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Town of Chesterfield – Internal Controls Over Selected Financial Operations (2014M-331)

Issued Date
March 06, 2015
read complete audit1.34 MB

Purpose of Audit

The purpose of our audit was to review the financial operations of the Port Kent Water District 1 and internal controls over the Tax Collector’s financial activities for the period January 1, 2013 through July 31, 2014.

Background

The Town of Chesterfield is located in Essex County and has a population of approximately 2,450. The Town, which is governed by an elected five-member Town Board, includes the Port Kent Water District 1, which provides water service to approximately 140 customers. The Town’s budgeted appropriations for 2014 totaled approximately $1.8 million.

Key Findings

  • The water district’s accounting records are incomplete and inaccurate.
  • The Board did not adopt realistic budgets for the water district.
  • The Board did not properly monitor the water district’s financial operations and the district has realized significant operating deficits.
  • A lack of oversight and segregation of duties has resulted in significant internal control weaknesses over the billing, collection and enforcement of water charges.
  • The Tax Collector did not maintain adequate records, did not assess penalties to all tax payments received after the due date and did not physically secure tax collections prior to deposit.

Key Recommendations

  • Ensure that the accounting records for the water district are complete and accurate.
  • Develop and adopt budgets for the water district that include realistic estimates for revenues and expenditures based on historical data.
  • Review budget status reports for the water district on a monthly basis and use them to monitor current-year results against the budget estimates throughout the fiscal year.
  • Segregate duties over the billing, collection and enforcement of water charges or establish compensating controls, such as increased management review procedures.
  • Record tax payments in the tax collection software when they are received, properly assess penalties to all tax payments that are not received by the due date and ensure that collections are physically secured prior to deposit.