Shelby, N.Y., Tackles Bookkeeping Issues After Software Change
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SHELBY, N.Y.– The Town of Shelby is actively addressing bookkeeping challenges that surfaced following a software transition in 2023.According to a press release issued by Shelby Town Supervisor Scott Wengewicz on february 24,2025,the town has taken steps to rectify issues highlighted in the Comptroller’s Audit Report from September 2024. The town engaged experts to reconcile cash and fund balances, aiming to ensure financial accuracy moving forward. The corrective actions were detailed during the February 11, 2025, town Board meeting.
At the February 11 meeting,Nichole Ruf from Drescher Malecki and Tina DeNigro from LGSS presented their findings to the Town Board. Their work focused on reconciling the Town’s cash and fund balances for 2023 and bringing all bookkeeping activity current. They also worked to reconcile the Town’s 2024 financials.
Software Transition Leads to Initial Challenges
The root of the problem was a necessary shift in bookkeeping software. Prior to 2023, the Town of Shelby used KVS software.Though,after KVS was acquired,the Town Board selected Williamson Law Books as its new bookkeeping system in 2022. The transition, while intended to modernize operations, introduced unforeseen complications.
Tina DeNigro, from LGSS, highlighted several limitations of the Williamson software compared to its predecessor. One critical issue was the inability to make entries for a closed month. This meant that any receivables coming in after month-end,or any errors discovered,could not be accounted for in the month they occurred. Rather, manual adjustments were required, a limitation not found in many other accounting software programs. This inflexibility created significant challenges for maintaining accurate and timely financial records.
Moreover, the transition from KVS to Williamson Law Books appeared to lack sufficient oversight. A basic principle of software implementation is ensuring that beginning balances align with audited ending balances from the previous year. This did not occur as the conversion was completed before the 2022 financials were audited. This oversight compounded the challenges and contributed to the subsequent bookkeeping issues.
Specific Issues Arising from the Conversion
The conversion to Williamson law Books created several additional complications. Critically, only the Town’s cash accounts were created in the new system. Balances for accrual accounts, such as accounts payable, accounts receivable, and unearned revenue, were not carried forward. Consequently, fund balances, representing total operating surpluses and deficits, were not established in williamson. This incomplete data migration hindered accurate financial reporting and analysis.
The Town’s account structure also underwent a significant transformation. The computer account, which served as the Town’s clearing and disbursement account, was previously managed as one general ledger account in KVS. In Williamson Law books,this was divided into 18 different accounts,adding complexity to the bookkeeping process. This fragmentation made it more tough to track and reconcile transactions.
Adding to the confusion, the code structure of the funds was altered. The 204 accounts in KVS became the 200 accounts in Williamson, the 200 accounts in KVS became 201 accounts in Williamson, and the 201 accounts in KVS became 202 accounts in Williamson. This re-coding further intricate the transition and reconciliation efforts, making it difficult to compare financial data across different periods.
Ms.DeNigro noted that given these issues, the conversion to Williamson would have been tough for any bookkeeper to understand.
Nichole Ruf observed that the bookkeeping process improved over the course of 2023, requiring fewer corrections. Though, the structure of Williamson made it challenging to retroactively adjust previous months. Despite these improvements, the underlying limitations of the software continued to pose challenges.
Findings and Reconciliation Efforts
Despite the challenges, Nichole Ruf stated that, for year-end 2023, it was her opinion that there was never anything that was intentionally done wrong.
She also noted a positive difference of approximately $3,000, indicating that the town’s bank accounts showed $3,000 more than the Town’s books, meaning no money was missing. This positive variance, while reassuring, underscored the need for thorough reconciliation to identify the underlying causes.
The year-end numbers for 2023 will undergo an audit before being provided to Tina DeNigro at LGSS, who will then complete the Town’s financial reports for 2024.Preliminary findings for 2024, viewed as a standalone year, show discrepancies of less than $100 each in the checking account and the payroll account. These smaller discrepancies suggest that the corrective actions taken during 2023 had a positive impact.
Both Nichole Ruf and Tina DeNigro identified issues with the Town’s utility payment software and procedures, recommending that these be addressed moving forward to prevent future discrepancies. Addressing these procedural issues is crucial for maintaining long-term financial accuracy.
Looking Ahead
Ultimately,both Ms. Ruf and Ms. DeNigro advised against expending additional funds and resources to revisit previous years. Their assessment was that the Town is now well-positioned for the future. This recommendation reflects a pragmatic approach, focusing on preventing future errors rather than dwelling on past mistakes.
Both Ms. Ruf and Ms. DeNigro noted that in their opinions it would not be worth the Town expending additional funds and resources to go back to any previous years.The Town is in a good place moving forward.
With the reconciliation efforts completed and recommendations in place, the Town of Shelby is focused on maintaining accurate and clear financial records moving forward, ensuring responsible stewardship of taxpayer funds. The town’s experience serves as a valuable lesson for other municipalities undergoing similar transitions.
Town’s Software Switch: A Cautionary Tale for municipal Financial Management
Did you know that a seemingly simple bookkeeping software change can trigger a cascade of financial reporting nightmares for a municipality? It happened in Shelby, NY, and the lessons learned offer a critical roadmap for other towns facing similar modernization projects.
Interview with Dr. Anya Sharma, Public Finance Expert & professor of Municipal Accounting
World-Today-News.com: Dr. Sharma, the Town of shelby’s experience highlights the complexities of transitioning bookkeeping software. What are some critical considerations municipalities should prioritize before embarking on such projects?
Dr. Sharma: The Shelby, NY, case underscores the vital need for meticulous planning and execution during municipal software transitions. Before initiating a change in bookkeeping systems, several crucial considerations must be addressed. First, a comprehensive risk assessment is paramount. This involves identifying potential pitfalls, including data migration issues, compatibility problems with existing systems, and the impact on staff training and workflow.secondly, robust testing and validation are essential.Testing should simulate real-world scenarios to identify and rectify any system flaws before full implementation.It’s crucial to ensure the seamless flow of data, especially transferring balances from the old system to the new one. sufficient resources – both financial and human – must be allocated.This includes budgeting for software licenses,training staff,and hiring external experts if necessary,just as Shelby did.Remember, a rushed or under-resourced transition almost always leads to unforeseen challenges.
World-Today-News.com: The article mentions the lack of sufficient oversight in Shelby’s transition.How can municipalities ensure proper oversight during such projects?
Dr. Sharma: Oversight in software implementations is crucial.It requires establishing a project steering committee consisting of key stakeholders from different departments – IT, finance, and legal. This committee should define clear goals and objectives, timelines, and establish interaction protocols. Regular progress reviews should be conducted and documented. Furthermore, a robust testing protocol needs to be in place, going beyond simple functionality checks; this includes testing data migration processes, report generation, and the new system’s overall ability to accurately reflect financial activity.One notable oversight in Shelby’s change was that the conversion to the new system, Williamson Law books, was completed before the 2022 audited financials were available. This meant that the starting balances in the new system couldn’t be verified against a formally audited baseline. Aligning the begining balances in the new system with audited ending balances from the previous year is essential. This helps in early detection of any discrepancies and prevents compounding errors.
World-Today-News.com: The article highlights the impact of the new software’s limitations on Shelby’s financial reporting. What key features should municipalities look for in financial software to avoid similar situations?
Dr. Sharma: Municipalities should prioritize several key features in their financial management systems. The software must, such as, have the ability to process transactions for closed periods, allowing for late entries or corrections. The system must support accrual accounting principles, appropriately managing accounts payable, accounts receivable, and unearned revenue. furthermore, the software’s ability to generate comprehensive reports and integrate smoothly with other municipal systems is essential.Versatility and scalability are also critical considerations. The system should be able to handle future changes to the town’s accounting structure and adapt to increased data volume. A user-friendly interface is crucial, facilitating easy adoption and minimizing the probability of human errors. municipalities should consider the software vendor’s reputation, support systems, and overall track record before making a decision.
World-today-News.com: The article mentions several reconciliation efforts. What steps should municipalities undertake to ensure financial data accuracy post-software implementation?
Dr. Sharma: post-implementation,reconciliation should be treated as a continuous process,not just a one-time exercise. Regular reconciliation of bank statements,accounts receivable,and accounts payable is crucial. This helps detect any discrepancies between the bookkeeping system and actual financial activity. Any discrepancies should be fully investigated and promptly rectified. Along with regular reconciliation, municipalities should implement robust internal controls. This includes segregation of duties, regular audits, and a system of checks and balances to prevent fraud and errors. Establishing comprehensive procedures for data entry and verification is highly advisable.
world-Today-News.com: What’s your concluding advice for municipalities planning bookkeeping software changes?
dr. Sharma: The Shelby, NY experience offers crucial lessons for other towns upgrading financial software. Thorough planning, robust internal control systems, and a strong focus on data integrity are essential.To avoid issues, municipalities should undertake comprehensive due diligence, engaging experts and consultants as needed to assess risks and plan prosperous implementations. In evaluating new software systems, municipalities must consider features such as month-end closings – can the system still process transactions after the month has ended? If not, this becomes a huge problem! Don’t underestimate the importance of data migration and account structure planning before changing software. Proactive planning and implementation can substantially reduce the potential for significant post-implementation disruptions. Remember, the cost of not adequately planning outweighs the cost of proper planning!
Concluding Thoughts:
The Shelby, NY saga underscores the possibly crippling impact of poorly planned software transitions. learning from Shelby’s experience is vital for every municipality, as it prevents them from experiencing similar chaos. Share your thoughts on this topic in the comments below and let’s foster a community dialog on responsible municipal financial software management.