Internal audit to review Prospect’s financial controls, records

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By Elio Gugliotti, Editor

PROSPECT — The town’s financial controls as well as records from a six-year period will be the subject of an internal audit in the wake of a theft from a town payroll account.

The Town Council unanimously voted July 21 to issue a request for proposals (RFP) for an auditor to do the internal audit. The auditor selected will review the town’s internal controls to evaluate areas vulnerable to fraud and abuse, and the adequacy of the town’s financial policies and procedures as well as the town’s financial and auditing organizational structure, according to the RFP. The auditor will also assist officials in implementing any recommended improvements.

The internal audit will also include a review of financial statements from fiscal years 2013-14 through 2018-19 to ensure town expenditures were in accordance with laws, regulations and town policy. The 2019-20 fiscal year wasn’t included because the town’s financial statement for the fiscal year isn’t finished yet. It may become part of the internal audit, if the statement is finished before the audit is done.

Responses to the RFP are due Aug. 25. The council is expected to discuss the proposals at a September meeting.

The internal audit comes as questions remain about a theft from a town payroll account.

Unauthorized transactions were made from the town’s Webster Bank payroll account from December 2017 to November 2018. The thefts didn’t became public until January of this year when state police announced that they made an arrest in the investigation, which is still ongoing.

Town officials have put the amount stolen at about $250,000.

Officials and the public raised numerous questions about the theft, namely how the unauthorized transactions went unnoticed for almost a year. Mayor Robert Chatfield previously said the town changed auditors at the time, and the previous auditor also reconciled the books monthly — a process officials assumed was being followed.

In a phone interview last week, council Chairman Jeffrey Slapikas said taxpayers have asked for an internal audit of the town’s polices and records. He said there was a question as to how far back to go, and the council decided on six years because it covers two three-year periods when separate auditors performed the town’s annual audit.

The six-year period also covers other questionable financial transitions. Seven transactions totaling about $45,000 were made from the budget for public works employees’ salary to pay five outside vendors and two non-public works employees in the 2014-15 fiscal year. In 2017, the council investigated the transactions. At the time, the transactions were attributed to human error.