No smoking gun.

No absolution, either.

An independent audit of the Woodsville Precinct for 2015 and 2016 found no large-scale criminal activity but uncovered significant problems that provided “opportunities” for embezzlement, theft and fraud.

Scott Eagen of accounting firm Plodzik & Sanderson presented the audit results at the Dr. John A. Bagonzi Community Building on Tuesday, telling an audience of 60 that Woodsville lacked checks and balances, kept insufficient records, and failed to meet state reporting guidelines.

It was part of a five-year audit of Woodsville’s finances from 2015 to 2019 ordered by the Department of Revenue Administration because the precinct did not perform required annual audits.

The DRA issued the following statement on Tuesday’s report:

“The DRA is concerned that the District routinely failed to comply with the State’s Municipal Budget Law and appeared to have no meaningful internal controls in place. The release of the audits from 2015 and 2016 have validated these concerns and identified a number of other potentially serious problems that may require further investigation.”

The audit covered all five Woodsville enterprises: Highway, water and light, wastewater treatment, fire and EMS.

It revealed a lack of “internal controls” designed to prevent, detect, or correct financial misstatements.

It also turned up potential infractions. Two stand out.

The district financed three equipment and vehicle purchases totaling $238,442 without voter approval, in violation of the Municipal Finance Act, according to the audit report.

Also, Water & Light improperly classified a full-time employee as part-time from 2009 to 2020. The district may be liable for unpaid pension contributions to the New Hampshire Retirement System during that time, according to the audit report.

The following is a partial list of other problem areas identified in the audit:

Fiscal Management: Woodsville’s accounting and information systems were insufficient, the audit report stated.

Precinct finance records were decentralized. Department expense and billing systems were not integrated. Payments were done through consumer-grade software.

Meanwhile, the precinct kept shoddy records. Some invoices for the audit period could not be located. Meeting minutes were handwritten, frequently illegible, vague and incomplete.

Plodzik & Sanderson recommended Woodsville implement a general ledger system to record all district financial activity; create a centralized and systematic record-keeping process; and take more care with meeting minutes.

Checks and Balances: Oversight was lacking across departments.

The audit identified a half-dozen instances where a single person was responsible for handling an aspect of department finances. That included one person in Woodsville Ambulance (billing and collections), one in Woodsville Fire (billing and collections), one in the precinct office (cash disbursements), and three in Water & Light (payroll, billings and collections, cash disbursements).

Plodzik & Sanderson recommended shared responsibilities to improve accountability.

Non-Compliance with State Statutes: The district violated state law for failing to repay a tax anticipation note of $70,029 (obtained May 22, 2014) within a year, as required, and for borrowing a sum in excess of the district’s total tax levy for the previous year.

Also, the district improperly used $45,000 from the accumulated water, electric and sewer funds for payments in-lieu of taxes; did not provide documentation for the creation of trust funds; failed to properly report debt service expenditures to DRA; and made a $30,000 transfer from the general fund to the Truck Replacement Capital Reserve Fund without an appropriation.

Payroll and Benefits: The district did not have documentation supporting employees’ initial rates of pay, or changes in pay rate. There were no records of the Board approving annual cost of living adjustments or weekend pay rates.

In addition, a Water & Light employee accrued significant time off in lieu of overtime pay, a practice not included in the department’s personnel policy. That employee was responsible for tracking all earned time, including compensatory time, without an outside review. A liability for this accrued time balance was not recorded on the district’s financial statements and was subsequently reported as part of the audit. The employee subsequently left the district and was paid for their accrued time.

Kevin Shelton, the administrator of the Woodsville Precinct, said changes are underway to address those issues.

“My goal is, by Jan. 1 [2022], to have all of the funds … in one system,” he said.

Shelton was hired on March 23, 2020 as the Woodsville Precinct’s first administrator. The position was established to provide oversight to the highway, fire, EMS, waste treatment and water and light departments.

Prior to accepting the position, Shelton said he was warned that “money was missing and people were going to jail.”

“But I was determined to be open-minded, neutral, and let the cards fall where they may,” he said. “I further responded to others who asked the same questions, saying that if someone did something with illegal intent then they must pay the consequences. I was concerned to think that this could be true of people who have raised children with mine and have served this community for as long as I have, and as long as I’ve known them.”

The legal fallout remains unclear.

Meanwhile, Shelton said he embraced the challenge of the five-year audit and viewed it as an opportunity to make much-needed improvements to the Woodsville district.

He said the work is underway and will be guided by the Plodzik & Sanderon report.

“Everything that has been presented tonight is an opportunity,” Shelton said. “It’s a checklist and we’re going to go through [it].”


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