WESTBROOK – Despite a six-month delay in selling bonds due to the rejection of its 2009 audit, Westbrook received some refreshingly good financial news when it finally sold the bonds this week.

Westbrook received high scores from bond rating agencies, helping it receive an excellent interest rate for borrowing, City Administrator Jerre Bryant said.

“We received four bids (Tuesday) morning with the low bid submitted by Bank of America Merrill Lynch at an interest rate of 3.13 percent – we are thrilled with the rate,” Bryant said.

The city continues to recover after rejecting the 2009 audit prepared by Runyon Kersteen Ouellette of South Portland. Rejecting the audit delayed the city’s ability to sell bonds to finance this year’s capital improvement projects.

An attorney for the city also recently sent a letter to Maine State Auditor Neria Douglass seeking reassurance the audit situation would not result in disciplinary action from the state.

According to Bryant, the city is borrowing $4.5 million to fund a $1.2 million Pleasant Street sewer project, the $1 million local share of the William Clarke Drive reconstruction, $1 million for repairs to the community center, $675,000 for Walker Memorial Library repairs, $450,000 for street repairs and repaving and $160,000 for public services equipment.

Westbrook is using the lower rate to refinance the remaining balances of two old bonds. Bryant said a 1999 bond with a balance of $2.25 million and a 4.82 percent interest rate and a 2000 bond with a $6.82 million balance and a 5.57 percent interest rate would be refinanced using the 3.13 percent rate.

“By refinancing these two bonds at the 3.13 percent interest rate the city will save $938,141 in interest payments over the next 10 years,” he said.

This year’s audit, prepared by Roberts, Greene and Drolet of Barnstead, N.H., recommended the city implement a number of changes after finding some irregularities in the practices of the Finance Department before Mayor Colleen Hilton hired Dawn Ouellette as chief financial officer to manage both city and school finances. Runyon Kersteen Ouellette failed to identify those issues as the city’s auditor for more than 10 years.

City officials said the deficiencies revealed in this year’s audit left the door open for misappropriation of funds and that there were accounts that no one could explain. The audit indicates checks and balances over the department were not in place and that balances did not match up to supporting documents.

Auditor Tim Greene told the City Council’s Finance Committee Monday night there were significant variances in the general fund that prevented the auditors from giving a complete opinion of the city’s finances. He said there was no proper tracking of the finances of individual capital projects and some activity could not be substantiated with supporting documents.

Sue Rossignol, the former Westbrook finance director of 32 years who was implicated in the audit results, was stymied in her efforts to comment at Monday night’s meeting. She attempted to speak up after Greene presented the audit results, but Chairman Mike Foley told her there was no public comment at committee meetings.

“I had a lot of questions, but they changed the rules and you can’t ask questions,” she said in an interview on Tuesday.

Rossignol said she issued statements each month as finance director that outlined the city’s financial position.

“For someone to even comment there were accounts that no one knew existed is a bunch of garbage,” she said.

She also wanted to know who could verify the work of these auditors – given the city’s questions about the work of Runyon Kersteen Ouellette – and claims that she withheld information from other department heads.

According to Rossignol, all department heads had clearance to use the old accounting software to review all transactions and financial details of the past 10 years when she was finance director.

After the committee blocked Rossignol’s attempts to speak at the meeting, she turned first to city attorney Bill Dale, and then to the auditors, but was rebuffed again.

“I just wanted to have my questions answered,” she said. “Jerre asked me to put them in writing.”

Her questions went unanswered and there were few questions for Greene from the committee members. Councilor Paul Emery asked whether the department has a competent staff going forward. Green said it does.

“I can see already there’s going to be a good handle on the funds going forward,” he said.

The city agreed with all suggestions in the audit and had already implemented some of them since Ouellette joined the city.

The city’s financial problems came to light with changes in authority at both the city and school levels. According to a letter from Dale to the state auditor obtained by the American Journal, Hilton and Superintendent Dr. Reza Namin both had issues with city and school audits for fiscal year 2009 when they took on their present roles.

The letter states Hilton refused to accept the Runyon Kersteen Ouellette audit and decided not to reappoint Rossignol, while Namin also took issue with the school’s audit performed by Berry Talbot and Royer of Falmouth.

“He was uncomfortable with the accuracy and the completeness of the proposed Barry Talbot audit report and refused to accept it,” the letter states.

This led the city and school district to hire the accounting firm Graham and Graham, P.C. of Concord, N.H. to perform a “forensic audit” of the accounts. According to the letter, the audit cost nearly $100,000. It found that “no moneys of a material amount appeared to have been misappropriated,” but did point out “critical and severe” irregularities in accounting practices and the audit work of both the city and school auditors, Dale’s letter said.

Bryant would not discuss any pending legal action against the past auditors this week. The City Council and School Committee have met in executive session to discuss their options.

Dale contacted Douglass, the state auditor, to ensure the city’s “remedial efforts” satisfy state requirements and that the state would not take disciplinary action regarding the city’s finances. According to the letter, the city and schools are still without annual post-audit reports for fiscal year 2009 that are required by law.

When reached for comment, Douglass said she has no intention to penalize Westbrook because the state does have a 2009 audit on file. She said the auditors filed it with her office.

“As far as I can see, we have the audits that are required,” she said. “It was filed with us, which is what was required.”

Whether the audit meets professional standards is not an issue from her office’s perspective, she said. Audits must be filed with the state, but the state’s job is not to prove or disprove the content, she said.

“Everything looked in professional order,” she said.

She said the ordeal may have been costly for Westbrook, but closer examination of finances is never a bad thing.

“It can be costly, and apparently it was,” she said, “but if they come out feeling they know more about their town, it’s a good thing.”