DIXFIELD – At Monday night’s meeting in the Ludden Memorial Library Community Room, selectmen learned about shortcomings in their accounting practices.

Auditor Keel J. Hood of Fairfield shared the results of his audit of the town’s general purpose financial statements for the year ended June 30.

Hood said the audit revealed “certain matters involving the internal control structure and its operation that I consider to be reportable conditions” under standards established by the American Institute of Certified Public Accountants.

“Reportable conditions involve matters coming to my attention relating to significant deficiencies in the design or operation of internal control structure that, in my judgment, could adversely affect the town of Dixfield,” Hood said.

The conditions could also adversely affect Maine’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements.

Hood had problems with the way the town handles its water and sewer, library and fixed asset accounting.

Dixfield processes the payroll for the water and sewer departments, then both reimburse the town for the amount due. Hood said both departments should be able to cover their own payrolls with rate increases instead of relying on town subsidies.

He recommended that as a regular function, the utility receivable account should be examined for activity. The review should also include the utility clerk and the town should routinely collect the full balance due.

Town Manager Nanci Allard said both departments had been reportable conditions all along. This year, the Water Department reimbursed $25,000 to the Sewer Department for money owed.

“It’s not a good situation,” she said.

“It’s easier to owe yourself the money than debt service to a bank,” Hood said, explaining reasoning behind the practice. “But the problem is you’re waiting too long to do rate increases because of the politics involved.”

As for the library, Hood recommended that a gross library budget that includes a budget for generated revenues be approved by annual town meeting voters.

Additionally, he recommended that all expenditures for the library department be recorded and processed with the town’s internal control system.

“Revenue and expenditure approval and review is essential to properly ensure appropriate accounting treatment,” Hood said.

Until late this year, the town’s library department was allowed to collect and expend money from library receipts. The activity was not required to be approved with the town’s internal control system.

“There was no evidence of approval procedures for disbursing of funds, nor was there evidence of a receipting process for receiving funds,” Hood said.

He also apprised the board of new accounting standards with which the town must comply. These include a requirement to record all infrastructure assets and an unfunded capital maintenance account.

He said the town should start preparing for the new standards by “more carefully” documenting fixed asset additions.

tkarkos@sunjournal.com

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