“Really the report primarily demonstrates that at the core financials are in that final state. We’re working on the last state and materials for the audit. We can talk about results a little bit on a high level,” Vitola said. “One section is about $2 million lighter at the end and that’s apples to apples with ARPA actually because we got that 2021, and then spent all of that $1.2 and got that second fund right at the end of 2022, so that’s about but the difference.”
Utility and other funds were up, according to Vitola based on the audit report. He also pointed out that city investments were very strong, but that he was talking to the auditors about how he should handle any dip in the stock market which would have an impact on city funding. Throughout the process, Vitola stated he had learned a lot about the process.
“Now, that’s not to say that this is how long the final state will take. I can’t believe that I have to walk back what I said at the end of the process last year, which was, well it can’t get any worse than this. Even if it’s later than a normal process because of how they work, that wouldn’t be as bad as it was a year ago tonight and counsel. I stand here humbled by my staff. It’s just fabulous. I don’t want to make excuses. I’d like to say I think we’re just stretched unbelievably thin in the finance department. And we’ve got resources in place, onboarding training with a third party contractor that was good but not great. There were some operating challenges that didn’t lend themselves to having it available as though, so that’s obviously the bad news,” Vitola said about the delay in completing the audit. “The downer is that we’re here right now. Good news is that some of the other things we learned from the process last year, paves the way for significantly stronger product. I was building the financial statements backwards.”
Vitola stated that the auditors had helped guide him through the process, providing him with details on how they viewed financials for government.
“But it looks wildly different than it used to look. So, there are tricks and tips and things to use to build those in a way that our current auditors prefer they be built, and we learned all that this year. There’s was no statement by statement preparing the way we expected,” Vitola said. “We have billing operations that operate miscellaneous receivables that are generated in the internal service fund the public works department when developments have been built, and we have to grant access to all these things. We also have little pockets the auditors are looking at that validate local city life. We looked at the pension multiple times because they compensated absences more than once. And many times, there was a philosophical disagreement between the production of backup.”
Vitola explained that other steps had been put in place to help the audit process run more smoothly so the reports are completed in a timelier manner. Vitola said the process was a drain on him and his department, leading to some stress in other areas of the city finance department, but that he saw the light at the end of the tunnel.
“What impact does a delayed audit report have or are there any penalties, financial or otherwise, for not getting the reports to those that rely on our financials for lending, regulatory purposes, whether it’s governmental or private or banking or whatever have you,” Councilman Jason James asked. “Are we okay? Because we’re talking 22 and then we’re going to get into 23, then 24.”
Vitola stated that in some cases, audits were not required, but that as long as the city finances were strong and polices were in place, a delayed audit should not have much of an impact on the city’s overall financial health. The only area where a delayed audit could have an impact is if a DEMEC customer, such as Middletown, requested financing where DEMEC members would need to provide financial information for loan grading, there may be some issue if Milford’s audit were significantly delayed.
“We have an agreement amongst the members of DEMEC and one of the items in that agreement is that we shall provide an audited financial statement within six months at the end of the year. So, we do have a contractual obligation under DEMEC,” Mark Whitfield, City Manager, said. “I know DEMEC is very concerned over the fact that this could have an effect on their rating and they they’ve been told by I guess Moody’s and S&P that the other side of that is Milford is not the only one that has not complied with this. There are two other municipalities that are kind of in the same boat that we are. However, we don’t want to be that example. We want to get to the point where we are complying with the contract obligations as part of DEMEC.”
Councilman Andy Fulton asked if there were ramifications through DEMEC if Milford continued to have delays in getting audited financials completed. Whitfield said there were not, but the problem would occur should DEMEC need to go out for financing. Councilman Dan Marabello confirmed that the 2023 audit should be completed in June and that the 2024 audit would be on track at the end of December. Vitola said that was the goal, but he could not say so definitively, but that he and his staff were working hard to meet the deadlines.
“First of all, thank you for your transparency and in depth explanation. Thank you for that. And the other thing is, you hear all this talk of work, life balance. I want you to take care of yourself. Because within the transparency, we’re honest to say how it’s affecting you. And what’s most important is you as a human being, as a man, as a family, mentally, physically is most important. So with all that’s in front of you, even though you said you’re seeing the light, if you need to step back and take care of yourself,” Councilwoman Katrina Wilson said. “I don’t care as much about the deadlines; I’m just saying it’s important. I’ve been in situations like that, where no one said step back, you don’t know you’re going there until you’re already there. So, I just want you to be as honest with yourself as you are with us.”
Vitola stated that he is managing good work-life balance. He explained his children are older and simply understand when he has to work. He is also cognizant of his staff having good work-life balance as well. Councilman Andy Fulton asked what steps had been put in place to avoid pitfalls the city faced last year. Vitola said that some of it was simply explaining to the auditors the processes used in the city while other aspects were additional training for staff.
“When we talk about work life balance, I want to share something,” Whitfield said. “The other morning, I woke up at like 4:09 in the morning and, don’t ask why, I looked at my phone. An email popped up from Lou to Terri at 4:14 in the morning. If that were not bad enough, Terri responded a few minutes later. I was thinking I’m not sure who is crazy here, Lou for sending an email at 4:14 in the morning, Terri for answering or me for reading it.”
Councilman James stated that they just had a conversation about that at his own workplace where it is so easy to allow work to infiltrate home hours.
Once the FY22 audit is finalized, it will be presented to council for approval.
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