Saugus refers audit findings to state IG

SAUGUS – Town Counsel and Temporary Town Manager John Vasapolli said possible procurement violations found in a recent audit of the town?s books have been sent to the state Inspector General for further investigation.?In the letter from the auditing firm, they had issues about bidding,” said Vasapolli. “That was referred to the Inspector General. They enforce procurement laws. They?ve taken the information and I think they?re reviewing it.”Preliminary findings from Powers and Sullivan, an independent accounting firm based in Wakefield, uncovered what it called “a high likelihood” of “significant” violations in procurement laws and regulations.These findings are based on payments to nine different vendors over the last three-and-a-half years totaling around $5.8 million. However, the report states that a more in-depth audit would be required to verify this, which Vasapolli said Powers and Sullivan is currently in the process of.?They?re going to do a full audit,” said Vasapolli. “So maybe we?ll have an answer when a full audit is done. They?re in the process of starting it. I don?t have a time frame but I know it will be very extensive.”Vasapolli declined to say whether or not criminal charges could be filed.Multiple calls to Leigh Pell of the Inspector General?s Office were not returned.After presenting the findings last week, the Board of Selectmen voted to send a letter to accounting firm Melanson Heath, which had previously been conducting audits for the town, informing it that its services were no longer required.John Sullivan of Melanson Heath told the Daily Item Wednesday that he wasn?t aware that the board hired Powers and Sullivan, and said he had no knowledge that the town was terminating its services or that there was an investigation.?I have not received a letter nor have I been made aware of the information,” said Sullivan. “I can?t believe that they brought in an audit firm and didn?t even discuss it with us. That certainly is a surprise.”John Sullivan said Melanson Heath has been working with Saugus for six or seven years and have issued management letters every year with its annual audit.?It?s not fair to say we?ve never raised any issues because we had management letter comments every year,” said Sullivan. “That?s part of the annual audit report. It?s a letter on internal controls, and we point out internal control findings and make recommendations for improvements.”Melanson Heath presented its last audit report for the fiscal year ending on June 30, 2011 to the Board of Selectmen in December.The report makes three recommendations to the town on what it called “material weaknesses,” including improving internal controls at the library, monitoring collateralization of cash balances and reconciling the high school activity account.The report states that its consideration of internal controls “was not designed to identify all deficiencies and internal controls that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all such deficiencies have been identified.”The report further states, “In addition, because of the inherent limitations in internal control, including the possibility of management?s override of controls, misstatements due to error or fraud may occur and not be detected by such controls.”Sullivan said he wasn?t sure how far back the Sullivan and Powers audit looked.?I don?t know if these issues go back several years or if they were in last year or this fiscal year that we haven?t audited yet,” said Sullivan. “Don?t forget, we?re now in mid-February of ?12 so there has been seven-and-a-half months that we haven?t audited.”Matt Tempesta can be reached at [email protected].