Nicholson: North Smithfield abatements the result of 'negligence'
Nicholson: North Smithfield abatements the result of 'negligence'
NORTH SMITHFIELD - Early findings of a forensic audit investigating the town's mass of tax abatements in 2013 were revealed this week, painting a jaw-dropping image of missing documents, negligent behavior and unqualified personnel resulting in an "abysmal" collection rate.
And the issue, it seems, began long before Tax Assessor Tammy Boss reported $752,000 in errors in June.
Richard Nicholson of Nicholson Associates, the firm hired to investigate the problem, said that the abatements - errors in bills sent to homes and residents - were the result of a "total break down of internal controls."
While the firm has yet to deliver its full report, on Monday Nicholson provided the Town Council a first glimpse of the results of his research.
Here's what was said so far:
• The Board of Assessment Review, which by Town Charter is supposed to approve all abatements, appears to not have met since 2007.
• Records documenting abatement requests and approvals are missing.
• Resum?©s and employment applications are missing.
• The town has been using the wrong process to document accounts receivables, bringing prior year financials into question.
• The firm believes unqualified individuals have been hired to work in the finance department.
• The town has approved an average of $320,000 in abatements annually without Town Council approval.
• The town's tax collection rate, compared to other municipalities, is "abysmal."
• Procedural problems in the tax assessor's office have existed for years, and appear to have begun prior to the current administration.
Nicholson said that while his firm has found no findings of willful or nefarious activity, "what we did find was negligence, which may be defined as carelessness, laxity and abandonment of responsibility.
"We know negligence at all levels, starting with the Board of Assessment Review and whether or not the council should have voted on abatements the prior year, down through the administration, particularly the Finance Department and finance director and your tax assessor or assessors," he said.
The attorney said his firm examined records, starting in 2005, to see if the town has followed proper procedure according to Town Charter, ordinance, and Rhode Island General Laws. Systematically and at all levels, he said, the town has not.
The first glaring flaw involves the town's Board of Assessment Review, a group that is supposed to meet regularly to approve tax appeals forwarded by the town assessor.
"We could not find a record of it going as far back as 2007," Nicholson said.
At first, Nicholson said he was told that the board had met before Boss was hired and that it resumed meeting after she was placed on administrative leave.
"We challenged that information and proved that that information is erroneous," he said. The Board of Assessment Review is required under open meetings laws to post agendas and minutes, and had not done so since 2007.
"We had a difficult time finding a lot of the documentation," Nicholson said.
The big problems in 2013, it seems, began when the town's previous assessor, Chris Belair, certified the town's tax roll at the close of the fiscal year. Standard protocol such as verifying accuracy, locking the system and printing a hard copy of the document were not followed.
At the time, Boss, who had been hired in March of that year, was working along with Belair, who had served the town for six years and continued her work through June after resigning.
"In our opinion, even the basics weren't even attempted before the roll was certified," Nicholson said. "So we end up with an erroneous tax roll that required a lot of work."
Boss, Nicholson said, was left with the monumental task of processing a mass of resulting errors.
"I think part of the breakdown of the process, other than the Board of Assessment Review not meeting, is the volume that the then-assessor had to do," Nicholson said.
But that was far from the only problem the firm found.
"There's going to be a lot to write up because there's resumes missing for certain positions that are being held," Nicholson said. "There's employment applications missing."
One of his greatest concerns, he said, was the discovery that the town has been granting an average of $322,000 annually since 2005, without Town Council approval.
"We were provided a scheduled that showed that the abatements going back to 2005 were approximately $100,000 a year on average. When we dug into the system, we noted on average since 2005, it was not $100,000 a year. It was close to $322,000 a year. The $100,000 a year is the amount that the council approved for abatements per your minutes. There is an additional $222,000 a year that you have no knowledge of. Your prior auditors didn't pick it up and they should have."
Nicholson also raised questions about the qualifications of individuals currently working in the finance office, and while he did not name employees, he repeatedly called out the finance director, with the woman currently serving in the role, Brenda McDonald, watching from just feet away.
"The finance director should know at all times where the staff is and what they're working on," said Nicholson. "There needs to be that accountability. What we found was the tax assessor and the finance director pointing fingers at each other. It's a breakdown in oversight. I do have grave concerns regarding qualifications.
"We have looked at personnel records and many of the records are sparse. We requested copies of resum?©s to ascertain if people are capable and have the qualifications to do the job that they've been hired to do."
Nicholson said the delay in providing the report, which was initially due before the council in August, occurred because he was waiting for information from the administration and the finance department.
"A lot of the information we requested started to flow in in the last week or so," he said.
Town Administrator Paulette Hamilton reacted after the meeting, stating that the Richardson firm never spoke to the former assessor, the current or previous finance directors, the current assessor or the assistant finance director.
"I do hope the draft report that will be provided to the town, will have a full explanation and back up to substantiate the findings," she said,
Nicholson's full report is expected to include recommendations for how to move forward and is expected to be delivered at the council's next meeting on Nov. 3.
Monday's presentation was cut short when Council President John Flaherty voted against a motion to extend the meeting for an additional 15 minutes, after a first approved extension ran out. According to Robert Rules of Order, the decision to continue a meeting past the set end time of 10 p.m. must be confirmed unanimously.
That decision was not well received.
"It was awful," said Councilor Thomas McGee. "I was embarrassed as a council person. I thought we were better than that as a team. None of us wanted it to end."
Councilor Kimberly Alves was not present for the Monday night meeting.