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Barre Town Officials Must be Investigated: Powers & Sullivan 2nd Report Saugus Audit

Barre Town Officials Must be Investigated: Powers & Sullivan 2nd Report Saugus Audit

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Published by Craig Shibley
P&S issued the 2/3 reports to the Town of Saugus on May 25, 2012 as part of its scope of services "outlined in its engagement letter".
Again, P&S found countless violations of state financial laws and DoR regulations...
Yet, in Barre where P&S completed a 6 mo forensic audit NOTHING has been made public.
NOTHING.
P&S issued the 2/3 reports to the Town of Saugus on May 25, 2012 as part of its scope of services "outlined in its engagement letter".
Again, P&S found countless violations of state financial laws and DoR regulations...
Yet, in Barre where P&S completed a 6 mo forensic audit NOTHING has been made public.
NOTHING.

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Categories:Topics, Art & Design
Published by: Craig Shibley on Jun 11, 2012
Copyright:Public Domain

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09/27/2013

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TOWN
 
OF
 
SAUGUS
 
REPORT
 
ON
 
REVIEW
 
OF
 
OPERATIONS
 
 
PART
 
2
 
FISCAL
 
YEAR
 
2012
 
 
 
May 25, 2012Town of SaugusTo the Honorable Board of Selectmen:This is the second of a three-part report intended to report our findings relevant to thescope of services outlined in our engagement letter and initial report. This particularsection of our report focuses on potential financial irregularities and noncompliance withlaws and regulations as they relate to wage, benefits and other compensation paid toTown employees.The issues identified in this report were obtained from information we received in ourinitial interview with the Temporary Town Manager, Town Accountant, TreasurerCollector and Purchasing Assistant. The conversation with the previous Town Managerprovided insight as well. In addition to initial interviews, we met with the HumanResource Supervisor and the Payroll Coordinator in order to gather additionalinformation relevant to the current employee wages, benefits and other employeeallowances, which we felt would be an exception to normal practices within the Town,outside of collective bargaining agreements, or in some way out of the norm for otheremployees in similar positions and departments.The Town Charter authorizes the Town Manager to set the salaries of most Townemployees, which normally would be accomplished through the collective bargainingprocess and employment contracts. We noted many employee salaries are not formallyset by either of these methods but are set informally by the Town Manager.Even though the Town Manager has wide discretion on setting employee compensation,the compensation needs to conform to budget restraints, accounting norms, collectivebargaining agreements, employment contracts and payroll laws and regulations.The Town has an internal practice to record and track changes in an employee status byusing a document referred to as a “Payroll Master File Form”. This document is used toauthorize status changes for a new employee or existing employees relating to base paywithin the Town. According to the Human Resources Supervisor, this document is notused for other compensation such as, stipends, special assignments, temporaryupgrades, etc.This information is critical for the Town since one of the objectives going forward is toproperly budget the wages, benefits and employee allowances in the proper accountand/or fund. The Town will be required to adjust the actual payroll related expendituresfor the FY 2102 budget and make reliable FY13 budget projections based on ourfindings.The final report will follow and pertain, as previously reported, to procurement issues.This report is intended solely for the information and use of management of the Town ofSaugus, Massachusetts.1
 
 
Summary of Current Findings
As previously reported, we first requested and obtained ledgers and documents thatprovided the detail and support for the Town’s payroll activity from July 1, 2011 throughFebruary 29, 2012 for selected employees. We conducted interviews with numerousTown officials and employees, along with the former Town Manager.What we have discovered is that there is clear evidence to support the fact that therewere and are significant violations of municipal finance laws, rules and regulations. Ourfindings lead us to believe that there was a systematic, knowledgeable and intentionalviolation of finance laws that led to misleading and fraudulent accounting of the actualnature of the financial transactions for the year under review.As in our previous report, we were informed that after the former Town Manager’s termexpired, the Town Accountant and several other employees approached the TemporaryTown Manager with evidence and concerns of specific violations of finance laws that hadbeen occurring over the past several years. We were informed numerous times bythese employees, that they knew processing these transactions were clear violations oflaw but stated they only did so under the specific instruction of the former TownManager. Although there may have been pressure to process the transactions, it doesnot relieve them of their legal responsibility to comply with the same laws andregulations.Liabilities were incurred were no valid appropriation was made. Those relating to payrollwere incurred and charged to an expense appropriation or in a number of instancesrevenue line items, which clearly there was no appropriation made. The following areexamples:
Changes were attempted to be made to the sick leave buyback contractualprovision for two current employees and a benefit change for another employee
Regular payroll was charged to overtime line items
Payroll expenditures were charged to expense line items
Payroll expenditures were made to several different revenue line items
Contractual and collective bargained payroll employees were paid above theircontractual step rate
Stipends were given to employees where there was no appropriation
Cell Phone and Auto Allowances were given to employees inconsistently and inan arbitrary manner and not in compliance with the Town of Saugus’ TravelPolicy
The Town’s Date of Hire practice, for calculating years of service, was notadhered to and employees were given related years of service benefits outside ofthe restrictions of the current practice2

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