I was interested to read in todays Boston Globe that Merrill Lynch has agreed to repay the City of Springfield for nearly $14 million in investment losses, as well as the City’s legal fees. The losses were reportedly related to “collateralized debt obligations,” which are securities linked to bonds and loans, including subprime mortgages, according to the Globe.

Interestingly, these reports are coming on the heals of several recent investment related reports and advisories that TLB has been monitoring on behalf of its clients. As well as downgrades from rating agencies on some government investment pools.

November 30, 2007, Standard & Poor’s issued a report entitled “S&P Rated Local Government Investment Pools Weathering Storm.”

On December 5, 2007, the Boston Globe ran an article with the headline “Volatile holdings part of state fund - SIV’s add risk as communities seek to increase income,” referring to the MMDT cash portfolio.

This was followed by a frequently asked questions report by S&P on December 10, 2007, related to local government investment pools and a separate question and answer piece issued by Fidelity on the MMDT cash portfolio and its perspectives on Structured Investment Vehicles. S&P also issued a separate report entitled “U.S. State and Local Government Investments and Recent Market Disruption,” on December 10, 2007.

Just recently, I received the 2007/2008 investment circular from the MMDT on the cash portfolio and the MMDT short-term bond fund.

TLB has been adding additional procedures to its municipal audits to ensure our clients are meeting the disclosure requirements of GASB 40, have an investment policy, are following and monitoring adherence to the investment policy and that city and town treasurers understand to what extent municipal investments may be at risk.

TLB will be adding future posts on a treasurers responsibility for deposits and investments under Massachusetts General Laws, and otherwise. But, in the meantime, there is no time like the present to review where your community stands. If you have any questions regarding the recent reports, on investment policies or municipal investments in general please contact Rich Bienvenue at (508) 255-2240 or via e-mail rich@tlbcpa.net

Posted by Rich Bienvenue

The Division of Local Services of the Massachusetts Department of Revenue has announced a pilot program to roll-out its web-based financial reporting system for Massachusetts municipalities. Gerard D. Perry, Director of Accounts for the Bureau of Accounts of the Department of Revenues Division of Local Services presented a summary of this new system at the Massachusetts Society of CPA’s Government Accounting and Auditing Conference held on June 21, 2007 in Natick.

The DLS is rolling out its system to approximately twelve pilot communities in fiscal year 2008 according to Perry and is expecting to provide for direct entry of the tax rate recap. and Schedule A initially, with additional functions and forms, such as snow & ice reporting, receivable and cash reconciliations to become subsequently available.

Although this may be viewed as an additional requirement to learn by some, I believe this is a fantastic step in the right direction and will ultimately result in additional efficiency and less time spent by finance officials in the reporting and reconciliation functions. What do you think of this inevitable requirement? E-mail or call me if you would like to hear more about what your city, town, district, etc. can be doing to utilize web based functions to improve efficiency and internal control. Thevenin, Lynch, Bienvenue has a strategic partnership with web developers, who, in conjunction with our significant experience in municipal finance operations, can save your municipality time and money. RB