Department of Revenue, Saugus reach agreement

By Mike Gaffney/ GateHouse News Service Posted May 03, 2012

Saugus — The Department of Revenue is requiring the town take numerous actions in response to a forensic audit that turned up financial violations. Town Manager Scott Crabtree met with Department of Revenue Director of Accounts Gerard Perry April 20 to discuss a host of fiscal matters in the wake of Powers & Sullivan’s ongoi ng audit of the town books. Reviewing transactions that occurred in fiscal 2011 and fiscal 2012 under the previous administration, Powers & Sullivan reported a number of “significant” violations of municipal finance laws and regulations that were systematic and intentional in nature. Crabtree informed the Board of Selectmen that the DOR has serious concerns about the findings outlined in the audit. His meeting with Perry touched on these issues and what must be done to address them going forward. “The meeting was constructive and informative, the DOR is committed to working with us collaboratively to achieve financial transparency and stability,” Crabtree said. Crabtree agreed to a dozen actions during the meeting with Perry, including: · The DOR will require that certain journal entries of enterprise funds need to be modified to the general fund for fiscal 2012 only; · Saugus must provide the DOR with a pro forma recap for fiscal 2013 by July 18 to determine if a balanced budget exists for the upcoming year as a condition for the agency to approve the fiscal 2013 tax rate; · Crabtree will work with town officials to immediately deal with any deficits identified in fiscal 2012 and 2013; · Saugus has to provide for any deficits identified in fiscal 2012 prior to the close of the fiscal year, or if not raise the deficits as a requirement to set the next tax rate; · Crabtree must work with officials to conduct a financial analysis of the water and sewer enterprise accounts to make sure the rates are appropriate; · The Board of Selectmen has to approve all indirect costs associated with the water and sewer enterprise funds when setting the fiscal 2013 tax rate; · The town must provide the DOR monthly “budget to actuals” to monitor spending; · Crabtree will present the Board of Selectmen a proposal to establish an audit committee; · Where appropriate the town will hire outside accounting services to assist with financial matters; · Crabtree will work with staff and consultants to establish long-range financial forecasting; · Research establishing a capital improvement committee to improve debt management; · Crabtree must review with the Board of Selectmen their legal ability to have the selectmen approve all warrants for town expenses

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