The Westfield Gas & Electric Department financial procedures comply with best-management practices, but the municipal utility’s outside auditor is recommending minor tweaks.
Howard Cheney, a CPA with the firm of Meyers Brothers Kalicka P.C. of Holyoke, reported to the Municipal Light Board last night that the department’s “books and records are in compliance with generally accepted auditing standards.”
“Our responsibility is to express an opinion on these consolidated financial statements based on our audits,” Cheney said.
Cheney classified the WG&E’s financial position as “healthy”, with assets exceeding liabilities by $6 million, but suggested that the utility should continue to pursue its software upgrade that would create a centralized tracking system for income, accounts payable, inventory and work orders.
The current process for justifying those accounts among offices within the department is 20 years old and still requires manual steps, leading to some delay in postings.
“Accounts payable are recorded following department head approval of invoices. However, there is not centralized process to track invoices received by the WG&E, but not yet processed,” Chaney said. “We recommend that management review the process by which invoices are recorded to minimize the chance of period end cut-off errors.
“In addition, the financial software does not provide for accounts payable aging reports by vendor and due date,” Chaney said. “Such a report would allow for verification of unpaid invoices by vendor.”
General Manager Daniel Howard said the department is proceeding with building out the utility’s automated financial systems administration software to eliminate the need for each office to enter data, then manually transfer that date to other offices within the department.
Cheney also addressed a number of liability line items, including retirement, accrued vacation and sick time.
The city recently hired a consulting firm to examine the city’s post employment benefit liability and to determine the portion of that liability borne by revenue generating departments, including the WG&E and the Water Resource Department.
Cheney said the department, and city, are presently funding those liabilities as needed, “a pay as you go” approach.
Cheney said that employees approaching retirement are entitled to be compensated for accumulated personal days, vacation and sick time, a liability for the utility of just under $2.7 million as of December 31, 2011.
Ward 6 Commissioner Robert Sacco asked if the utility has created a reserve account to cover those liability line items, a concern because a number of employees are nearing retirement age.
“I’d like to see an analysis (of those liabilities) over the next five to 10 years,” Sacco said. “We have to do that analysis for strategic planning.”
