LISBON — An audit of the town’s financial records revealed deficiencies related to its internal controls, the auditor told School Committee members and town councilors Thursday night during a special joint workshop.

Under former town management, not all of the town accounts had been reconciled on a regular basis, said Greg Chabot, senior auditor with RHR Smith & Co., CPAs of Buxton. He recommended that the town and school departments reconcile monthly and record the processes that the town will implement over time.

After the accounts’ lack of reconciliation was discovered, an outside accountant was brought on last spring to help Finance Director Ed Karass “catch up” when he first came to work for the town.

The audit also revealed that the town did not remit certain 2013 employee Maine Public Employment Retirement System withholding because of an incorrect deduction setting in the town’s payroll software in addition to the town’s lack of monthly reconciliation of payroll withholding accounts.

The town agreed to develop written procedures to monitor changes in the automated payroll system and to take steps to reconcile the accounts monthly.

Karass thanked the Town Council for recently supporting his request to purchase a new accounting software system, which will be put in place over the next 15 months. The accounting software will help the business office implement internal controls over the financial statements.

Chabot noted that the town should have written procedures in place that will allow it to have more fiscal control over the administration of grants. Currently, the Town Council approves requests to apply and receive grants but needs better record-keeping all the way through the process, from application to compliance.

There were no corrections or objections to the findings of the audit by the finance director. Karass said he agreed there should be an internal control manual with a uniform set of operating controls across all town departments. 

Chabot commended Karass for putting together a comprehensive annual financial report that goes beyond what is required and encouraged the town to submit the report for an award.

“If it meets their standards, you’ll get a certificate showing excellence,” he said. “There are only about 15 in the state.”

Councilor Allen Ward thanked Karass for his “big contribution” to get the financial report into this format.

“There’s a lot of change in Lisbon for the good,” Ward said. “The new town manager (Diane Barnes) and new finance director are doing a great job.”