On Feb. 22, Milford City Council reviewed the annual audit report compiled by Rob Griffin of Gold Gerstein Group, LLC. According to Lou Vitola, Finance Director for the city, the independent auditing company issued a “clean” opinion on the city’s financial statements for the year ending June 30, 2020.
“The audit says we are in great condition,” Councilman Jason James, who also chairs the Finance Committee, said. “Lou has done great work, but I do have a few questions. It says our bond rating went from AA- to A- and I’d just like to understand why that happened.”
Vitola explained that the AA- rating was an error in a previous audit report as the city has held an A- rating for many years.
“An A- rating is nothing to sneeze at,” Vitola said. “It is an extremely high hurdle to overcome especially since 2008 and in a municipality the size of ours. There are very few AAA ratings, although New Castle and Kent County are both AAA, so it is easy to see how we may think we could get a AAA rating, but there are different factors that get you those ratings.” Later, Vitola found that the city does have a AA- rating and that the A- rating in the report provided to council was incorrect. The rating will be changed in the report for the March 8 meeting.
The workshop prior to the regular council meeting was designed to provide information to council and to allow members to ask any questions. The audit must be approved by council per city charter and Vitola explained that the March 8 meeting approval is critical.
“We took out general obligation bonds in 2016,” Vitola said. “In that bond agreement, we promised the investors that we would publicly disclose our independent financial audit and subsequent information no later than 270 days after the end of the fiscal year. Because we have had some delays in getting the audit completed due to COVID and to allow me time to review it since it was completed before I came on board, we are cutting it close to get this approved. The 270 days ends in March.”
Vitola also explained that the entire audit was completed remotely due to COVID. In addition, the auditors sat down with Councilman James as finance committee chair which gave the financial committee an audience with the auditor without financial staff in attendance.
“Despite the issues and delays, we achieved the most favorable outcome we could have received in every section of the audit,” Vitola said. “We have a clean audit letter and our internal control environment showed there were no deficiencies in our controls. There were no weaknesses that could lead to problems with federal grants. We received a clean management letter which acknowledges the challenges of COVID, the new independent standard which requires us to create the reports for the auditor to review. In the past, the auditor created the report and reviewed them, but those rules have now changed.”
Council will vote on the audit at the March 8 meeting and the public is welcome to review the audit on the City of Milford website under the Council Packet tab on the Agenda and Minutes page. Vitola also stated that he would welcome any questions at his office.