SHIRLEY -- Dick Hingston, of the accounting firm Guisti, Hingston & Co., summarized the results of his annual audit of town finances and business practices for the selectmen Monday night, including "heads up" information on pending state legislation and recommendations to correct a few anomalies he found in the accounting system.
Characterizing his report as a "conversation" rather than a presentation, Hingston began with a "variance" he'd noticed between outstanding sewer betterment amounts and ledger entries, which he said was "atypical" for Shirley. But it was "a large number," he said.
It should have been simple to pinpoint the discrepancy but was not, due to the Sewer Department's outdated reporting system, Hingston said. "We recommended an updated report," with copies distributed as needed, he said, and with the new format, the books should balance.
Another problem he noted was ambulance billing. Medicaid pays only 80 percent of an approved amount versus the actual bill and does not allow the town to collect the difference, Hingston said. "It's contractual." A similar gap also exists between amounts billed and amounts paid via contracts with other insurers, with no viable means to collect the balance from patients who do not pay. The end result is a running deficit that at some point must be written off, he said.
An ambulance billing review committee seated some time ago was charged with meeting several times a year to add up balances due that are considered uncollectible, Hingston continued, and although the ARC "wrote off" two or three years of debts, they didn't produce an authorized document to back up their decision, recorded in the minutes.
"We suggest that they start meeting quarterly" to adjust accounts in a timely fashion, he said and that they generate a document signed by the ambulance director or the town administrator, with a copy to the selectmen. "These can be significant sums" the board should know about, Hingston concluded.
The town's trust funds were another concern, but Hingston said he had discussed the issue with treasurer Kevin Johnston and it would be resolved. Although it's standard practice to bundle fund balances, invest the total and get the best available interest rate, as the treasurer has been doing, it's also key to ensure that interest earned on each balance accrues to the fund it is intended for, Hingston said.
Another issue was long-term and involves withholding accounts, with balances leaning more to the negative side than they should. "There are also positive balances," Hingston said, but not enough to close the gap. In his view, the problem can be traced in part to some people not paying their portion of health insurance premiums, while some of it could be due to errors in the split, with the town paying more than its share of the cost.
"This has been around for a long time and should be resolved," Hingston said, even if the resolution is to write off the negative balance. Going forward, it shouldn't be a problem, since there's no withholding discrepancy now, he said.
"We've authorized more aggressive collection methods," Selectman David Swain added.
Finally, Hingston recommended taking action on a state law in effect since 2011 that allows one municipality to bill another for its share of retired employee health insurance benefits. In the past, only the municipality in which the employee worked when he or she retired was responsible for retirement benefits. Now, however, the responsibility can be shared when an employee has worked for more than one municipality.
The scenario works both ways and it will take some homework to collect all the necessary data, but "we recommend balance billing," Hingston said. "I definitely think you should send out bills" to other towns where retired Shirley employees also worked. Johnston previously told the selectmen he's working on it.