These are the questions that Selectman Woolsey attempted to ask but was not able to ask as evidenced by the film clip. The questions are very sound and to the point and an Auditor who had been on the town scene (a good part of 2015) for the 2014 audit and as experienced as he indicated he was, should have been able to address the questions. If he was unable to fully explain them at that time, he could have committed a time frame by which he could respond to them.
Mr. Griffin essentially read from a script that appears to have been prepared for him by the Town lawyer. All the other Selectman agreed with what was read and once again Selectman Woolsey was stonewalled by her associate Selectmen (A very common happening). No other Selectman raised any questions of substance but simply discussed the audit overview and appeared to be full of self gratification. They were so happy that such a wonderful job had been done by the Finance Director that they repeated it several times. They were so happy that they finally complied with the GASB 54 (Government Accounting Standards Board) statement 54 as it related to the town fund balance they could not stop congratulating each other as their respective turn came at the meeting.
In the mean time the substantial questions that were derived from a serious review of the audit and that were attempted to be asked go unanswered as of 1/19/2016! The questions reflected a true insight into the audit that was performed and asked very serious questions. Isn’t that what a Selectmen debrief is all about??
The questions are shown below for public transparency purposes. As answers are received they will be posted here as well. Stay tuned.
- Schedule 3 on page 42, which addresses the changes in the Unassigned Fund Balance, includes in increase of $1,013,704 as a result of a decrease in the Assigned Fund Balance for Abatement contingency. While the Abatement contingency at the end of 2014 (Note 16 page 32 of 2014 report) is $600,000, which is $1,013,704 less than the $1,613,704 at the end of 2013 (Note 16 page 31 of the 2013 report), a settlement agreement was approved by the Hampton Selectmen in September of 2014 that required the Town to pay a tax refund of $620,000 to Seabrook Station. It was my understanding that the funds paid to Seabrook would come out of the Abatement Contingency. Given this background information, how could the full amount of the decrease in the Assigned Fund balance move to the Unassigned Fund balance and how was the $620,000 payment to Seabrook Station accounted for in the 2014 Audit report.
- Schedule 3 also contains a reduction of $903,664 in the GAAP basis Unassigned Fund balance for property taxes not collected within 60 days of the fiscal year-end. This amount compares with prior year 2013’s reduction of $2,436,621 for property taxes not collected within 60 days of that year’s fiscal year-end. According to the Audit reports, the total amount of property taxes owed as of December 31st of both years was about the same, $3.2 million. Based on the preceding amounts, there is an anomaly in that it appears that $2.2 million would have to have been collected in the first 60 days following the 2014 year-end as compared with only about $800,000 for the first 60 days following the 2013 year-end. I understand that the Tax Collector has indicated that the amounts collect in both years were similar, between $600,000 and $800,000. Note 17 on page 33 of the 2014 report contains a $1,493,611 adjustment described as “to record change in methodology for deferred inflows related to property taxes not collected within 60 days of year end.” What is the change in methodology and is it documented anywhere in the report.
- A Fund Balance Policy was approved by the Board of Selectmen in March of 2007 and subsequently codified into the Town of Hampton Ordinances under Chapter 611. As of December 31, 2014 the Unassigned Fund balance was less than the amount required by the formula in Chapter 611-3 of the ordinances. $900,000 was subsequently removed in 2015 and there are a number of 2016 warrant articles proposing further reductions. In 2011 the Town implemented GASB 54, which states that “If a governing body has formally adopted a minimum fund balance policy, the government should describe in the notes to its financial statements the policy established by the government that sets forth the minimum amount.” It goes on to state that “users are similarly interested in information about those minimum fund balance requirements and how they are complied with by the respective governments. Therefore, this Statement also requires that governments disclose their minimum fund balance policies.” There is not any information related to Chapter 611 in the 2014 or prior years Audit reports.
Related Hampton Town Ordinances as of 12/17/2015:
611-3. Fund balance retention amount: The balance of the unreserved-undesignated fund shall, once accumulated, at all times be no less than the balance of unpaid property taxes due to the Town for municipal, school and County and precinct obligations as computed on December 31 of each year by the Auditors, plus 5% of the net adjusted appropriations of the taxes to be raised as recommended by the New Hampshire Department of Revenue Administration, and calculated under general accounting standards.
Related GASB 54 Standards:
Paragraph 27 – Minimum Fund Balance Policies: If a governing body has formally adopted a minimum fund balance policy (for example, in lieu of separately setting aside stabilization amounts), the government should describe in the notes to its financial statements the policy established by the government that sets forth the minimum amount.
Minimum fund balance policy disclosures: Many governments create de facto stabilization arrangements by establishing formal minimum fund balance requirements. The Board believes that users are similarly interested in information about those minimum fund balance requirements and how they are complied with by the respective governments. Therefore, this Statement also requires that governments disclose their minimum fund balance policies. Some Exposure Draft respondents and field test participants asked that the final Statement more clearly identify 48 the minimum balance arrangements that are intended to be the focus of the disclosure requirement. They pointed out that governments are often required to maintain minimum balances by ordinance, statute, indenture, contract, and other sources and asked whether the disclosures would be required for all minimum balances, regardless of the source of the requirement or its objective. To clarify the focus of the minimum balance disclosures, paragraph 27 refers to policies rather than requirements and emphasizes that those policies are adopted or established by the government to distinguish them from other minimum balance requirements that are imposed upon the government from other sources and authority.