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Monday, June 13, 2011

Brookline selectmen required to post annual audit

BROOKLINE – Selectmen might not like a taxpayer’s request to post the most recent town audit faulting the town for a number of accounting deficiencies on the town Web site, but they may not have a choice.

It turns out, posting the annual audit, which shows how the town is managing its finances, has been required by state law for more than a quarter century.

Furthermore, the law, which was revised last year, requires every municipality in the state, including villages and school districts, to elect residents to conduct an audit or hire a certified public accountant to do the job, and to publish the audit in the annual report.

The laws are cited, and explained, on the state’s Department of Revenue Administration Web site, nh.gov/revenue.

In the future, said Barbara Robinson, director of the Municipal Services Division, the DRA plans to develop a program to follow up on the audit’s findings.

Currently, if auditors raise questions, as they did in Brookline, the DRA lacks the authority to take action.

In other words, the law lacks administrative teeth.

“The Department of Revenue has no statutory authority,” said Robinson, who designed the section of the DRA’s Web site that provides forms and information about audits. “We really don’t have authority on the expenditures that have occurred. We can provide technical assistance, and we have authority over appropriations in the town meeting process.”

The 2009 Brookline audit by Concord-based Plodzik & Sanderson Professional Association/Accountants & Auditors, identified “certain deficiencies in internal control” it considered “significant” and other deficiencies it said were “material weaknesses.”

According to the audit, some deficiencies are a problem that “adversely affects the Town’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles.”

There’s a “more than remote” chance that an accounting error would not be prevented or detected, according to the audit.

“As the Board of Selectmen and department heads strive to achieve the goals of the Town and provide accountability for their operations, they need to continually examine internal controls to determine how well they are performing, how they may be improved and the degree to which they help identify and address major risks for fraud, waste, abuse and mismanagement,” the auditors wrote.

The audit also noted that the town has not formally adopted policies for a “code of ethics, anti-fraud, employee evaluations, computer use, Internet, credit cards, accounting policies and procedures, and disaster recovery.”

Asked if the policy citations were accurate, Rena Duncklee, the selectmen’s executive assistant, said the town has an employee evaluation policy, included in the town’s personnel plan, but lacks policies on anti-fraud, computer use, Internet, credit cards, accounting policies and procedures, and disaster recovery.

Dunklee said voters at Town Meeting in 2005 approved a code of ethics policy, with the proviso that instead of making it a town ordinance, it should be left up to department heads to adopt and follow it.

On Monday, resident Dennis Skey, who recently launched a one-man campaign to make town government more transparent, asked the board to post the 2008 audit on the town’s Web site, saying the report reveals financial mismanagement, and no policies to protect against fraud, waste, and abuse of taxpayer’s money.

Skey’s question provoked longtime Selectman Clarence Farwell, who told the resident, “The feeling I have from you, Mr. Skey, is that we are inept, and the implication is that we are crooked.”

The exchange did not escalate, however.

Selectman Jack Flanagan suggested that Skey’s concerns, discussed during public input, be placed on a future agenda, and Chairman Tad Putney redirected the discussion, informing the audience of nine, as well as residents viewing the meeting on the local cable access channel, that the town expects to receive the 2010 audit in two to four weeks and plans to post it on the Web site. Putney also cautioned against jumping to conclusions without checking the facts.

Barbara Reid, government finance adviser for the Local Government Center, said that while there is no state agency with oversight, the law requires that audits be made public. As managers of the town’s affairs, she added, selectmen have a responsibility to address the concerns and make a plan.

The LGC assists with training and technical assistance, and the auditors are responsible to review the previous year’s audit and comment on the progress.

“Independent reviews like this one help support some things the Board of Selectmen may have wanted to do but didn’t have the financial support to do,” Reid observed, adding that years before Enron and other high-profile accounting fraud cases, auditors carried less liability, and often helped local governments put their financial statements together.

In the case of town policies, Reid added, towns often have them in place, informally.

“They need to formalize them,” she said.

Hattie Bernstein can be reached at 673-3100, ext. 24 or hbernstein@cabinet.com.