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Berlin receives ‘unmodified opinion’ in audit

By Rachel Ravina, Staff Writer

(Nov. 28, 2019) Despite a turbulent budget cycle, PKS & Company accountants presented the town with an “unmodified opinion” for its annual audit.

“This is also known as a clean opinion, and it’s the highest level of assurance that we can provide as auditors,” Michael Klager, a partner in the firm, told the Town Council Monday night.

Leslie Michalik, an audit manager at PKS & Company, agreed.

“The books and … records of … the town are in good order,” she said. “You have a good strong accounting controls in place.”

The general fund had a roughly $5.16 million balance on June 30, the end of the fiscal year, according to the report. There was about $6.6 million in revenues — up $645,000 from the year before — and approximately $6.7 million in expenditures, down by a little more than $1 million from the previous year.

The audit cites several changes, including “increases in real estate taxes, state shared income taxes” and a reduction in the number of capital projects during this fiscal year.

Berlin’s Town Council increased the real property tax rate to $.80 per $100 of assessed value for the fiscal year 2020 budget. The water and sewer rates also were increased.

The audit also broke down the town’s four enterprise funds: sewer, electric, water, and stormwater. Among the utilities, auditors agreed that the sewer fund needed some attention.

The town’s sewer fund had a $930,640 operating loss, according to the audit. There’s also a decrease in the fund’s net position prior to “special connection fees” of $170,329 as compared to $567,860 last year.

“At June 30, 2019, the Sewer Fund owes the General Fund $3,384,000 and $374,000 to the Water Fund,” the audit stated.

Klager and Michalik suggested the town establish a repayment plan for the sewer fund. Among several recommendations, they said officials should inquire if “the town has the intention and ability to repay this amount?”

“You didn’t get into this issue overnight and you’re not going to get out of the problem in one year either,” Klager said.

Berlin Mayor Gee Williams addressed last year’s difficult budget cycle and said he was eager to see how the restructured rates could alleviate the sewer rate debt.

“I have a feeling that … we’ll have a plan for FY21 starting July 1, [2020] as to what we expect the repayment process to be and then in a year we can review it and then determine is that realistic and if not do we need [to] make some additional adjustments to make it realistic?” Williams said.