Princeton council adopts audit; auditor flags higher water-sewer receivables and $61,579 drop in fund balance

The Princeton Town Council voted to adopt the town’s annual audit and heard auditors describe several financial items the council should monitor, including a roughly 37% rise in water-sewer accounts categorized as doubtful, a $61,579 decline in the town’s general fund balance and new state requirements for the finance officer bond.

Auditor Austin, who presented the audit, told the council that the town’s water-sewer accounts receivable now appear as about $68,000 in the audit package compared with $49,521 the prior year — an increase Austin described during the meeting as “about 37%.” He said the allowance for doubtful accounts is a routine, annually calculated figure tied to the age of receivables and that an increase can reflect more unpaid customer balances or a change in how the allowance was calculated.

"The allowance for doubtful accounts is a calculation. So we look at your age trial balance," Austin said. "If more people owe the town for their water bills, then the allowance would have also increased." He advised the council to examine 30/60/90-day aging detail to identify whether collection or deposit policies are driving the rise.

The council also heard that the town’s undesignated general fund balance fell by $61,579 in the audited year. Austin said the Local Government Commission (LGC) emphasizes the percentage of fund balance available relative to general fund expenditures — recommending about 34% — and that Princeton’s percentage was reported at roughly 41.24% in the audit, which the auditor described as above the LGC guideline even after the $61,579 decrease.

The audit review also covered pension and separation-allowance accounting. Austin explained that the town has elected a ‘‘pay-as-you-go’’ approach for the special separation allowance for law enforcement (commonly called LEO or special separation allowance) and that an actuarial study produces a recorded liability representing future benefit payments. He said some units now are required to establish a formal trust if they want to pre-fund separation liabilities; Princeton currently records the liability and pays benefits as they come due.

Austin told the council that a change in state rules during the year increased the required finance officer bond from a flat $50,000 to a calculation equal to 10% of the unit’s total annual budget (capped as specified by statute), and that the town needed to update its bond during the year. The auditor said this change produced similar findings for multiple units in recent audits.

On the proprietary side, the audit showed an operating loss in the water and sewer fund when measured on an accounting basis that includes depreciation. Austin pointed the council to the statement of cash flows and said the more relevant operational cash figure — cash flows from operations — was positive in the audited year (about $951,244 in the presentation) even though certain noncash items such as depreciation reduce operating income. He recommended monitoring operational cash, aged receivables and, if needed, conducting a rate study.

Council members said the town has already taken action. Town staff and council noted that they implemented a rate adjustment during the year to address the shortfall and planned to monitor results in the coming months. Council members also discussed deposit policy for rental properties, noting that high rental turnover can increase the town’s exposure to unpaid balances when customers leave without settling accounts. Officials said they will compare deposit practices with nearby towns and consider a tiered approach (for example, higher deposits for renters) and stronger enforcement of disconnection procedures.

The council adopted the audit by voice vote. The meeting closed with the council confirming it will continue to review budget-to-actual details, consider budget amendments where needed before the statutory deadline, and monitor the effects of the recently adopted water and sewer rate change.

Votes at a glance: Motion to adopt the audit — passed (voice vote recorded as 4–0). Motion to accept Mr. Clark’s application to a town board — recorded as passed (vote details not specified). Motion to proceed with Heritage Jewelers — recorded as passed (vote details not specified).