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Saturday, February 12, 2022

The Charlestown Blame Game - Part 1

Surprise Surprise - No Volunteers

By Stephen Hoff

The Town Administrator and the Budget Commission have both investigated themselves about the recently disclosed $3 million “missing” from Charlestown’s General Fund and responded in writing to the Town Council. 

Each focused only on events in the past 6 weeks and essentially found themselves without blame and the taxpayers unharmed. 

Miscommunication, non-disclosure, no impact to the General Fund, only an allocation error, and the Town’s lack of consistent reporting has not hurt the Town…these are the words used to describe what is a serious failure in Charlestown’s internal financial controls.  $3 million has been spent that would not have been had accurate financial information been provided.  

What is important to focus on is not the past 6 weeks.  It is the FY 2020 and FY 2017 audited financial statements that we need to focus on, because that is where the evidence is that Charlestown’s internal financial controls are seriously impaired or even worse not functioning.  

Financial internal controls are like an iceberg.  Once you identify a problem 10% above the water line you realize that there is another 90% below the surface yet to be discovered.  But be assured that with further investigation much more remains to be revealed, and it will be ugly. 

In both FY 2020 and FY 2017 the audited financial statements for Charlestown overstated its Unassigned Fund Balance by $2,976,881 and $275,000 respectively. 

Our outside auditor only became aware of the $3 million overstatement of the Unassigned Fund Balance a year after issuing their audit report for FY 2020 in December of 2020. 

It's not clear if our outside auditor even knows that our FY 2017 audited financial statements overstated our Unassigned Fund Balance by $275,000.

Our Town’s Office of the Treasurer, Town Administrator Mark Stankiewicz who makes $150,000 in compensation annually, and our Budget Commission volunteers were completely unaware until the past 6 weeks. 

This matters greatly because all these individuals have been making expenditure recommendations that were accepted by the taxpayers to use cash for expenses that would not have been approved if we had known the money was not there to spend. 

The blame is abundant and the acceptance of responsibility is missing in action. 

However, the assignment of blame has been quick to allocate.  To paraphrase an old saying, responsibility runs downhill. 

The auditors blame the Town financial staff which includes the Town Administrator Mark Stankiewicz for not providing them with accurate financial statements to audit.

The Budget Commission blames the Town’s financial staff and the outside auditor.  The Town Administrator blames the Town Treasurer who was not even an employee of the Town when the FY 2017 and FY 2020 audited financial statements had been provided to the Town.  This is where the “responsibility” runs downhill. 

That is why the Town Administrator and Budget Commission only want to discuss the very minor events that occurred in the past 6 weeks, and not the major ones that occurred in FY 2020 and FY 2017. 

To the new Treasurer I offer you an apology as a taxpayer for the magnitude of Charlestown’s internal control problems that seem to have found their way to your doorstep.   While I don’t know all of the particulars, I do know that Charlestown’s internal control problems preceded your arrival.  

To all of Charlestown’s taxpayers I hope that you will join me on Valentine’s Day on Monday, February 14 at 7:00 PM at the Town Council on-line meeting where a great many interesting issues will be aired in public as they should be.  Bring your significant other and you will be glad that you attended.  I also urge you to participate even if it is only a brief comment. 

For more analysis of Charlestown’s financial mismanagement:

Charlestown, we have a problem 

$3 Million Missing - the Unknown Unknown 

The Charlestown Shell Game