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Lancaster auditor flags OPEB reporting gap, recommends MD&A and bookkeeping fixes
Summary
External auditor Tim Greene told the Lancaster Select Board the town's 2023 financial statements include an adverse opinion tied to OPEB reporting under GASB 75, while general fund opinions were clean; he recommended adding a Management Discussion & Analysis and tightening cash and grant recordkeeping.
Tim Greene of Roberts & Greene told the Lancaster Select Board during its March 3 meeting that the town's year-ending 2023 audit includes an adverse opinion limited to how the town reports postemployment benefits other than pensions (OPEB).
"GASB 75 requires towns to determine...the implicit rate subsidy for Town employees being part of a pooled insurance program," Greene said, explaining auditors expect a reported liability for the benefit even though the town does not directly pay it today. He said other portions of the audit received clean opinions, including the general fund and other major funds.
Greene also said the town did not present a Management Discussion & Analysis (MD&A), which GASB requires and which he finds useful for readers. He recommended the town clean up cash reconciliation practices (noting older outstanding checks) and duplicate records for tracking grants to reduce reporting risk.
Selectman Kathy-Jean Lavoie pressed on whether the town should budget depreciation; Greene said budgeting for depreciation differs from capital outlay and can complicate rate-setting because depreciation is an accounting expense that can occur in years without capital purchases.
The board did not take formal action on the auditor's recommendations at the meeting. Greene told the board applying the GASB 75 requirement is ultimately a management decision; if the town chooses to comply, it will likely require actuarial work to quantify the liability and adjustments to financial reporting and policies.
