On September 27, 2023, a special Board of Selectmen (BOS) meeting was held in the Veterans Room at the Warren Memorial Town Hall to discuss the Town’s annual financial auditing procedures and delays that have emerged during the past two to three years.
According to the state’s Municipal Auditing Act, all municipalities must have all their financial statements audited at least once annually. (Learn more about the requirements here.) Lynn Nenni, who has been the Town of Stafford’s interim finance director since April 2022, reported to the BOS that the State of Connecticut Office of Policy and Management (OPM) sent a letter to the Town of Stafford indicating the audit report for Fiscal Year 2022 (FY22) was not submitted by the routine deadline of December 31, 2022. As a result, the OPM requested a written summary explaining why the report is late and the steps being taken to correct the current situation and to prevent future delinquencies. Nenni gave to the BOS a copy of the completed summary report, measures being taken to avoid future delays, and a preliminary version of the audit as the OPM had requested before final submission to the OPM by September 29, 2023.
Discussion followed regarding the Board of Education (BOE) reports, which are assembled and presented to the Town’s finance director by September 30 of each calendar year. The submission of the BOE audit report for FY22 was late, as well. Nenni explained that key vacancies in the school system and Town finance departments have interrupted the normal audit process for both departments.
Also noteworthy, explained Nenni, is that the BOE and BOS use different software packages. Therefore, for the departments to share staff during periods of absenteeism is difficult because there is no cross-training on the two software systems.
The BOS discussed with Nenni the possibility of using a single financial software platform for both the BOE and the Town. Nenni and First Selectman Sal Titus agreed it would entail research to find a compatible system to handle the needs of both departments, possibly at a significant cost to the Town. This would be possible only if both departments agreed to use a single, shared accounting software.
Nenni said there are towns in CT that use a single accounting software, but that many towns use dual systems as Stafford does.
At the conclusion of the meeting, the BOS approved a motion to send a letter to the BOE requesting that the required financials be submitted to the Town as soon as possible to avoid further delinquencies in submitting the FY22 and FY23 audits to the OPM.
More about state audits
It's worth taking a look at the statutes behind the auditing requirements and what chronically missing these deadlines could lead to. First and foremost, it's important to acknowledge the potential financial ramifications. The new software to help streamline the reporting process may be costly, but according to state statutes, so is missing your deadlines:
“Any municipality, regional school district, audited agency or auditor who fails to have the audit report filed on its behalf within six months from the end of the fiscal year or within the time granted by the secretary shall be referred by the secretary to the Municipal Finance Advisory Commission established pursuant to section 7-394b, assessed a civil penalty of not less than one thousand dollars but not more than ten thousand dollars or both, except that the secretary may waive such penalties if, in the secretary's opinion, there appears to be reasonable cause for not having completed or provided the required audit report, provided an official of the municipality, regional school district or audited agency or the auditor submits a written request for such waiver.”
As of right now, Stafford has not been fined. However, repeatedly missing these audit deadlines could result in the state deeming it necessary to provide oversight. According to the OPM’s 2020 “Tiers Status Reports”:
“Resources are made available by the State of Connecticut to municipalities experiencing degrees of fiscal challenges as authorized under Chapter 117 of the Connecticut General Statutes. These resources are primarily provided through the Municipal Accountability Review Board (MARB) and the Municipal Finance Advisory Commission (MFAC) in the form of technical assistance, financial assistance and other tools meant to promote financial health. Municipalities seeking assistance with their financial challenges may do so based upon their tier designation. Eligible municipalities that apply for and are designated as Tier I, shall be referred to the MFAC. Eligible municipalities facing higher degrees of fiscal challenges that apply for and are designated as either Tier II or Tier III, shall be referred to the MARB and are provided additional resources.”
The goal of MARB and MFAC is to solve the immediate fiscal problems and create a more sustainable financial future for towns.
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