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The Valley Reporter
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Truth for Duxbury taxpayers

By William Yacavoni

After performing the audits of the town of Duxbury, Vermont, for numerous years, I feel an ethical responsibility to the taxpayers of the town of Duxbury for them to understand what has transpired over the last few years.

Over the last six to eight weeks, I have read article after article about the town of Duxbury's financial deficit and misreporting of the town's financial affairs. All of these articles have been initiated and have been opinions of the chairman of the select board, Richard Charland. It is time the taxpayers of Duxbury get the facts as they relate to the town finances.

TOWN'S ACTUAL DEFICIT

Richard Charland has gone to the press about the town's huge deficit. On April 2, 2014, Bonnie Batchelder of Batchelder Associates, P.C. presented the 2011-2013 audit reports to the select board. In this presentation, she informed the select board that the town had a $338,344 deficit.

When I read the newspaper article in early April related to her presentation, I was positive it was not accurate but had nothing to review to verify that.

When I was presented with a copy of the 2013 audit prepared by Batchelder Associates P.C., I immediately looked at the balance sheet of the General Fund which reported assets, net of prepaid expenses, of $536,940 and liabilities of $647,284, resulting in a deficit of $110,344, not the $338,344 deficit as presented to the select board by Batchelder. The $228,000 line of credit is already part of the $647,284 liabilities and the $110,344 deficit, not in addition to it. For example, if I have $100 in my checking account and owe a loan of $1,000, I have a shortage (deficit) of $900.

I do not owe $1,000 in addition to the $900 deficit. I do not have a $1,900 deficit.

Richard Charland is calling for special meetings, getting proposals from banks to finance a level of debt that does not even exist. He then states this would cost the taxpayers an extra $70,000 per year for the next five years, and then going as far in a recent article to the press as stating fraud had been perpetrated.

In reviewing the audit performed by Bonnie Batchelder of Batchelder Associates, P.C., I believe there may also be an additional accounts receivable that was owed back to the town from the school district of $40,551. I do not have enough detail for the audit to verify if this receivable was or was not recorded due to inadequate footnote disclosures by Batchelder relating to property taxes.

If this accounts receivable was not included in the audit report prepared by Batchelder, the town's deficit would be $62,818.

At any rate, the level of deficit is nowhere near the amount as reported by Bonnie Batchelder of Batchelder Associates, P.C.

The actual level of deficit ($110,344) is nothing that should shock the taxpayers. The town's required contribution to the storms was limited to 3 percent of the 2011 equalized grand list, or $48,362. When combined with interest expense of approximately $47,770 on a line of credit used to finance the storm, it is easy to see how this deficit arose.

Here are some further facts the taxpayers of the town of Duxbury should know:

1) When I commenced the 2011 audit in January 2012, under the direction of Richard Charland, the town had already filed expenditure reports with FEMA related to the storms.

2) After one and one-half days of my audit work, I informed Richard Charland that the amount reported in the town's accounting records as maintained by then treasurer Ken Scott were approximately $140,000 higher than what was reported to FEMA.

3) When I asked Richard Charland how this could occur, he stated he did not trust the work of Ken Scott (treasurer) and instead had the paperwork for FEMA be compiled by the road foreman. Because the town's accounting records were not used, numerous invoices were not included in reports filed with FEMA, as there was no accountability between amounts paid and amounts being reported to FEMA.

4) I instructed Maureen Harvey, another member of the select board, to use the transactions in the records maintained by Ken Scott, yes the same records Richard Charland did not trust, place each payment on a spreadsheet and associate them to a project, or as ineligible for any costs not allowed.

5) Since reports had already been submitted on all the projects, I instructed Richard Charland to immediately contact FEMA, make them aware of the underreported amounts, and ask if the reports could be amended. Thankfully, since a few projects of the storms had not yet been closed out, FEMA allowed the amended reports to be filed. Had more time passed and those projects been closed, the town of Duxbury would have been at risk of losing out on this additional $140,000.

6) I spent endless hours working with the select board and the state of Vermont Agency of Transportation and FEMA, all because the original reports under the direction of Richard Charland were filed inaccurately.

7) The re-creation of these spreadsheets and resubmission of the reports to FEMA took time and delayed the town's receiving of reimbursements from FEMA causing additional interest expense to the town. I also perform the audit of the town/village of Waterbury and during my audit of their FEMA reports, I never had to contact FEMA or the state of Vermont, and they had been fully reimbursed all of their money by June 2012. Due to the filing of inaccurate reports originally submitted to FEMA by Richard Charland, the town of Duxbury received over $700,000 of their reimbursement in 2013, the last of which was received in May 2013 – almost one full year after Waterbury had been fully reimbursed.

8) Richard Charland admitted to me that he made bad decisions about managing these projects and should have hired a clerk of the works.

9) I have audited municipalities for over 28 years, auditing close to 1,000 entities, and never has any entity not utilized their accounting records to compile reports to FEMA or other government entities when requesting reimbursement of funds. Richard Charland's decision not to utilize the town's accounting records has cost the town a substantial amount of interest, and was close to losing out on $140,000 of federal reimbursements.

10) My 2011 audit, which included the majority of the FEMA expenditures, was selected by the AICPA peer review program to be reviewed by an outside firm to verify my firm's compliance with professional standards. Not only did that review receive an unqualified opinion, I was commended by the reviewer for my assistance in helping the town obtain its additional FEMA funds.

ACCOUNTING RECORDS

I performed the audits for 2011 and 2012. During those audits there were postings errors and duplicate postings to the accounting records by the former town treasurer. All of these amounts were corrected and adjusted as part of my audits. Many adjusting journal entries by an auditor are needed in audits of small towns. None of these errors were done intentionally or fraudulently. In auditing small towns in the state of Vermont it is far from unusual for treasurers/town clerks to be elected by taxpayers and not totally possess the accounting knowledge necessary to provide accurate reports to the select board. In fact, it is more normal than not for this to occur than to have one be proficient in all accounting aspects.

In both the 2011 and 2012 audits that I presented to the select board, I included a finding that bank reconciliations were not performed timely, posting errors occurred and data presented to the select board was substantially inaccurate. The select board did nothing to resolve this issue.

A neighboring town had a change in treasurer, was not sure of the new treasurer's capabilities, and wisely hired a part-time town administrator to oversee the financial records. The select board of the town of Duxbury made no effort at all to correct this issue for two straight years despite my recommendation.

I am probably the person with the most knowledge of what has occurred in 2011 and 2012, and certainly the only one that understands it all. I would be more than happy to attend any public forum to discuss any of this at any time.

William Yacavoni is a Certified Public Accountant.


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