Board of Finance Sees Opportunity for “More Connectivity” in Annual Audit Process

At the June 13 Board of Finance (BOF) meeting, board members continued to discuss several strategic questions that have been raised in recent months, including matters related to the annual audit of the Town’s accounting and how the board should handle its internal and external communications.

Favorable Finish For Current Fiscal Year

The meeting began with some good news from CFO Dawn Norton who updated the board on her expectations for the current fiscal year, which ends on June 30. (Norton gave a similar financial update to the Board of Selectmen on June 6.)

• Norton is forecasting revenues will exceed budget expectations by approximately $700,000, driven by building permits, investment income, and grant revenue — offset by a $240,000 shortfall in the collection of current and back taxes.
• Norton is projecting approximately $200,000 in savings on expenditures before the fiscal year-end, which she said were mainly due to vacant positions in the Police Department and turnover in other departments.

Norton also informed the board about the Town’s $13.1 million bond sale at 3.19% — below the 3.5% budgeted for FY2024. Norton explained that 11 bids were received with competitive interest rates based on Moody’s recent reaffirmation of Wilton’s Aaa rating.

After asking some questions for clarification, the board members moved on to other matters.

Interest Rate on Tax Deferrals

Reading from the Town Charter, Norton explained that the annual interest rate for taxes deferred under Wilton’s program for the elderly and disabled is “subject to change no more than once a year by the Board of Selectmen (BOS) in consultation with the Board of Finance.”

After informing the BOF that the BOS had recently voted to keep the interest rate unchanged at 2.75%, Norton asked if there were any objections from members of the BOF.

Before responding, Sandy Arkell and Matt Raimondi asked for more information on how the BOS had determined the rate and other context on the matter. Rich Santosky also asked for clarification on how deferrals differed from delinquencies, which have a higher penalty.

BOF Chair Mike Kaelin said he would follow up with First Selectwoman Lynne Vanderslice before asking board members for any opinion.

“It doesn’t look like [the BOS] actually consulted with us. They’re just reporting to us what they’ve done, but there’s no give and take,” Kaelin said. “Our [BOF meeting] record will just reflect that they’ve reported this to us, but we’re not going take a vote on it. Personally, I don’t have a basis to object or agree to it.”

BOF Role In Town Audit

The board then discussed its role in the annual audit.

Kaelin noted that the BOF must appoint the auditor, and is required to do so at least 30 days before the end of the fiscal year. The BOF fulfilled that obligation at the May 13 BOF meeting, though the auditor was chosen largely by default after Norton had revealed that only one firm had responded to the RFQ: CliftonLarsonAllen, LLP, the firm that was already retained by Wilton.

Underlying the RFQ process was a critical factor outside of the board’s control: pervasive staffing issues among audit firms over at least the past year.

“We’re painfully aware that accounting firms were having a very hard time hiring people,” BOF Vice Chair Stewart Koenigsberg said. “They’re having a very difficult time executing on work they had already. So it’s not a huge surprise that we didn’t get overwhelming response [to the RFQ]… they were struggling to maintain the customers they already have.”

“I don’t think any of us were really comfortable or happy that we didn’t have any choice… we only had one party respond,” Kaelin said. “But the reason I put it on the agenda for tonight is, knowing that we have to appoint auditors for the next fiscal year within a year, do we want to talk about changing or even implementing a process that gives us more time to do this?”

Kaelin directed the question first to Sandy Arkell, who was instrumental in the BOF effort leading up to the RFQ, along with Norton and Santosky.

Arkell clarified that the agreement with the auditor is renewable for three years. If the Town is satisfied with the auditor’s performance, it would not be necessary to conduct a new search and appoint a new firm next year.

“I do think though, there should be a quality assessment that this board does, as part of [an] annual review of [the audit] report,” Arkell said. “And I think there’s an opportunity to really connect with the audit firm on a more regular basis.”

She went on to suggest touchpoints that would include the audit kick-off, to understand the scope of the work, and highlight areas of risk or changes in standards, for example; and an interim update (or two) before the year-end that would provide “a little bit more connectivity with the audit firm, in live time, as they’re executing.”

The board seemed to have a consensus around an October timeframe for such an interim update.

Koenigsberg broached the subject of whether a new committee — possibly composed of members outside the BOF — focused on screening potential new audit firms and understanding the audit findings would be beneficial. He asked Norton about such a committee that had been informed in New Canaan.

“It’s failed miserably,” Norton said. “It was a really, really rough start… mainly because those who volunteered to be on that committee had no public experience. It was a huge, two- [or] three-year learning curve, to even understand how government works and get the mindset away from corporate [accounting]. In my opinion, there were a lot of bumps in the road.”

Norton turned the discussion back to the BOF.

“You [BOF members] have a lot of financial experience, all of you. So you are, in yourselves, experts and have quite a bit of knowledge. I wouldn’t have thought… ” Norton’s unfinished comment suggested she was surprised the board would consider looking to a separate committee for matters pertaining to the audit.

The board also discussed the notion of formalizing a BOF subcommittee for the audit. Arkell pushed back on that idea.

“I personally am opposed to another subcommittee,” Arkell stated.

“It could be extremely efficient to just incorporate it into our normal agenda, based on the timeline of the audit,” Arkell continued. “Then the entire board has the opportunity to ask any questions, and to understand [for example] what risks do [auditors] see when they plan their audit, what are they seeing in the landscape in general, and then how the audit is going.”

The board also discussed whether the BOF should have more of an oversight role in the audit process — something the Town Charter does not specifically establish.

Chris Stroup favored the idea of more oversight.

“[Whether] from the Board of Finance, or a subcommittee of the board, or a separate audit committee, I think there ought to be some organization that is more directly involved in oversight,” he said.

Koenigsberg seemed to agree but noted that finding volunteers familiar with government accounting practices would be difficult.

“I think it would be beneficial for us to have a broader focus beyond just the selection of the auditors,” he said. “The things that keep me up at night with respect to town government is, what is it we don’t know in terms of controls? We get some comfort certainly from the auditors, but I would like some sort of organization [committee or subcommittee] that might be helpful in that, but it’s very difficult to get people to volunteer.” 

At Stroup’s suggestion, the board agreed to craft a set of bullet points or goals for what the BOF seeks to accomplish with the audit process.

Managing Board Member Communications and Agenda Items

Referring to a May 13 email from Stroup to all of the other board members in which Stroup requested several topics to be added to the June 13 agenda, Kaelin reiterated board procedures for making such a request and explained why he did not respond to it.

GOOD Morning Wilton requested and received a copy of the email, which included eight wide-ranging topics, including the interpretation of the Annual Town Meeting results, policies for board member speech outside of BOF meetings, and addressing misinformation in the budget process, to name just a few.

Kaelin said he felt most of the items had been previously discussed and “wasn’t interested in talking about them again.”

“I personally didn’t think it would be the best use of everyone’s time to go into all these items, so I didn’t put them on the agenda,” Kaelin explained. “But the decision doesn’t end with me. Any board member can make a motion during the meeting to add anything to the agenda. If [the motion] is moved and seconded, we can discuss whatever the subject of the motion is.”

Stroup noted that would likely mean adding the subject to a future agenda, in order to properly give notice to the public.

Stroup’s email also spurred Kaelin to say he intended to invite Town Counsel to a future BOF meeting to review Freedom of Information Act (FOIA) requirements governing board member emails. Board members who engage in discussions about board business via email can violate FOIA rules. For that reason, the BOF had to disclose multiple emails that circulated among board members as recently as May 8.

Stemming from the discussion about Stroup’s May 13 email, the board did agree to add a number of topics for future agendas, as requested by Stroup and other board members. Agendas for all town board meetings are posted in advance on the Town website, along with information on how the public can observe or offer public comment at the meetings.