No remarkable findings in 2007-2008 Penn Yan village audits

Gwen Chamberlain

Penn Yan Village officials have learned that an independent auditor has not found any serious problems in the village’s fiscal records.

Members of the Penn Yan Village Board, the Municipal Utilities Board and Village Clerk/Treasurer

Shawna Wilber met with a representative of Bollam, Sheedy, Torani and Co.  to hear details about the audit of village financial records for the fiscal year ending May 31, 2008.

The audit was complete in November 2008.

William C. Frietag, a partner in the firm, described the information in the audit and other official documents that are part of the process.

During the discussion of the audit, Frietag noted that the current electric rates are not covering all the expenses. But he noted the village municipal electric crew’s work has resulted in a low line loss rate — 3.9 percent. He explained this number reflects inefficiencies in the system, but it is a cost that’s passed through to customers. He said Penn Yan’s low rate of loss probably ranks in the top five or six systems in the state, something that the Public Service Commission (PSC) will look at closely at the rate for the past six years when the village applies for a rate increase.

Frietag said the PSC will likely question a $45,000 payment in lieu of taxes (PILOT) made to the village. “They don’t want the electric rate payers subsidizing property taxes,” he explained, but then noted it’s legal for the village general fund to take money from any other enterprise fund except a sewer fund.

Discussing the municipal utilities capital reserve fund, Frietag praised the village’s efforts, saying, “It was a prudent decision to put money away.”

Reviewing the water and sewer budget, Frietag agreed the village can create a line item to show more than $100,000 past due to Penn Yan from the town of Jerusalem. Frietag said a footnote in the final audit can be added to show the total amount due to Penn Yan from other governments.

Frietag said there were no material weaknesses found during the audit.

The audit includes the following statement:

“We did not identify any significant or unusual transactions or significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.”

During the meeting, village officials learned about some areas that caught the attention of the auditors, including:

• FUND ACCOUNTING: In the village’s general ledger, one fund called the Trust and Agency Fund actually contains balances and transactions for three funds or village accounts: one for perpetual care in the cemetery, the volunteer fire department’s length of service fund, and an escrow-type account that holds money payable to outside agencies for a number of other village funds. Frietag recommends the activities of each fund should be posted to its own separate general ledgers.

Mayor Douglas Marchionda Jr. suggested the individual accounts be renamed to more accurately describe their purpose.

• SOFTWARE: The software used to track the village’s electric fund work orders does not perform one specific function  — fully allocating an overhead percentage to direct labor and direct material costs on work orders. Because of this, the electric fund’s operating property did not have the correct amount of overhead included in its cost, so the value of operating property was understated.

The software, which has been used by the village for some time, is no longer supported, and a software update that has worked in other municipalities didn’t correct the problem in Penn Yan. So, the municipal utilities office worker who enters the work order data must now manually determine the overhead costs.

• CREDIT CARD LATE FEES: Because of the approval process used by the village, there are times when credit card bills are paid late and the village is assessed a late fee. Although Wilber is able to get the late fee waived, has eliminated one credit card and was able to change the due date on another, Frietag recommended the village board consider a new policy for paying such bills.

• ACCOUNTS PAYABLE: Because some payable amounts from the year ending May 31, 2007 were improperly included in the 2008 fiscal year, the auditing firm recommends staff reconcile accounts payable at the end of each fiscal year.

Each year, the village of Penn Yan is required to open its books to an independent auditor for review of accounts. The audit information must be made available to the public and to the municipalities that purchase water and sewer services from Penn Yan.

The previous year’s audit had not been completed until mid-2008 by a different auditing firm.

Frietag said in the future, audits will be complete and available for the village boards to review soon after the conclusion of the fiscal year, which ends May 31. each year.