State finds discrepancies in Ludlow’s financial operations

By Jen Lynds, BDN Staff
Posted Aug. 04, 2010, at 7:56 p.m.

LUDLOW, Maine — For the first time since they learned that the state was examining the town’s financial records, residents on Tuesday received a report of the state’s findings.

The more than 40 people who attended Ludlow’s annual town meeting Tuesday evening also received a written report of suggestions to strengthen internal financial controls and town operations from an auditing firm that conducted an audit of the community’s 2010 finances.

The state subpoenaed financial records from Ludlow in October for fiscal years 2007, 2008 and 2009 after receiving a complaint and verifying that the state had not received municipal audits for several years.

Mary Beth Foley, Ludlow’s town manager for the past 14 years, was suspended without pay in early February and resigned last month.

State Auditor Neria Douglass issued a letter to residents that was handed out at Tuesday’s meeting stating that she found items of concern in the records she examined.

Douglass said she found that more than $3,000 was unaccounted for between January and May 2008. Records on tax liens “are poor and open to error,” she wrote.

She also said that checks for more than $1,000 written to charities were not delivered in February 2008 and 2009, but were reported in town reports as expenditures. She also said that some people who did not live in Ludlow registered their cars in the town, which means that the communities those individuals actually lived in at the time did not get the revenue from the registration process.

The state auditor also noted that even though town reports said that volunteer work was being done at the Ludlow Food Pantry, the town was still paying substantial amounts of money for “labor” and “mileage” related to food pantry activities.

“No contract, detail or basis for the payments was found,” Douglass wrote.

She also addressed payments made to Ted Ivey, a member of the Board of Selectmen, who did not attend Tuesday’s meeting. According to town financial records, Ivey was reimbursed numerous times for “mileage” as well as for “labor,” “labor and mileage,” “tire repair,” “food pantry” and “credit.” Residents said that Ivey often drove to locations such as Bangor and Portland to pick up food for the Ludlow Food Pantry and was reimbursed for the mileage. Douglass said that some of the receipts for payments made to Ivey for labor lacked detail or adequate documentation, and there seemed to be no contractual basis for his being paid.

He also was paid once for “stolen tools,” for which Douglass said she could find no documentation.

“The payments raise concerns about self-dealing and conflict of interest,” Douglass wrote.

The state auditor also noted that “a law in effect in 2009 prohibits a clerk from commingling personal funds with town funds,” a law which she said the town seems to be ignoring. While she did not go into detail about the matter, one attendee Tuesday said that when a resident has gone to the office to pay a bill, they have at times in the past been asked to write the check out to the clerk instead of to the town of Ludlow.

Douglass also said that someone submitted a “false audit” to her office, or an audit that was not completed by an auditor at all. The audit report was submitted to her office for the town’s finances in 2009 and contained obvious errors, according to Douglass. The false audit was discovered when one of the selectmen called the auditor who supposedly did the audit to ask if he had been paid. The auditor told the selectman that he did not do an audit for the town and also called Douglass’ office to let her know.

“The false audit report raises many questions that have not been adequately answered,” Douglass wrote.

She said she would not press charges and would let the town decide what to do about the discrepancies.

Residents made clear Tuesday night that they want Foley’s handling of the finances investigated further and for her to be criminally charged if that is warranted. Only two of the town’s three selectmen attended the meeting — Virginia McCain and Greg Dow — and neither immediately indicated what steps might be taken next.

Meanwhile, the town hired Hollingsworth & Associates, a Bangor accounting firm, to audit the town’s 2010 financial statements. Douglas R. Hollingsworth, an accountant for the firm, recommended in a letter to selectmen that the town consider investing in financial software and training for staff to better track revenue and expenses.

Hollingsworth also advised town staff to provide a financial report at least monthly to selectmen and that the town implement a system for reconciling bank statements for the town’s cash accounts in a more timely manner. The town’s filing system, he added, is “disorganized.” He recommended that it be reviewed and restructured and that important documents be kept in a safe or other locked, fireproof storage area. A backup of the town’s computerized records should be maintained at a site other than the town office, Hollingsworth said.

Townspeople did not discuss the letters from Douglass or Hollingsworth during Tuesday evening’s meeting. The town hopes to have a manager in place to replace Foley by the end of the month.

http://bangordailynews.com/2010/08/04/news/state-finds-discrepancies-in-ludlowrsquos-financial-operations/ printed on September 20, 2014