Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
The Exeter Times-Advocate, 1933-11-09, Page 2
THURSDAY, NOVEMBER Oth. 1033 THE EXETER TIMES-ADVOCATE Auditor’s Report into Huron County Finances The following is the report of Mr. F. P. Gibbs, chartered ac countant, into his investigations into Huron County finances, Mr. 'Gibbs’ .report was nanded to Warden Ballantyne of Huron County on Tuesday, Octo. 31st. The report proper consists of 18 typewritten pages. Exhibits and tables take up many more pages Introductory At the June meeting of the Coun cil it was decided to engage a Char tered Accountant to audit the books from January 1st to May 31, 19'3|3l, and to install a porper system of bookkeeping for the County of Hur on. The Warden and the Warden’s Committee instructed me accordingly and I commenced this work. I soon found that there was no list of outstanding cheques available as at December 31st, 1932, and yet there appeared in the bank books payemnts which did not appear to me to be reasonably outstanding from 1932. The Cash Book for years had not been added and. a cursory examination showed that salaries had been entered monthly and again entered in total at -fhe end of the year. As no auditor’s check marks ap peared in the cash book I asked the Warden’s Committee for pTemission to go back to and examine the 19'3'2 records with a view to arriving at a starting point. Another matter which made me request this further power was the evident reluctance of the Treasurer and the Clerk to pro vide the co-operation which I con sidered reasonable. The Treasurer made no great ef fort to help and assured me that the missing cheques were simply the 1932 outstanding which had been handed to the caretaker and could not now be produced, having been lost. The Clerk handed me invoices in a muddled condition, two or three years being contained in what pur ported to be a year’s payments. He made no effort to have them sorted out according to order number so that a proper check could be made. These invoices contained no mark indicating the order number they had been paid under or the number of the cheque issued therefor. More over several accounts would be paid on one cheque and no statement presented. I was informed that the County building’s chimney had been set on fire just before I arrived and that Mr. Young had been seen carrying baskets, of white, yellow and pink papers down to the cellar. It was evident that obstructive tactics were being employed to de feat the object of the investigation. The Warden’s Committee author ized me to go back over the accounts of 193 2 and during this examination it became very evident that consid erable shortages had occurred, mainly in 1932 but others in 1933 also. I deemed it advisable to first straighten out the matter of the bank disbursements and this Tevealed a large number of missing cheques with a recurrence of amounts of $1'50.00', $ll25.t0'0 and so on. I then turned my attention to the tracing of receipts to the bank and this resulted in discovering that a large number of items had not reach ed the bank, some of which were en tered in th cash hook, while others appeared in the receipt books only. I also noted that none of the re ceipt books were numbered conse cutively and that receipts had been abstracted In the case of some of the stub receipt books there 'were blanks leaving no clue as to the use made of the receipt form. I com municated these discoveries to the Warden, Mr. Ballantyne and to Mr. Goldthorpe, Chairman of the War den’s Committee informing them that I, intended to use the power of an auditor conferred, in the Municip al Act “to administer an oath to any person concerning any account or other matter to be audited.” I next consulted the County 'So licitor, Mr. R. C. Hayes and Mr. Young was called for examination and sworn. Mr. Young admitted to having appropriated approximately $600.'00 of receipts and to have du plicated his salary on five or six oc casions. He signed a statement to that effect; Mr. Young admitted that he did not issue receipts unless ’ asked for but assured under oath that those were all the defalcations. Mr. Young further signed an or der on the bank authorizing me to examine his bank account and then signed his resignation. This occur red on August 16th, 1933. I took possession of Mr. Young’s office re fusing to allow him to take any papers therefrom and padlocked the office so that no one having a du plicate key could gain entrance. On August 18th, the Friday fol lowing, on being called for re-exam ination Mr. Young appeared accom panied by his solicitor, the latter of whom advised me that the further items I had discovered in the mean time including the cashing of a bond were admitted by his client “with out prejudice” further stating that his client was anxious to assist me in every way but would make no in No Cold is o Fixture with Buckley’s Mixture No, sir. No matter how herd and deep-teated your cough or told m»y be, BUCKLEY’S MIXTURE will conquer it in next to nd time. The very first, dote gets dawn to btuinem — you can feel it doing you good. It* lightning-tot action amazes everybody when they take it for the fir** time. If you, or any member of your family, hi» a cough, cold, ’fiu or brdnehiti*, tty Buckley’* and be convinced. Refuse aubstitutea. Buck* ley'* ia cold everywhere. criminating statemens. As Mr. Young could give very little information that would be of assistance without incriminating himself he was excused. Later tin the day Mr. Young was arrested. I next called Mr. G. W. Holman, the Clerk, who to my surprise ap peared also accompanied by the .same solicitor who demanded protection for his client under the Canada Evi dence Act although mo charge had been made against Mr. Holman. It is one of the defects of the po wers given to Auditors under the Municipal Act that there is no per vision for the auditor to extract ev idence from a reluctant person, but this matter I understand is being considered and may appear before the Legislature at the next session for amendment. Mr. Holman stated that he had no knowledge of any shortage and promised to produce the invoices for the payment® made in proper order. I imay say that I have not yet re ceived invoices and vouchers in such a condition that they can be audited. Mr. Holman admitted that orders had been signed in blank by Mr. L., Rader and the Wardens preceding • him, the names andi amounts being inserted afterwards and that Mr. Ballantyne had been the only War den who had refused to do this. When asked if Ire had noticed any irregularity in any of the County of fices within the last three years the Solicitor said, “I would not think,' this man would be in a position to judge and do not think he could, answer that,” and then Mr. Holman stated, “Any An admission salary cheques the end of the he and Mr. Young had received their August salary before August 18th. It had also been the practice to pay $1'50.00 to both Mr. Holman and Mr. Young for each of the first two months of the year and the balance of the annual salary monthly. After the arrest of Mr. Young the Warden’s Committee decided, to ex tend the inquiry to the year 1913'0 and 1931. On September 2nd a de tailed statement of the shortage then discovered amounting to 210,046.71, consisting of receipts not accounted for $3,512.75, and cheques traced to Mr. Young’s account amounting to $6,533.96 was presented in Court when the prisoner’s 'Counsel asked for a week’s remand that he might study the particulars therein con tained. On September 9th Mr. Young pleaded guilty to 3 charges, that of theft, of bribery and conspir acy, and of mutilation and destruc tion of records, and was. sentenced by Magistrate Reid to one year de terminate and six months indeter minate at Guelph Reformatory on each count, the sentences to run con currently. , On October l’Oth, 1933, Mr. W. B. ' Common, K.C., appearing for the At torney-General of Ontario was grant ed leave to appeal the sentence by Mr. Justice W. E. Middleton at Os- goode Hall. I was instructed by the Warden’s ' Committee to investigate the ac counts of 192 8 and 1929 and> further shortages were discovered in 1929 amounting to $1,798.5'8 of which $70'8.58 was for receipts unaccount ed for and $1,090.0'0' cheques traced to the bank account of Mr. Young including $5'50.00 of cheques plained later on. It must be mentioned that the vestigation of 1928 was abortive the following reasons: (a) Mr. Young’s account was then in the Standard Bank (now defunct) and only the Ledger .Sheet was avail able, while none of his deposits slips could, be produced. (р) That no deposit slips for the County, to show the details of what had been deposited could be pro duced for the same reason. (с) That the cheques of the 'Coun ty’s General account of that year had been destroyed. It will be understood that because of the condition of the books, and of the lack of invoices and other vou- cers no complete audit has been made of any period .mentioned her- in, and that this report must be con sidered in the light of an investiga tion with insufficient material. No General (Ledger existd and no con tinuity could be traced from year to year. On September 9th, 193 3, Mr. John Hunter Taylor, Manager of the Can adian Bank of Commerce at Goder ich was examined and stated that he warned the then Warden County, Mr. Louis Rader cheques in particular and practice in general of Mr. Young put ting into his account .more cheques of the County than appeared to be proper. On /Sept. 11th, 1933, about 2.30 p.m. I mailed a letter to Mr. Louis Rader from a hotel in 'Clinton ask ing him to attend on the following Wednesday the 13th, to assist me in clearing up certain matters. On Wed- Sept. 13th, I telephoned Mr. Rader who claimed that he had not receiv ed the letter and an order was is sued for him to attend for examina tion on Sept. 18th. At this inquiry Mr, Rader produced my letter when he said was delivered after I had talked to him on the 13th, and the envelope was found to have been stamped Dashwood Sept. 12th. Mr, Rader’s memory entirely left him during this examination and he could not remember Mr. Taylor’s warning but thought it might have referred to an overdraft of the -County. He was informed that there had been no overdraft on 'County funds during the year 1913(2 and that had there been the Treasurer would have been call- fed. and. not the Warden. Mr. Rader however was unable to recollect any thing which would be of valtie to the County and prefixed al! his answer® irregularity? No.” was also made that were issued before month and that both ex- in- for of of of the the two With “I do not remember,” or words to that effect. He could not recol lect the object of a visit to the home of Mr, Kemp about this time and Mr. Goldthorpe who accompanied him says he was not informed, of the object of the visit, Another confer ence I understand took place with Mr. Kemp later, with others present, but I have 'been unable to discover what took place at that time, Mr. Roy Patterson, the County Engineer swore that he had warned Mr. 'Rader of irregulaities. My instuctions were again amende ed to prepare financial statements as at August 16th, the date of Mr. Young’s resignation. Auditors and Accounts As a result of confessions made by ■Mr. Gordon Young and by Mr. Ro bert Higgins, the auditors ... County for the year 193'2, namely Robert Higgins and W. T. “ were arrested- on acy and bribery, writing are still I have already that it was not I the main cash book or to make check i marks init although an audit stamp with the signatures of the auditors was affixed at .the end. of each year with the exception of 193.2. The following are the signatures in the i main cash book accompaning .the “audited” stamp. 1927— A. Porterfield, Robert Hig gins. 1928— A. E. Irwin, A. Porterfield. 1929— A. E. Irwin, John Cameron. 1930— John Cameron, A. E Irwin. 1931— 'Robert Higgins, John Cam eron. 1932— No stamp or signature. Au ditors were: Robert Higgins, W. T. Booth. I would call your attention .to the fact that although these shortages have been continuing year after year and two auditors have been appoint ed each year, in the six years only 51 different men have been appointed. It is very evident that a comparis on of the receipts books with the cash book and deposits would have at once brought to light the fact that the Treasurer was not .depositing all receipts, or entering all of them in the cash book. The Treasurer’s po licy of not giving a receipts unless requested to do so left proof of un receipted payment in the hands of the payor only. There was however abundant proof where receipts had been issued, since I have been able to discover $4,221.33 in the four and a fraction years I have investi gated. In the General Cash Book the bank columns were not used. The Auctioneers’ License Receipt book bears no mark of previous au dit and there are several blank stubs. The Pedlars’ License Receipt Book shows marks of stubs torn out about March, 19 3 0, and January 19,’31 There were also blanks in 1930. The Tax Receipt books are fasten ed toget'hr very loosely, one of them with string and when I examined Mr. Young’s desk after his resigna tion I found a number of these stubs containing details of receipts which had been extracted from the book and for which no entries appeared elsewhere. The 'General Receipt book is a bound 'bool; but receipts have been torn out with no explanation of the use of the receipt. A number of cheques in 1932 seem to have been stamped with .the au dit stamp though what they were compared with to merit that stamp I have been unable to discover. A considerable number of cheques were destroyed just before I commenced the audit and I cannot say whether they were audited or not. They should have been checked however against the cash book, the cheque stubs or the vouchers. The cheque stubs contained many blanks which we now know correspond to the che ques found in Gordon Young’s ac count and surely .there would have been an inquiry as to what these blanks meant. The vouchers do not appear to have been examined and are in such a state .of disorder that I have eben unable to do- anything with them. Of course they may have been purposely mixed before I start ed my audit or they may have been in the same condition before. The latter, I feel, is the correct solution, yet attention apparently was never drawn to this most important fail ure to account not only for mondes paid, but also as to payments. In the absence of the cash book I am count for the auditing of the cheq ues. The General account Debit show some marks which may been made by the bankers.. Two* cheques appear to have issued to Mr, L. H. Rader, No. and No. 4861 both for $13.50 February 26th, -19321,. one of these was not entered in the’ cash book. The County auditors appear to have checked the cheques in the Highways account against the vouch ers since both are stamped but it is evident their verification was not thorough as they would nave found those chques which have been issued without a»voucher and which are. missing at the present time. None of the audit procedure seems to have been complete. An examination of the auditors’ reports as printed in the County Re ports of the various years shows that in 1922 a total of $20H,000.'0'0 was shown as owing on debentures, This was substantiated by a list giving Information of the debenture® out standing. In 1923 the debentures were repotted at $2/68)0'00.00 certain debentures amounting to $3|3l,00/0.i00 having been paid. In 1924 the same total is given And no debentures of the Booth charges of conspir- and at .the time of awaiting trial, mentioned the fact customary to total the'propriety of check marks in at a loss to ac- slips have been 4860 ' on were due in that year. In 1925 the auditors made the remark “the de benture debt remains the sam as last year.” This was obviously incor rect as in the year 192'5' $'2.2.000.00 was due and payable. One of .the auditors that year was Mr. Young. In 1926 Gordon Young still being an auditor, the outstanding debentures were shown as $143,000.0'0 notwith standing the fact .that a further $23,- 500.0/0' had been paid an the deben tures Should have been shown at $122,5 0000. In 1927 the debenture debt was shown as $76,000,00 tho* as $44,'500.0'0 had been paid, the total should have been $78,00l0'.00. In 1928 no total is given but as $39,- 500.00 had been paid the balance should have been stated at $38,500.- 00. In the year 1929 $20,000,00' was due and payable showing a bal ance of $18,50040'0 as owing on the Patriotic Debentures. In July 1933 the remaining Patriotic debentures were paid off and found it be $19,- 500.00 and it would therefore appear that the debenture statemens have been continuously incorrect by a $1,- 000.00 Bond of the “A” series 1918 issued for 115/ years and due in 1983. A very strange point in connection with this is that while the liability for these debentures has been stated for some time at $18,50'0.00, interest has been paid on $19,500,010' annual ly. It was found that for several years the envelopes containing the paid coupons received from the bank had not been opened. The 1932 envelope was, however, opened but no audit stamp or can cellation mark, had been placed upon the coupons. Among the papers found in Gor don Young’s residence under the search warrant there were carbon copies of the auditors’ report for previous years which might indicate that don tary er. ■It payable were not porperly stated in 1932. They showed $220.98, where as from suc'h information as has been available to me I show a total of $2,- 762.88 at December 31st, 1932 The condition of the tax arrears book is such that no one can tell ex actly what has happened and the Township Treasurers have been1 com municated with in an effort to find out exactly what taxes were in the county’s hands for collection, what were collected by the county treas urer .and what were paid over by the county to the townships. The book has not been written up fully. There has apparently 'been no check made by the auditors and some of the items marked “remitted” were found not to have been remitted These latter remarks refer larly to the 1932 audit. A further point I would make is that* apparently since 19'30 no bank reconiciliaton was made. The auditors’ reports did not agree either the reports were <made by Goir- Young, even to- the complimen- remarks regarding the Treasur- would appear that the accounts I Coleman Good Light—Every Night Coleman Lanterns are always ready for any lighting job, any time, in any weather. Light instantly . .. no preheating. Th« N«w No. 242 Coleman Sport- Uie is just the Hght for any camping, touring or fishing trip. Small in size but big In brilliance. Only 12 inches high, yet gives up to 150 candlepower ofpure white light Weight only 3 lbs. Single mantle type, Pyrex glass globe protects mantle. It's a double-duty Hght for indoors or out Model No. 22OB Coleman Lantern fe a sturdy, dependable general duty Hght 14W inches high. Two-mantle type. Produces MODEL No. 242 Retail Price *7.95MODEL No. aaoB Retail Price $1LSO _ ~ __________ _ up to 300 candlepower of clear steady”light Green enamel porcelain top, clear mica chitnney, every modern feature. THE COLEMAN LAMP AND STOVE COMPANY, Ltd. TORONTO, «, ONTARIO ASK YOUR DEALER (LX-S) 1 Eczema Brake Out On Her Face and Arms Bitters Rlood For the past 55 years MANUFACTURED ONLY BY THE T. MILBURN CO., Limited Toronto, Ont. Miss Mary Ens, Hague, Sask., writes:—“My blood was in a terrible condition and my face and arms broke out with eczema. I started using blood cleansers of various kinds, but it was of no avail. One day I read about Burdock Blood Bitters, but being so dis couraged, because all other methods had failed, I was rather skeptical about trying it, but after having taken six bottles I, was perfectly satisfied as my skin was left clean and healthy looking.” ; ia receipts qr disbursements with . the actual deosits and disbursements > as discovered by me thorugh an ex- ; amination of the bank transactions. > I am informed that after a statement > hd been built up by the treasurer the . difference betwem the balance shown . and the balance in the bank book was called “outstanding cheques” . though there was no list to justify ■this statement. As a result I found t the outstanding cheques, shown1 at the end of a year in disagreement , with the amount of outstanding cheques paid .during the next year, as nthe following table shows: Outstandings shown as Outstandings per paid' next year in at all. panticu- Outstandings as shown Year.Auditor’s repoi t Auditor’s report County General Account by my report 1928 $$ 778.53 Cheques missing 19'29 51,2 70'. 64 ■5,2170.64 not ascertained. 1930 12,223.29 12,396.99 <1 <c 193'1 .3,808.02 5,232.6'3 •$ 2,175.92 cheq 1932 11,230.16 12,14i0.5’>4 .miss County Highway Account 1928 ?$ 7,315.67 No information 1929 4,899.85 4,899.85 Not ascertained- 1930 5,642.0-7 ■5,642.0'7 It << 1931 11,190.27 8,531.71 $ 7,447.14 1932 <3,637.43 3,768.3'5. The auditors in the p’as-t were evi dently ignorant of the use of a Sinking Fund for when the balance of the Patriotic Debentures matured in July 19|3i3, there was practically no provision for the repayment of the $ 19,'5'0'0.DO. There was a bank account for the purpose but it con tained only a small amount and the method of its operation makes it evi dent that it was an interest account only. I am glad to state that the exist ing debenture for $'100,000.00 is. an instalment debenture and therefore requires no Sinking Fund. 'It is not my purpose to judge the actions of the auditors. They are, I understand to appear before the courts and the facts of the case will then be laid before them for their decision. CHANGES HANDS The Mitchell Advocate, which has been, in the Davis family since its inception, in 1860 has changed hands and this bright newsy week ly has been taken over by Mr. Gor don V. Mounteer, a former publish er of the Trenton Courier-Advocate. The Mitchell Advocate was founded by the late W. R. Davis and his brother, the late J. E. Davis. Dor the past eleven years the paper has been edited by Mr. H. D. Davis, son of Mr. W. R. Davis and a brother of Mrs. F. A. May, of Exeter. Seven- ,ty-three years in the hands of one family is a long time and dates back to the early days of this thriv ing town. It’s influence on the com munity has ever been helpful and the Advocate has been one of the leading weekly papers of the prov ince. Editor “Hal” Davis has made many warm friends among the newspaper fraternity by his genial manner as has also his very genial companion, Mrs. Davis.. In bidding good-bye to Mr. and Mrs. Davis at the same time a welcome will be ex tended to Mr. and Mrs. Mounteer.al'l consideraton of Capital or Trust. 1 The Trust .section deals with those !' assets held in Trust by the County and therefore not forming part of its Surplus either Capital or Rev enue. The Capital Sections in each case ' contain the properties at valuations ' shown in the 19'3.2 auditor’s report. Furthermore, I have added- as. an as set the amount of the Provincial Highways debentures outstanding a® ■ it represents the county’s interest in the ^Provincial Highways at the . amount paid therefor, - less the amounts repaid. At December 31st, 1'932, I show the Patriotic Deben tures liability at $19,500.-0'0 and: as 1 a sinking fund should have been provided for this .debenture it is stated without the usual asset. This is the debenture which has been shown at $18,500.00 since 19-24 but on which interest has been paid for $19,500.00. The debentures were act ually redeemed in July, 1933, at the 1 larger figure. , The Revenue section in each bal- ‘ ance sheet is by far trie most impor- i .tant of the three sections for reasons already stated. All bank accounts have been re- ; conciled as at the dates of the Bal ance Sheets and such other verifica- , tions made as were possible. Other liabilities or changes dn as-' ' sets may come to light later on and certification is therefore withheld'. The Turst sections are, of course, self-explanatory. I would now like to make a com parison- -of my report with that of the •gicounty auditors' of' 1932: Per County Auditors Per ths Report Current Assets .......................................$ 1'511,665.48Current Liabilities .............................. 193,726.36 Current Deficit ............................................42,060.8'8 -The difference in net current de- The following is < a dicit is $3,411.89, F’inancial Statements financial statements attached are listed on the first page report are now discussed.. TWo The which of this Balance 'Sheets are presented, one as at August 16, 1933, and the other as at December 31st, 1932, and are to be found on Exhibits A and iC, re spectively. These are drawn up in three sections showing 'Capital, 'Rev enue and Trust sections separated. The Capital section deals with the properties owned by the county as against the bonded indebtedness. The Revenue section is the most impor tant one since it shows the current assets and liabilities and indicates the Surplus or Deficit due to the operations of the county apart from County General Account Balance at beginning audit** ,.$ 5,941.40 .. 2,753.61 $ 150,099.64 1915', 572.41 45,472.77 ____ _ „ comparison of the cash transaction® shown by the ^auditors of 1932 and by this report. Receipts Balance at Disbursements end Per county or ...... Ex. E. I. Discrep ancies It will .. _ cash book, had not been totalled for ■the year until my audit was made and that it showed salaries by the month and by the year also. I there fore cannot tell how the previous au ditors arrived at their figures. This comparison shows that the opening balance, i.O., the balance In the bank less the outstanding bheq- O’D O’D $3 49,6’813.70 3 4 8,910'. 8 5 ...$ 3,187.79 be recalled that O’D ; the general $7,497.09 O’D 9,101.53 O’D ____ _r_____ ‘1,60(4.44 ties differs from my -balance, which was obtained by an analysis of the bank transactions. The county Au ditors showed greater receipts than appeared in the bank by $772.8(5(, Th© following is' a statement of the differences discovered in the re ceipts; (Continued on next page) 772. &5 STEPHEN COUNCIL The Council convened at the Clerk’s Office, on Saturday, October 28th, 1933, at 8 p.m., pursuant to the call of the Reeve. All members were present. Moved by Mr. Edmund Shapton, seconded by Mr. Edward Lamport: That Freeman W. Morlock be and is hereby appointed Tax Collector for the year 1933, at a salary of $100.00 and postage. That the Township pay commis sions on all taxes paid into Banks outside of the Crediton branch. That the said collector furnisjh and file with the Clerk of the Township a Bond for the amount of $20,00'0. for the due’ performance of this work. Carried. Moved by Mr. Edward Lamport, seconded by Mr. H Beavers: That By law No. 471 to appoint Freeman W. Morlock, Tax Collector, having been read three times be passed and sign ed by the proper officials and the Seal of the Corporation be attached thereto. Carried. Moved by Mr. H. Beaver, seconded by Mr. Roy Holt: That a penalty of five per cent, be added to al'l tax es in the 19'3i3 Roll paid on and after December 16th. Carried. Moved by Mr. Edmund Shapton,. seconded by Mr. Edward Lamport: That a By-law No. 472, being a By law to impose a percentage or pen alty of 5 per cent, on all taxes if not paid on or before the 15th day of De cember A D. 1933, having been read three times be passed and signed by the Reeve and Clerk and the Seal of the Corporation be attached thereto. Carried, Moved by Mr. Roy Holt, seconded by Mr. Edmund Shapton: That By- Law No. 473 being a By-law to amend By-law No. 4.69 for adding certain Hydro accounts to the Tax Roll of 1933, be passed and proper ly executed. Carried, The Council adjourned to meet again at the Town Hall, Crediton, On Monday, November 6th, 1933, at 1 P.Mh Henry Eilber, clerk