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Audit: Rumford finances "rock solid"
RUMFORD -- If the review of last year's audit is along the same lines as the June 30, 2010 report, Rumford will be in terrific financial condition.
Auditor Ron Smith of Rhr Smith & CO Cpa in Buxton told selectmen Thursday night that his findings of the 2009-10 audit revealed that the town's finances are “rock solid.”
"The general fund, the operations fund of the town, had about $6.2 million in assets, with liabilities and obligations of about $278,000, leaving a fund equity of surplus of about $5.9 million.
The standard benchmarks say a municipality should have 30, 60 to 90 days of your operating budgets sitting in surplus. To proximate an annual budget of $14.5 million annually for Rumford, that would equate to $1.1M for 30 days, $2.2M for 60 days and $3.3M for 90 days.
"At June 30, 2010, the Town of Rumford had $4.1 million at its disposal for surplus to use to offset property taxes, to be used for emergencies, used to fund reserves. So you're certainly at the higher end of the standard benchmarks and I think that's a good thing in this day and age," said Smith.
As of June 30, 2010, Rumford is "very rock solid financially. I don't think there's any question about that," he noted.
Further, with one-third of the town's tax revenue coming from the mill, Smith noted, "You've bought a year's worth of time if something drastic happens to the mill."
Smith was hired to redo the audit earlier this year after Harold Blake of Hallowell was discovered to be unlicensed to conduct municipal audits.
When asked by resident Kevin Saisi, Smith said "I saw no indication of wrong doing" as far as the town finances.
"As rock solid as your financial condition is, there's some areas that you need to pay attention to," said Smith, adding that one of the concerns the town needs to address is capital reserves for things such as sewer and infrastructure needs.
He also said the town should establish a number of policies to govern other parts of municipal finances, such as including the amount of fixed assets and establishing additional capital plans to meet future needs.
Another recommendation called for ending the tradition of reselling town purchases to individuals or private companies.
“It is unclear to us whether or not sales tax is charged to the vendors or how the town determines a fair cost to be charged.
The town should discontinue this practice immediately and use purchased town goods strictly for town business,” Smith wrote in the management letter presented to Puiia and selectmen.
Puiia said he doesn't know when the practice began that permitted the sale of sand, cold patch, culverts and other materials to private contractors, individuals and neighboring towns.
Among the issues brought up by Smith was whether or not such materials were assessed sales tax, and how a fair price for the materials was determined.
Puiia said the practice was stopped in June when Smith made the recommendation.
He said residents may still pick up a pail of sand during the winter months for spreading on their driveways, but that's it.
Smith had also said that selling such materials was competing with private sellers.
The town will continue to sell gasoline to nonprofits such as Western Maine Transportation, the Hope Association and the Polar Bear Snowmobile Club, under a form of interlocal agreement.
Other recommendations included cross-training town office personnel so that a backup would be in place if the current financial officer is unable to perform her duties and setting up short- and long-term capital plans.