CASCO – The state auditor has contacted the town of Casco regarding the town’s auditing procedures and possible violations of state law.

After being informed by Selectman Carroll Morton of what he thought were auditing irregularities, the state auditor, Neria Douglass, informed Morton and Casco Town Manager David Morton in a letter dated Oct. 6 that the town could be in violation of state law because the Board of Selectmen has failed to directly engage the services of an auditor on a yearly basis. Instead, the town manager has engaged auditors Purdy Powers & Co.’s services for more than 10 years without direct, yearly approval from the board.

The town manager said this week he mistakenly believed that he had proper approval from selectmen a decade ago to autonomously select an auditor. Now that he has been made aware of the specifics of the state law, he said, the process will be changed to include annual approval by the Board of Selectmen.

According to state law, auditing firms should be selected and hired by the town’s officers, in this case, the Casco Board of Selectmen. If a town manager chooses an auditing firm without input from town officers, both the manager and the board of selectmen can face fines and forfeiture of office, according to the law.

“I’m concerned if there is not a proper engagement of the auditor. So I’m looking for verification or confirmation or information that the auditor was engaged by the selectmen as called by state law,” Douglas said Tuesday.

According to Douglass, Maine law requires each town to conduct an annual audit of all accounts at the end of each fiscal year. The law calls for the year-end audit to be done by a “qualified public accountant elected by ballot or engaged by its officers.”

“Having town officers engage an auditor ensures a separation of duties, as well as independence. It’s not supposed to be an inside job with a town manager hiring an auditor,” Douglass said. “It’s very common also for Select people to rely on their manager to get an auditor. Really, a lot of this relates to this: are the Selectmen paying attention to what the town manager is doing?”

While she said she is “looking into the matter,” Douglass said this week she is concerned about the process by which Casco had engaged auditors.

“I’m also a lawyer, and while lawyers can disagree, I would say the law requires selectmen to vote on an auditor, and if that didn’t happen in Casco, it throws a bunch of things into question,” Douglass said.

Though she is awaiting a letter of explanation from David Morton, Douglass has already sent Morton a letter detailing proper procedure as well as penalties for not following the law overseeing annual audits.

In the letter, she quoted the governing statute: “A public official who neglects or refuses to perform any duty imposed by sections 5831 to 5823 (faces) 1. Civil violation. Commits a civil violation for which a forfeiture of not more than $100 may be adjudged; and 2. Forfeiture of office. Forfeits his office.”

Douglass added in her letter to Morton: “Maine laws on municipal audits do not mention giving the power to select an auditor to a town manager. In fact, there is a prohibition on a town manager acting as a selectman.”

The proper role for a town manager in the area of annual audits, Douglass explained, would be preparing a request for proposals for an audit, as well as evaluating the proposals submitted by auditors in order to give guidance to the selectmen or to the citizens during the annual town meeting.

“According to information I’ve received, the town did have audits performed but whether those audits were authorized by the Board of Selectmen I can’t say at this point,” Douglass said.

When contacted for comment, Morton said he is not guilty of breaking the law because he had prior approval to engage an auditor from a former Board of Selectmen. However, he said that approval came at least a decade ago and that he “assumed wrongly I suppose” that he was to keep engaging the same auditing firm, Purdy Powers, to perform the annual audit.

“It’s been at least 10 years, I can’t remember exactly. But it’s never been a problem before now. The formal, correct way to do it is to vote each year, I acknowledge that, but the important thing here is the town has had an audit done annually and the firm was initially selected by the board,” Morton said.

Now that he’s aware of state law that sets specific roles for town officers regarding annual audits, Morton said he will change policy regarding the engagement of an auditing firm, on Douglass’s advice.

“I can assure you we will make it a point to do that every year from now on,” Morton said.

That policy change will require a little more preparation on Morton’s part, he said, especially if selectmen want to change auditing firms.

“If they do make a change, they’ll need to line that up well in advance,” he said.

Selectmen react

Selectman Carroll Morton said he’s not fazed by financial implications stemming from the board’s apparent failure to authorize an annual audit.

“It’s $100. That doesn’t bother me. What bothers me is why has the town office not allowed an independent audit,” he said this week.

He added that he submitted a list of 35 other auditing firms who could have done the annual audit but was rebuffed in that suggestion.

Newly elected Selectman Ray Grant declined to comment on the matter, but confirmed that Casco’s most recent year-end audit “was started without our knowledge.”

Chairman Barbara York did not return phone calls seeking comment. Selectwoman Mary Fernandes’ could not be reached for comment. Selectman Paul Edes did not want to comment without first seeing Douglass’ letter.