Standard & Poor’s lowered the underlying rating on Williamsburg, Mass.,’s general obligation bonds to BBB from BBB-plus. The outlook is now negative because of significant accounting and financial reporting issues. The rating is based on the town’s recent general fund deficits and shallow local economy. Offsetting these credit weaknesses are Williamsburg’s above-average income levels, manageable debt burden, and limited capital needs. “The negative outlook is based on the issues raised by the auditor about the town’s fiscals 2005 and 2006 financial control and reporting, which are also expected to affect the fiscal 2007 financial statements,” said analyst Henry Henderson. “While the town’s new financial staff believes the issues have been resolved and will have a minimal effect on the 2008 financial statements, this resolution has not been confirmed by an independent audit.” The town’s auditor said the fiscal 2006 financial statements did not fairly present the town’s financial position in conformity with GAAP. This disclaimer was due to the lack of reconciliation procedures and the existence of significant variances, which left the auditor unable to form an opinion as to the accuracy of the receivable balances for water, sewer, and real estate taxes.The previous year’s financial statements will be restated. While the fiscal 2007 financial statements are expected to have similar audit findings, the new town management indicates that the auditor’s findings have been fully addressed in fiscal 2008.
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