Town of Bridgewater Audit exit conference – Town Council/Finance Subcommittee Roselli, Clark & Associates December 20, 2016

Contents Introduction Economic trends Accomplishments Other Postemployment Benefits Other informational items General findings and recommendations

Introduction - What is an audit? Performed in accordance with GAGAS (Yellow Book). Requires review of internal control over major transactions. Requires risk assessment and enhanced procedures in identified material areas. Clean opinion verse qualified opinion.

Economic Trends

Economic Trends

Economic Trends Reserves have stabilized. Used $500K of free cash but realized $300K back through positive revenue experience – so slight drop Conservative forecasting of revenues ($700K) Motor Vehicle ($400K) Penalties and interest ($200K) Other in aggregate ($100K) Offset by expenditures ($400K deficit) Snow and ice ($800K deficit amortized over 3 years) Expenditure turn backs ($400K) Metrics are approaching State average which could have occurred without the historical seasonal weather issues in 2015. Continue to work at increasing reserve ratio Goal is to maintain tier 2 reserve status; tier 1 could be a stretch

Accomplishments Maintained reserves as discussed. Free Cash policy being followed. Cured debt material weakness from 2014 as well as some other more minor findings (tax recap process, health enrollment review and deminimus tax billings) Transitioned new Finance Director – plan in place to cure remaining material weaknesses and findings during 2016 and 2017

Other PostEmployment Benefits GASB 45 and GASB 75 – OPEB $41.2 million future liability; increase of $4.6M from prior study 5% free cash transfer not made Average age of employees = 47 New OPEB GASB 75 in effect for fiscal 2018

NEW PENSION STANDARD GASB 68 implemented in 2015 June 30, 2015 Bridgewater proportionate share of pension liability was $28.5 million The funding of this liability is in the control of Plymouth County Retirement; to which the Town belongs Liability will be updated annually and certified by separate audit report which is also new requirement for 2015

Other Informational Items Municipal Data Breaches Assignment of Tax Title (over $2.0M)

General Findings and Recommendations Cash reconciliation – material weakness Withholding reconciliation – material weakness Receivable reconciliation (some improvements) E-911 grants Golf Inventory (gross margin issue) Overlay Balances Sewer Betterments – municipal modernization act

General Findings and Recommendations Appropriation deficits (1 accounts totaling $6,000) Human resources function Performance bond variance and age of performance bonds Tax title collections (see informational items)