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The Audit
Kathleen Corey Rahme, Methuen Councilor At Large

When faced with the question to approve a resolution for an independent audit, the City Council voted it down 6-3. Does that mean the majority does not favor an independent firm coming in to examine the books? No. What it does mean is that they are not in favor of spending an additional $50,000 to have a firm come in and tell us what we already know. The city of Methuen has an independent audit yearly to the tune of $40,000.

To make an additional expenditure of $50,000 was deemed redundant and perhaps even reckless. Fiscal conservatives might even consider it a waste of money.

The city of Methuen has been found to have impeccable books for the years 2004 and 2005. The audits that were performed by Melanson, Heath & Company, PC were without findings. “They perform the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the comptroller general of the United States. Those standards require that they plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation” (source: Melanson, Health & Company). The team led by Tom Kelly, city auditor, should be congratulated for its above average job performance. This is an impressive feat for any city. The process that the city goes through to get to this point is really quite thorough.

Many eyes follow the expenditures of the city of Methuen. It was explained to me and I am more than satisfied with the amount of thresholds.

When a department head needs to make a purchase, an invoice is required. Every expenditure is given department head approval and initialed as such. Invoices are sent to the auditing department and examined by two people on Kelly’s staff to ensure they are proper. The mayor makes the final approval with a review and signature. On a monthly basis, all department heads must verify their month’s activity and they are required to sign off and verify a report reflecting the activity. All along the way, if there is anything that is out of the ordinary, it is red-flagged and held up in the auditor’s office for clarification. Later, if department heads find that they need more money, they must present their case to the mayor. If it is approved, the city auditor is consulted and the necessary resolution is drawn up for action by the City Council. The budgets are adopted by the City Council and can only be amended by the City Council. All money that comes into the city is received formally by the City Council. As you can see, this is a thoughtful and quite thorough process.

 The City Council is accountable to the constituents of Methuen. We work for you. Approving the operating budget is probably the greatest responsibility that faces our elected officials. This year we approved a $112 million budget. The annual audit is performed for the citizens of Methuen, the City Council and the mayor. Anyone who has the notion to look at the findings of the audit are always welcome to do so.

The annual independent audit is presented to the Department of Revenue, Moody’s of Wall Street, New York City, the bonding company and financial advisors of First South West, and the GFOA, which is the Government Finance Offices Association. There are many eyes that look over our audit. As stated above, the audit has been without findings for the past two years and do to that accomplishment, the audit was taken to a higher level known as the CAFR, which stands for “Comprehensive Annual Financial Report.”

This type of audit is akin to the gold standard of audits. Upon meeting all the standards set by the GFOA and a complete and successful review by the GFOA, the city of Methuen would be awarded a Certificate of Achievement for Excellence in Financial Reporting. This certificate essentially states that the city of Methuen achieved the highest standards in government and financial reporting.

Bravo Methuen and its capable team of financial gurus.

The city of Methuen boasts an A1 bond rating, which means we have a low risk and a high yield of return. Moody’s assigns the city its credit rating based upon its fiscal solvency.

This credit rating allows the city to borrow money at a very low interest rate for various projects that it can’t take out of the budget. This doesn’t happen on its own. It requires good management.

Why would we want another independent audit? I am relieved that it was voted down because I could not justify an additional expenditure that would yield the same result. To suggest that we don’t do independent audits is nothing more than disingenuous and praying unnecessarily on the fears of the good citizens of Methuen.

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The February, 2006 Edition of the Valley Patriot
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Prior Columns by Kathleen Rahme