Auditor says Winchendon departments routinely ran deficits

Auditor says Winchendon departments routinely ran deficits
By Paula J. Owen TELEGRAM & GAZETTE STAFF

WINCHENDON — Town auditors have a clearer picture of what went wrong that led up to a $3.85 million cumulative deficit that required the passage of deficit legislation.

The two biggest issues, they say, are the town's financial software and a lack of communication between departments.

Additionally, several town departments routinely ran their budgets in deficits, expecting money would just be shifted to balance them at the end of the year, as was typically done, they said.

During a joint meeting of the School and Finance committees and Board of Selectmen Monday night, auditor Tony Roselli, from Roselli, Clark & Associates of Woburn, went over the now complete fiscal 2014 audit of the town's finances.

A fiscal 2013 audit uncovered deficits in several town departments. Both audits have been completed since May.

Mr. Roselli said a deficit of the magnitude uncovered could not just be filled by shifting money around, and money was spent from other town funds to fill it, resulting in $1.9 million in cash overdrafts.

After more than 1,300 hours spent going through the town's finances by his firm and additional hours spent by a consultant hired by the town and state Department of Revenue field representatives, he said, one thing they all agree on is that there are inefficiencies in the town's financing software system, Munis.

Munis is a powerful system, he said, that can be a town's best friend, or — if it is not updated every year and users aren't familiar or trained well — worst enemy. The latter was the case in Winchendon. Munis works well in many other communities, he said, but it was not set up properly more than 15 years ago and the town's most recent accountant, who came on last year, was not trained to use it, he said.

"You need to fix the system starting immediately," he said. "You can fix it. Other towns do use it."

Town Manager James M. Kreidler Jr. said the town will request $60,000 from voters at town meeting in the spring to reconfigure Munis.

The second biggest issue, Mr. Roselli said, was very obvious to auditors: One hand doesn't know what the other is doing in town. The town accountant was reporting to selectmen, the treasurer was reporting to the town manager, and the School Department's business office was reporting to the School Committee, but not all with each other, he said.

Recent changes made in Town Hall include that the accountant and treasurer both report to the town manager, he said. Mr. Roselli said he would also like to see an audit committee formed.

Material weaknesses, the audit pointed out, included several departments running their budgets in deficits throughout the year, he said, and expecting a "bailout" at the end of the year. Only the snow and ice account legally can run in a deficit.

He said four or five town department heads he spoke to knew they had deficits in April and kept spending because they knew they'd be taken care of at the end of the year, he said. The problem was, there was no money at the end of fiscal 2014, he said.

"The bottom line is the town accountant is the person that says, 'Do I approve this or not,' " he said. "Going forward, if bills are coming into the town accountant and there is a red balance, that bill is not going to get paid. She is not allowed to pay it. That is going to be something different for the town of Winchendon."

The only exception, he said, is when the School Department is awaiting grant money that the town accountant knows will be awarded.

Officials were still discussing the audit late Monday night.

Contact Paula Owen at powen@telegram.com. Follow her on Twitter @PaulaOwenTG