Town auditors: Riverhead’s ‘books are pretty clean’

Riverhead’s outside auditors have given the town a clean bill of financial health for fiscal year 2018.

The town’s auditing firm, Cullen & Danowski, presented the 2018 audited financial statement to the town board at last week’s work session.

“The books are pretty clean here,” Cullen & Danowski partner Chris Reino told the board.

FY 2018 was “the first year you didn’t have any significant or material deficiencies,” Reino said. “Two years ago, there were significant deficiencies.”

Michael Leone, principal auditor, told the board the firm’s opinion was “unmodified.” That is, he explained, “If there was an exception or a standard that wasn’t met or something we couldn’t audit we would issue a qualified opinion.”

The town had “a net increase in position of about $4 million,” Cullen & Danowski supervisor Raul Perez reported. Revenues were up more than expenses because of increases in property tax revenues, fees for services and interest income, Perez said.

The town’s unassigned fund balance increased from $2.2 million in 2017 to $4.4 million in 2018. While the $4.4 million still doesn’t meet the requirements of the town’s adopted fund balance policy — which states the unassigned fund balance shall be no less than 15% of its total operating budget, which would have been $7.2 million in 2018 — the increase is a big improvement and the town is trending in the right direction, Perez said.

There were no new comments on the 2018 audit, Perez said. Comments from prior years have either been corrected or are in the process of being corrected.

The auditors provide comments on the audit in a letter to the town’s management. In the management letter, dated Dec. 4, 2019, the auditors will describe any significant weaknesses in the town’s internal controls and areas that are in need of improvement.

In past years, a significant issue centered on the town’s outdated computer hardware and software, the management letter noted. The town has moved the accounting functions off the old mainframe computer and implemented Edmunds Associates accounting software as of Jan, 1, 2018. The town is also in the process of moving to a cloud-based computing system.

Other, less serious, comments raised in past years have been corrected or are being corrected, the management letter states.

The town’s audited financial statements are posted on the town’s website.

Leone said in an interview after the meeting the firm intends to have the FY 2019 audited financial statements delivered to the town by July. That will give town officials the benefit of having the audited statements prior to preparing the 2021 budget, he said.

Cullen & Danowski was first hired by the town in February 2018, to handle the FY 2017 audit. The firm was deemed the lowest responsible bidder in response to a request for proposals issued by Riverhead in December 2017. The town had previously retained the accounting firm of Albrecht, Viggiano, Zureck & Company, which had handled the town’s audit for a decade.