Washington County used to complete its audits in less than a year. But in 2020, county officials grew frustrated as they realized their auditor was taking much longer than usual.
“He wasn’t very speedy,” former county manager Betsy Fitzgerald recalled. So, although they had no alternative lined up, they fired him. The delay only got worse.
In July 2020, the county put out a request for help analyzing its 2019 books, but it didn’t get any bids until December.
“The county advertised left, right, sideways, up, down,” said Fitzgerald, who retired from county work in 2023. “Some firms that were contacted never even responded.”
The county’s new auditor started in January 2021. Treasurer Jill Holmes said at the time that he was “extremely thorough,” delaying the audits even further. It took until late 2024 for him to reach figures from 2021. That’s when he informed officials that the numbers were not adding up.
Years of poor bookkeeping, hidden in part by a huge influx of federal pandemic relief funds, meant the county’s records were not accurately reflecting how much money it had in the bank. The county had dug itself into a multi-million-dollar budget hole that, with audits delayed, had grown unnoticed for years.
The county stands out for the scale of its budget crisis, which has forced it into $8 million in debt that it’s now struggling to repay. But it’s not an outlier in its failure to keep up with audits.
Seven of Maine’s 16 counties are behind on their audits, a Maine Monitor analysis found, some of them significantly so. In Penobscot County, years of skyrocketing jail costs have put the county into a fiscal crisis — and oversight has been limited, with the county still catching up on its 2023 audit. Waldo County is facing budget trouble and hasn’t completed an audit of its finances past 2021. Sagadahoc County is waiting for its 2022 audit. And Aroostook County only recently completed its 2020 audit.
These delays, which officials attribute to a decline in the number of qualified accountants, mean that half of the state’s counties are building new annual budgets without an independent eye confirming that the past couple years of public funds have been spent as intended. The shortage comes as county budgets have grown in size and complexity, with large sums of cash flowing in through the American Rescue Plan Act and opioid settlements, but limited infrastructure to monitor the money.
Maine’s county governments, which oversee sheriff’s offices, jails, probate courts and other regional services, are required to audit their annual financial records to ensure, via a certified accountant, that public funds are being properly tracked and spent. Historically, the understanding among officials has been that those audits should be completed roughly a year after a given budget cycle has ended. But the state law mandating county audits does not set a deadline.
Aroostook County is the farthest behind on its audits. County administrator Ryan Pelletier blamed an auditing firm the county had hired in the past for the delay. Its current auditor, the Buxton-based RHR Smith & Company, is working on its audits for 2021 through 2024. Pelletier said the firm, led by accountant Ron Smith, has told officials all of those audits will be completed shortly.
“I’ll be perfectly frank. I’ve heard that story many times,” he said, adding that he had previously been told to expect completed audits this fall.
Smith’s firm works with a majority of Maine’s counties and is a well-known source for government audits in Maine. But with only four other firms serving counties, officials across the state said that auditors are stretched too thin to work quickly.
“We’re in a little better financial situation here than other counties, I know that,” Pelletier said. “But, at the same time, the audits do have to get completed. We are at [Smith’s] mercy.”
Smith could not be reached for comment.
The accountant shortage is a national problem. State Auditor Matt Dunlap, whose office oversees government audits statewide, said he believes younger generations are not as interested in pursuing a career as a government auditor.
“I think probably a lot of people look at being an accountant or an auditor as being incredibly boring work,” he said. “It’s a cultural thing more than anything.”
Auditing government finances requires a specialized skillset, and, despite high demand, many professional auditors can make more money in the private sector or by leaving Maine than they can serving the state’s rural counties.
County treasurers are not always financial professionals, so poor bookkeeping can force auditors to spend extra time making sense of transactions. That adds to any delay, and the frustration pushes accountants out of the government auditing business, Dunlap said. Ensuring enough money is available to incentivize that work could be a solution, he said, though he added he’s not sure if anyone in the Maine Legislature has the appetite to divert money toward local audits.
James Wadman is an Ellsworth-based certified public accountant whose firm has long been in charge of auditing Knox County’s books. He said business is booming.
Several years ago, his firm decided to cut ties with Knox County and leave county auditing behind when it lost a staff member. Within a month, he said, Knox officials were “begging” his firm to resume their audits. Wadman said he now is asked to complete audits for towns and counties at least weekly.
“The profession is not dying by any stretch,” he said. “It’s thriving, but there’s just fewer people that are going into it.”
He said an onerous review process implemented by the American Institute of Certified Public Accountants, a national licensing organization that demands more of accountants working for governments than those in the private sector, also discourages accounting firms from doing the public work.
The high demand also means higher costs for counties. Wadman’s firm used to face a competitive bidding process for government accounting work.
Now he tells potential clients, “We’ll do your audit, but it’s going to cost whatever it costs,” he said. “Whatever it costs is what you’re going to pay us.”
Once Washington County finally received a bid for an auditor in late 2020, the cost was higher than expected, said Fitzgerald, the former manager. After months of searching, the county had little choice but to pay up.
As part of their bid to dig out from the budget crisis, Washington County officials voted on Wednesday to put forward a $11.6 million budget. Despite service cuts, county commissioners found room to set aside $50,000 to hire outside auditing support and $110,000 for a new full-time finance director.
Daniel O’Connor is a Report for America corps member who covers rural government as part of the partnership between the Bangor Daily News and The Maine Monitor, with additional support from BDN and Monitor readers.