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County treasurer clarifies status of financial statements and audits

by Thomas Beeler
Editor of The Granite State News
July 10, 2014
OSSIPEE — Carroll County Commissioners held a special 9 a.m. meeting last Monday to review the issues uncovered by new auditor Ron Beaulieau of Portland, Maine, prior to a 10 a.m. meeting called by the county delegation.

At the start of the commissioners meeting, Delegation Chair Karen Umberger said she called the delegation meeting to receive an update from the commissioners on the status of the county audit in view of the discrepancies found in 2010 statements by Beaulieau.

Commission Chair David Sorensen opened the meeting explaining that what was originally planned as a meeting between Umberger, himself, Business Manager Kathy Garry and Treasurer Jack Widmer had "mushroomed" into a full delegation meeting at 10 a.m. and that in turn had led to this 9 a.m. commissioners meeting.

Delegation member Glen Cordelli (R-Tuftonboro) objected to the use of the word "mushroomed," saying that delegation members such as himself requested a full meeting to hear the status report.

Treasurer Widmer provided background on the audit issue, saying he was elected in 2010 and the financials for that year were his first. The county had been using Mason + Rich of Concord to do financial statements and audits back till at least 2007 and that firm completed the 2010 financial statements but not the audit. Mason + Rich was not paid for the audit that it did not complete and the firm subsequently withdrew from providing services to Carroll County, which led to a bidding process where the current accounting firm, Ron L. Beaulieau & Company, was selected.

In the course of preparing to audit 2010 and move on to bringing county financial statements up-to-date Beaulieau found discrepancies in the 2010 statements which dated back to 2009. Because 2009 was closed and audited, the correction of any discrepancies would need to be done in the 2010 statements, which are still open.

Widmer stressed that the discrepancies did not indicate any wrongdoing or any money misallocated or missing. The major error found was where prepaid interest on the bond for the new nursing home was booked in one year rather than being amortized over the 20-year life of the bond. An error like that should have been picked up in a 2010 audit but no audit was done.

There were other minor discrepancies, Widmer said, that also should have been cleaned up in an audit of 2010 but were not. The county has commitment letters from Beaulieau to do the 2010 audit and then generate audited financial statements for 2011, 2012 and 2013. Before the 2010 audit can be done, the errors in the 2010 financial statements need to be corrected, ideally by Mason + Rich.

Widmer said the county should have asked why there was no 2010 audit report. He added that in his view there was no point in trying to find someone to blame for the situation but instead the errors should be fixed so that the county can move forward.

Rep. Tom Buco (D-Conway) asked whether it was a conflict of interest to have the same firm prepare financial statements and do the audit as well.

Widmer responded that there are only 2-3 companies that provide financial services to New Hampshire counties and all do both, but the team in the firm that does financial statements is separate from the one that does audits. He said he doesn't see a conflict of interest in that arrangement.

Buco responded that he understood the prior firm was no longer doing the work and in his experience a new firm coming in does a pre-audit of the prior firm's work. He added that having an annual audit is clearly needed.

Widmer conceded that commercial firms often have separate firms do statements and auditing. Carroll County is more complicated in that it has an enterprise entity, the nursing home, which is a very large operation in itself.

Buco asked why the problems were not caught in the 2009 audit.

Wilmer responded that he does not know but the county has audited 2009 financials. Any fixes would have to be done in 2010 statements, which are still open and unaudited. He added that the county does file state information returns but normally does not complete financial statements up to a year later. He pointed out that there are only two employees in the business office for a $23-$24 million enterprise, and that is a lot of work to do.

Rep. Cordelli objected to Wilmer's plea to move forward and not try to find someone to blame for the past. He said the county needs to know why it happened. He asked what work Beaulieau is currently contracted to do.

Sorensen attempted to answer Cordelli's question but Commisioner Asha Kenney gave a different answer. Business Manager Garry then clarified that Mason + Rich did the 2010 statements and John Lyford, who used to work for Mason + Rich, did the 2011 statements. Beaulieau is prepared to do the 2010 audit and then do the statements for 2012 through 2013 and audit 2011 through 2013. She said she is asking Mason + Rich to make the corrections to the 2010 statement.

Sorensen said Beaulieau is willing to make the 2010 corrections for a fee of $15,000. Since Mason + Rich was paid to do the 2010 statements that firm should do the corrections at little or no cost and not force the county to spend $15,000 to do them.

Wakefield resident Steve Brown said there is no guarantee that Mason + Rich will do the corrections without charge and, given the discrepancies Beaulieau has uncovered up to $2.6 million paying $15,000 is cheap.

Sorensen cautioned that the amount of the discrepancies is an estimate, not a fact.

Kenney interjected that despite what the minutes cited earlier by Rep. Cordelli said, there were actually three bids received for financial services, not two, and Beaulieau was chosen as the cheapest. She also disputed Widmer's claim that there are only 2-3 firms doing county audits, saying the Department of Revenue Administration told her there are more firms who could do it.

It being close to the 10 a.m. start for the meeting with the county delegation, Sorensen closed the commissioner's meeting.

A full report on the meeting with the delegation to go over the same information will follow next week.

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