Letter on our Town.  Since I’m down here and you’re up there trying to hold the fort, I thought I’d give you some comments which may be of some help.  That’s the intent. 

1.   None of the problems Scanlon identifies appear to be terribly serious.  Yes, there are deficiencies in internal controls.  But none of them rises to the category of a “material weakness”.
2.   I would not be surprised of none of our Selectmen really understand Scanlon’s report or how to proceed to correct the identified weaknesses in internal controls.  It may be that the members of the Finance Committee have a greater understanding of these matters.  But they may not have the authority to do anything about them.
3.   2012-1 Tax Collector Accounts Receivable Reconciliation
it’s significant that Scanlon found that the subsidiary records are being correctly maintained and that the problem is simply that these accounts are not reconciled with the general ledger on a timely basis.

It’s too bad that no amounts are mentioned.  Are we talking about a lot of money here?  Or just pocket change?
4.   2012-2 Water Accounts Receivable Reconciliations
This is a more serious problem.  Hardly surprising, is it?

One wonders why Scanlon provides numbers regarding this problem while having neglected to do so with regard to point 2012-1 above.  Why is this?

It would be interesting to know the ageing of the “water user outstanding accounts” as well as their composition.  For instance, have these balances been outstanding for over a year?  Over two years?  Or are they short term?  And is there any significant concentration?  Are there water users whose accounts past due exceed $2,000?  $5,000?  If so, who are they and what is being done about them?

Finally, what are the abatements/adjustments?  Who has authority to give an abatement?  On what basis is one granted?  Again, what sort of concentration is involved here?
5.   Other Matters – Water Company
You know my opinion on the EWC: it’s a disgraceful mess.  Not only poor or non-existent management but also a woeful disregard for the basis on which the Town’s citizens voted to purchase the EWC to assist their neighbors: that the EWC users would be fully responsible for all the costs of the EWC.  The Water Commissioners are derelict in their duty to their fellow citizens, in my opinion.

The numbers speak for themselves: 2012 revenues were $136,618 while expenses were $225,376.  This marks the extent to which the non-user citizens are subsidizing the EWC users: $88,758 in 2012 alone, a hefty 39% of the actual expense of providing water to these users.  Each of the users received a subsidy of over $440 from us non-users during 2012.

The EWC’s management can’t even collect the revenues they projected: they projected $156,345 for 2012 but only collected $136,618.  We know where part of this problem lies and, fortunately, that employee is no longer part of the puzzle.  But will the EWC collect what it projects?  Will it charge full cost?  All this remains to be seen.

The other matters mentioned in Scanlon’s report have their importance.  But, to my eye, the ones I touch on above are the more important ones.  You may know better.

Please use these observations as you see best.  BUT NOT FOR ATRIBUTION, PLEASE.  I’m happy to work with you all to improve the governance of our (poor) Town.  It’s struggling with the burden of a dysfunctional management team, in my opinion.  But I want my name kept out of it, please.

Thank you and best of luck.

1 comment:

  1. Check this out: