Best practices: Towns should have checks and balances on all public accounts

Sentinel Editorial

Winchester's Selectboard would do well to pay heed ...  

 

 

In small-town New Hampshire — and other states, for that matter — a small group of civic-minded individuals often takes the reins of local government. These people are known to everyone in town, often elected to their roles, and serve in positions few others seek to take on, such as deciding local zoning, budget and waste disposal issues. And often, they have control over public funds, sometimes sole control, which can be problematic.

That was brought home in a recent audit of the town accounts in Troy. As noted in a report today by staff writer Meghan Foley, the town of roughly 2,100 residents has, like many towns its size — or smaller — a town treasurer who oversees municipal accounts. In fact, she’s the only one with access to at least one account, meaning there’s no check on her work. And as Treasurer Janet McCullough herself notes, other town officials have pretty much sole control of other accounts.

This, according to auditing firm Vachon Clukay and Co., is a less-than-ideal setup. Neither McCullough’s ability or honesty is at issue. And the town did well in its audit. It’s just not a good model to have one person in charge of accounts with no oversight, the firm said. The dynamic — repeated in small towns all over the state — is similar at many small businesses and nonprofit agencies, which have few staffers trained to go over the books.

For decades, this has been the model in many, if not most, New Hampshire communities. Perhaps that’s due to the assumed honesty of Granite Staters, the trust we have in each other’s motives and character. And there was nary a case of that trust being breached. But all good things must end. For some reason, in the 1990s and early this century, several cases cropped up of municipal embezzlement in towns and school districts.

The N.H. Municipal Association has advised, since 2005, that towns put in place internal controls to ensure no employees have sole control of accounts or payments. But in many smaller communities, that still hasn’t happened. As the Municipal Association notes, having sole access to funds provides the opportunity for theft or fraud, even if there’s no intention. Having additional eyes on accounts lessens that opportunity. The state Department of Revenue Administration also advises against it, although no law mandates multiple access to accounts.

We’d guess in some cases, the situation persists because no one has ever stolen public funds in town before, and if local officials are your friends and neighbors, you might be reticent about putting in place policies that might make it seem they’re not trusted. It’s also because in many towns, there aren’t that many qualified people willing to serve in official roles. Some people can look at a ledger and follow where money came from and where it’s going, and others can’t. And there’s finding the time to do it.

Putting a process in place to solve the problem comes with costs. Either people must be trained and take time to periodically examine accounts, or more staff must be hired. In a best-case scenario, volunteer officials, such as selectmen or budget committee members, might take on that job. But someone should, even in the tiniest of towns.

Though the issue exists in many communities, the lesson should resonate particularly in Troy, where former administrative assistant to the selectmen and town welfare officer Cynthia Satas was sentenced to 30 days in jail in 2015 after stealing almost $20,000 in town money. In fact, part of Satas’ sentence was to pay the town back $19,000 she took, plus $10,000, which was to be used for a forensic audit. Asked about it recently, town officials said none of that money has been spent.