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June 6th 2012: A Question of Intent

June 6th 2012: A Question of Intent

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Published by Craig Shibley
A media report about the possible legal ramifications of the City's forensic audit.
A media report about the possible legal ramifications of the City's forensic audit.

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Published by: Craig Shibley on Mar 26, 2013
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08/17/2014

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Auditor: Intent of fiscal transactions hard to prove
 June 6, 2012
The Board of Selectmen discussed the second part of Powers and Sullivan‟s forensic audit into theTown of Saugus‟ finances last Thursday and Tuesday.
 Jim Powers, one of the firm’s accountants,
was there Tuesday to answer questions from the Board and members of the public
.The audit report discussed payroll issues, finding $162,000 worth of questionable payroll out of
$200,000 that was investigated. “This particular report is not as all
-
encompassing as the last one,”
Powers said Tuesday.Town Manager Scott C
rabtree said at Thursday night‟s meeting that he was working on developing
policies for cell phones, car use, fuel and other areas where some town employees were given certainbenefits over others as stipends. He also said that he had corrected instances where certain
employees were regarded as 1099 contractors when they weren‟t.
 
Select Board Chairman Michael Serino asked Powers about the town‟s possible liability for thepayroll taxes that weren‟t paid because the former administration had those employees
classedimproperly. Powers could only answer that it depended on the exact situation.The bulk of the discussion about the report was in regards to the grievance process. According to
Crabtree, the town‟s contracts include a grievance process for addressin
g issues that come up during
the contract‟s life. “Each contract has different steps for the grievance process,” Crabtree said.
 In Saugus, the auditors allege, the previous town manger used the grievance process to raise certain
employees‟ wages without ei
ther renegotiating the contract or requesting additional funds to pay for
that increase to be appropriated for that employee‟s department. Furthermore, the previous town
manager would then have the town accountant make a journal entry covering the pay raise withmoney from other appropriations, such as the enterprise funds.
“So what you‟re saying is that journal entries sufficiently obscured these transactions?” Selectman
Stephen Castinetti said.
“Yes,” Powers replied. “Journal entries can be used to take t
he transaction was initially approved
and moves them to accounts they weren‟t authorized for. That‟s one of the tricks people use to notshow the true nature of the transactions.”
 However, both Crabtree and Sullivan talked about the difficulties of identifying problematic
grievances. “You‟d have to establish, which is difficult, that it was done for this purpose,” Crabtreesaid Thursday. “Some are more difficult than others.
 
They didn’t go through the payroll process
,” Powers said Tuesday. “Sometimes ther
e were
reasons given [for specific wage adjustments].”
 

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