Pownal audit finds errors, no losses
The errors, some of which were repeated in both years, largely reflected misclassification of funds, including posting a short-term loan as revenue and posting gross debt payments to a single expenditure account, when the principal and interest should be separated.
The town's financial statements were presented fairly in accordance with accounting principles — but that opinion didn't come until after errors were corrected, Ron Beaulieu, a certified public accountant from Portland, Maine, told the Select Board at a special meeting last Thursday.
Vermont law requires that school districts, town and cities account for money entrusted to them, and that those records be audited.
For fiscal 2017, the errors came to $381,000, Walker said. For fiscal 2018, the errors came to "somewhere in the range" of $60,000, he said.
The town has loans, and lenders require audits every year, Walker said. The fiscal 2017 audit was not done on time, as there was a "miscommunication," Walker said. The town clerk at the time was also ill, he said.
The audit found eight errors in fiscal 2017, according to the internal control report for 2017, which lists issues found in the audit. Some items in the 2017 report were redacted.
There were six such errors listed in the fiscal 2018 report.
When reached last Friday, Walker emphasized that none of the issues identified involve loss.
"There's no loss of any money," he said. "There's no mismanagement of any money. It was recorded differently than the auditor recommended."
At the meeting, board member Suzanne Caraman asked for examples of the errors.
"We don't want everybody in town thinking, `oh, we made these horrible mistakes,'" she said.
Beaulieu directed the board to an item in the fiscal 2017 internal control report.
That item identifies an error in which a long-term loan was listed as a liability on the road fund.
Only short-term loans are to be posted as liabilities on fund financial statements.
This error, along with two others, was repeated in fiscal 2018, according to the 2018 report.
For fiscal 2018, as in fiscal 2017, gross debt payments were posted in a single account when principal and interest should be posted to separate accounts.
There was also a lack of an internal control document to address internal reporting objectives, as was also found in the 2017 report.
At the meeting, Beaulieu pointed out that the number of errors decreased from fiscal 2017 to fiscal 2018.
"If you will, you had some progress," he said. The numbers of adjustments went down from 2017. Those adjustments can always go up or down in number, depending on things like whether the town had complex transactions, he said.
Day-to-day financial transactions are being handled pretty well in Pownal, he said.
"You know how to pay bills, you know how to collect revenue," he said. "This isn't to say you don't know what you're doing."
But, he said, each of the errors found matter. And when unusual transactions come up, the town doesn't have the expertise needed.
Beaulieu recommended the town utilize a consultant to help with such transactions through the year.
"I can say this — these are material adjustments," he said of the problems identified. "I don't want to minimize these. The dollar values are such that I cannot walk away from."
With today's complex accounting rules, if there isn't a person in-house with the proper, up-to-date education and training, errors will occur, he said.
"Please take it very seriously," he said.
A consultant would help reduce the chances of having such errors, he said.
Beaulieu told the board he's also concerned about the town treasurer being an elected position. This time around, the numbers got to where they needed to be — with some minor corrections. And that's good, he said.
But if a treasurer who wasn't qualified won in a later election, that could change.
"Right now, you have a risk, I think," he said. "And it scares me. [When] anybody with no qualifications can actually take on that kind of job. Would you like to go for a plane ride where the pilot is elected? I don't think so."
This isn't a reflection on the town's current treasurer, Ellen Strohmaier, he said. "I think she does a terrific job," he said. "But the town's risk is elevated because of this."
Beaulieu said the town should consider having an accounting department. Officials should evaluate the situation, which would take planning and discussion, and maybe committee work, he said.
Patricia LeBoeuf can be reached at email@example.com, at @BAN_pleboeuf on Twitter and 802-447-7567, ext. 118.
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