Auditor flags tax-recap gap, pension risks and control gaps in Town of Templeton fiscal 2024 review

Tony Roselli, managing partner of Roselli Clark & Associates, presented highlights from the Town of Templeton's fiscal 2024 audit at the Select Board meeting on June 25, saying the report includes several observations the town should address.

Roselli told the board auditors could not reconcile the town's tax recap with budget workpapers and reported a variance of $112,000. "We were unable to reconcile that. It was off a $112,000," he said. He described that discrepancy as an audit finding that whoever prepares budget-to-recap reconciliations should resolve.

The audit also pointed to pension and retiree-health liabilities that could strain future budgets. Roselli said the town's other-post-employment-benefit (OPEB) liability was about $9,000,000, and the plan-asset ratio for the town side of OPEB was roughly 13 percent, while the town's participation in the Worcester County contributory retirement system showed plan assets still at about 50 percent. "You're only at 50% with Worcester County," Roselli said. "In order to be fully funded by the plan date of 2034 or 2035, you can expect contributions to start really increasing."

On cash management and investment income, Roselli said the town has millions in cash and investments but has been slow to shift funds into higher-yield instruments available after recent interest-rate increases. He noted about $2.6 million in general-fund cash and $2.2 million in other investments, and estimated potential interest income if those balances were managed more aggressively. "If you took 5 percent of that, you should be earning about $300,000 in the general fund," he said, and urged staff to work with bank advisers on optimizing short-term investments.

The auditors raised recurring control and operational suggestions: implement regular monthly cash forecasting in the treasurer's office, consolidate unnecessary bank accounts to simplify reconciliations, strengthen cash-handling controls for smaller departments that accept cash, and reexamine the capital-asset inventory to remove assets no longer in use. Roselli also urged vigilance on cybersecurity training and suggested simulated phishing exercises for employees.

Other technical points in the audit included an unusually large allowance for tax abatements relative to outstanding appellate board cases, an approximately $10,000 deficit long carried on a liability account, and classification issues on the tax recap where water, sewer and light indirect costs were treated as revenues instead of other financing sources.

Select Board members asked clarifying questions during the presentation about depreciation and the practicality of achieving investment returns similar to those reported for pension funds. Roselli explained the town's legal investment options are more limited than a pension fund's and therefore will not produce the same equity-style returns the retirement fund can earn.

The audit report is an annual management communication; Roselli stressed the findings reflect the fiscal 2024 records and some operational changes underway in 2025 may not be captured in this report. He said the town's new accountant had been engaging with the firm on outstanding items.

The board did not take immediate formal action on the audit presentation itself at the meeting; Select Board members asked for the items to be addressed in follow-up work by staff and for several recommendations to be returned with implementation plans.

Roselli concluded by offering to provide the capital-asset spreadsheets and other supporting schedules to town staff to assist with follow-up work.