An analysis of the town's financial management procedures has indicated that it needs to continue building a reserve fund, as well as tighten its policies and procedures.

Completed by independent auditor Powers & Sullivan, the analysis focused solely on fiscal year 2009, which ended in June of 2009. Town Administrator Mark Andrews said the review serves as a "report card" for the town, pointing out areas where improvement is needed.

Though towns should typically have an audit completed each year, the practice has been spotty in recent years, Andrews said, adding that he plans to have yearly audits become standard once again.

"It's good financial business practice to have an audit," said Andrews. "You're challenging yourself and saying, 'What can we do better?'"

The report emphasized the need for a reserve fund that the town can draw on in emergencies.

"We have a positive cash balance, but not enough in reserves," Andrews said.

Town Meeting voted in April to place $100,000 in reserves. Jim Powers, of Powers & Sullivan, suggested that the fund hold an amount equal to 5 to 10 percent of the town's annual expenditures. The $100,000 represents less than 0.25% of the town's $46 million operating budget.

The audit also pointed out weaknesses in town processes, most of which involved the "reconciliation of accounts." Some accounts were found to be out-of-balance, and sometimes problems went undetected due to a combination of outdated financial management software and the procedures used by departments to monitor accounts.

The outdated financial software was a known issue, Andrews said. It was updated as of July 1.

"The breakdown of internal controls is fundamental to solving this problem," Andrews said. "We're taking all of the departments and making sure we have updated policies and procedures."

In addition to putting new procedures in place, Andrews said he is making professional development a top priority to ensure employees have the necessary training to perform their duties.

Powers also suggested adding an employee to help with the workload in the Town Accountant's office. Andrews posted a position last week for a part-time Assistant Town Accountant.

Some of the issues reported in the audit were known and have been addressed already. Others will have to be addressed in the current fiscal year, 2011. "This document will stay in play" until all of the recommendations for improvement are met, Andrews said.