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City Audit Cites Improvements, But Recommends More Internal Controls

Edit: Due to an error, Councilor Neil Kinnon was inadvertantly listed as the author of this piece. While he uploaded the document, he did not author the text below. 

The attached management letter (click the picture at right to read) was received by the City Council on June 14th 2012 from the City Controller who recently received the report from the City Auditors, and reports on the city's long-term financial standing. 

The report finds that "after three very challenging years of experiencing significant free cash declines," that the "city is finally showing signs of emerging from this financial crisis and achieving some measure of stability," though it also makes some recommendations for better internal controls and an increase in cash reserves. 

What do you think about the report? Would you support a tax increase or cut in spending to increase the city's reserves? 

Carol J. Merletti

12:03 pm on Thursday, July 19, 2012

Where is the outrage over this report? What do I think? I am disgusted and very angry! Not at our new mayor, but our previous one, as well as our previous city council members during the Howard regime, (not the newest members), anyone who worked in former Mayor Howard's office, and the former Treasurer. This is disgraceful! Why isn't this report front page news? The media should be all over this! There is, or at least there wasn’t, according to this report, no accountability at Malden City Hall. This report must, and should be, seen by all Malden people who pay taxes to our city. This is outrageous!

I asked about this previously, so I will ask about it again, since the second theft in the Treasurer's Office was not on this report, but was briefly mentioned by Patch, and then dropped off the radar at the beginning of this year. How many other thefts, besides the first one which involved over $500,000, and the second theft, in which the article did not state how much was stolen this time around, have happened under Howard’s watch? How much money was stolen the second time? What was the outcome of this second theft? Was it internal? Was anyone arrested? Did anyone get fired? I honestly believe that these questions will never be answered honestly. How can they be? No one communicates, or shall I say “communicated” at city hall! There is or “was” no accountability!

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david mokal

8:28 am on Saturday, July 21, 2012

This is why you dont hire Brothers,Freinds, and inlaws. No ONE was held accountable in the $518,000. There homes should have been attached and jail time. All relatives in that heist, Carol its no different that a bank robbery and the THE BIG news isnt covering it. You know as well as I do in the private sector all would be fired over this. Oh well too old for this headin out to DD's anothe Large Iced Coffee creme no sugarLOL I guess America Does Run on Dunkins

Carol J. Merletti

12:03 pm on Thursday, July 19, 2012

-Continued-

And just how did Mayor Howard get that job in Winchester? Has anyone thought about sending this report to the Winchester Mayor? How about the taxpayers of Winchester?

I personally thank Neil Kinnon for sending this report to Patch. After watching the last Council meeting in shock, I am aware that he posted this for different reasons. My concern is about accountability at Malden City Hall after reading this report, and not the recommendations made on this report to Malden City Hall. This report about what takes place in the Malden Treasurer’s office needs to be addressed.

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Marshall T

12:11 pm on Thursday, July 19, 2012

Winchester doesn't have a mayor it's a town. It has a town manager and I think that's what our former mayor is.

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Carol J. Merletti

1:15 pm on Thursday, July 19, 2012

I did not know this about Winchester. All the more reason why Winchester taxpayers should be aware of this report Marshall.

If I were responsible for employees who stole under my clock, then it would be my fault for not doing my job. This is no different. In fact, it is much worse!

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Michael Victor

1:18 pm on Thursday, July 19, 2012

Seems like its more than just the Treasurer's office from my reading of it.

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DannyBoy

1:18 pm on Thursday, July 19, 2012

Well, Carol, it's too late for the Winchester residents, as our former Mayor is their current town manager. The fox is in charge of the henhouse.

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Michael Victor

1:28 pm on Thursday, July 19, 2012

I could be wrong but I think from watching the meetings that the Treasurer and all the money people work for the City Council not the Mayor. I remember this being a big debate with some of the Council saying that it was not a good idea since they are not there to oversee those people.

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Carol J. Merletti

1:32 pm on Thursday, July 19, 2012

I agree with you Michael. I am outraged by the whole report. In my opinion, every single person who worked under Howard's clock at Malden City Hall should be fired. According to this report, no one communicated, and none of the departments had checks or balances. Don't get me wrong. I really did like Howard as a person. I also voted for him when he first came into office. But it didn't take long for him to get taken in by certain people who believe that they own our city. It all went down hill from there. And because of this, Mayor Christenson was left with one huge mess to clean up. I believe that he will, but looking at this report, it is going to take a h_ll of a long time. What also amazes me, is that some of the city council members who attacked Gary's budget at the last meeting where under Howard's umbrella. They knew nothing about this? They view reports. They live at city hall? They are just as much to blame as everyone else as far as I am concerned!

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Michael Victor

1:57 pm on Thursday, July 19, 2012

Its the old question of who knew and when did they know and what if anything did they try to do. You are right about some city council members being under the umbrella but to be fair so was Mayor Christenson. Where is the money going to come from to clean-up those reserve issues? The Patch last question is right. It will either be belt tightening or more taxes. The sad thing is they took our money for the bags and where did that go?

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DannyBoy

2:08 pm on Thursday, July 19, 2012

Hey Chris, can you do a follow-up or another article on the thefts of money from Treasurer's office, and how City Hall plans on addressing the shortfall as a result from these criminal incidents? I'm sure Patch readers would be interested in knowing about this.

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Gene Pinkham

2:13 pm on Thursday, July 19, 2012

There actually was no second theft. The Softright Accounting System installed by City Controller Charles Ranaghan allows the Controller's Office and Treasurer's office to communicate in Real Time.

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Carol J. Merletti

2:17 pm on Thursday, July 19, 2012

Here you go Gene.... Here is the article about the second theft that was published on January 6, 2012...

http://malden.patch.com/articles/officials-investigate-missing-city-funds

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Michael Victor

3:15 pm on Thursday, July 19, 2012

Just read this and remember reading it when it happened. Article says they didn't reveal the amount. Buried. Who was in Charge of the Treasurers office then? From the article it appears as though its the City Council.

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AnnieOMalden

3:42 pm on Thursday, July 19, 2012

The fact our former Mayor did not ever have a computer on his desk and the city was counting on an abacus and using paper records of everything allows for a lot of things to go unaccounted for. It would takes weeks and plenty of OT for the Treasurer or whoever makes budget reports to produce anything necessary to make decisions on. Too much cash is used in transactions in various departments: DPW and the Clerk's Office for birth certificates come to mind. I am not accusing anyone in particular but how many people closed their eyes to the drug addict in the Treasurer's Office?

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Dan O'Brien

9:36 pm on Thursday, July 19, 2012

Carol, you say this; " Mayor Christenson was left with one huge mess to clean up." Are you forgetting that the current Mayor was the Ward 1 Councilor at the time, he knew exactly what was going on. Lest you forget, he was "Howard's Boy" groomed for the position? The whole Council was under Howard's umbrella! Annie O made a comment about the "drug addict in the Treasurer's Office?" Why not drug test everyone in city hall, do you think they all would pass that test in the current administration?

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Carol J. Merletti

10:16 pm on Thursday, July 19, 2012

Dan, First and foremost, I am a firm believer of drug testing for all jobs, especially any job that deals with money. When I interviewed for a job at Fidelity, I not only had to take a drug test, but I had to get fingerprinted, have a CORI check run on me, as well as have my credit history checked. (FYI, I am proud to say that I passed with flying colors!). So yes, the answer to your question is that they should all be drug tested. I also do not know who is in the current administration. I would like to hope though that it is none of the same people from Howard’s regime. But I would still like to see all of them drug tested.

My biggest pet peeve, and the biggest problem with the City of Malden, as in politics in every city and town, is the nepotism. This has to stop. Who you know, or who you are related to vs. being qualified for a Malden city job does not apply at City Hall, and never has. Hopefully Gary will change that.

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Carol J. Merletti

10:31 pm on Thursday, July 19, 2012

I am going to add in another pet peeve of mine. I am tired of seeing city workers bringing city vehicles home at night. I was shopping at Stop and Shop one day, and what do I see? The person who oversees the cemeteries in Malden putting his groceries in a city vehicle! Really? Nice! There are a few more people whom I know well who take city vehicles home, so I won’t mention them, but I do hope that this practice stops so that they can’t do this anymore.

Now about Gary being Howard’s boy, it would be unfair for me to accuse him of that. I say this because I do not know if this is true or not. I was always under the impression that he was his own person and stood for his own beliefs. I say this because I do not know him well enough. I’ve met him a couple of times, but not for a conversation. I’ve heard many people call him this, but since I have no proof that this is true, it would be very wrong of me to agree with others. I could however, mention the names that I know for a fact were Howard’s boy(S), and a few gals too, who sat on the Council, but I think that everyone knows who they are, so I will refrain from this as well. But I will say one thing, I adore my Ward Councilor, Barbara Murphy. She is honest, cares about her ward, and stands by what she believes in. She is not a puppet to anyone, and I do not believe that she was a Howard puppet either.

Joe Gray

6:52 am on Friday, July 20, 2012

Started reading this report. After the first few pages, got disgusted and trailed off. No one will be held accountable in my negative opinion. Money is lost. Taxpayers holding the bag. Fees and taxes climbing to plug shortfalls. Water rates went up again this year and no clear reason why. Residents just pay and pay and pay.

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Michael Victor

8:46 am on Friday, July 20, 2012

Hey Joe hope you didn't get so disgusted you didn't read the whole thing: Can't really begin to form a fully informed opinion if you don't: How about this excerpt.
"The City’s most recent valuation reflected a future actuarial-estimated liability of
approximately $206 million. While this is a future liability, its impact to current
operations cannot be ignored. This is especially important in light of the average
employment age for Malden employees, which is approaching fifty years old. This
factor, among others, may make this an unmanageable liability in ten years." It's on page 6. You and I both watched that budget hearing and had different opinions. I can now see with my own eyes one some wanted to save a little money.

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DannyBoy

12:01 pm on Friday, July 20, 2012

This future liability thing is really scary. I hope this doesn't end up bankrupting Malden, like what happened to those two cities in California...

Michael Victor

8:59 am on Friday, July 20, 2012

How about this one, you want to talk about water going up did they reduce our rates this year to make up for hte past?
"All interest income earned from 1994 – 2011 ($910,958) in the main project account was directed to the general fund by the Treasurer. This is not an appropriate practice as the portion of the interest income related to MWRA projects should remain with the funds. We determined that $611,677 of the amounts originally credited to the general fund should be credited back to the MWRA program." On page 16

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Michael Victor

12:30 pm on Friday, July 20, 2012

1. The City has yet to develop a comprehensive financial policies and procedures manual.
2. The City has yet to develop a fraud policy, or a limited internal audit process.
3.The City’s investment policies are deficient. The City earns approximately $3,000 per month in interest on average cash balances that exceed $20 million. This is not acceptable, especially in these difficult times of trying to maximize revenues.

From Page 14 of the Report. It just keeps getting better. Who is in charge of the finances for the city? Only $3,000 in interest on $20,000,000 dollars no wonder they need to raise our taxes and water rates.

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Kathleen Sullivan

11:18 pm on Friday, July 20, 2012

Does this report mean we are turning over a new leaf? I am going to be an optimist and say yes. Making this report public was a big step in the right direction.

When it comes to money, finance and policy makers, whether private or public, there must be a reliable system of checks and balances and more importantly, when it is public tax money, transparency is a crucial component if we are to believe and trust in our political leaders and build a strong, productive community. People may not like the truth but people can handle the truth. What can't be tolerated is cover ups, thefts, untruths, and purposeful omissions.

The financial slate has been wiped clean. Let's see if we can continue to move forward in a positive, honest, and inclusive direction as a city. We must insist that nothing less than this--- "leadership with integrity". Those who lead in this way will set the tone for all citizens of Malden to follow.

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Carol J. Merletti

12:14 am on Saturday, July 21, 2012

Well stated Kathleen. I love your positive attitude. However, sadly the financial slate has not been wiped clean as of yet, as this report did not address the second theft, nor has anyone else at City Hall.

http://malden.patch.com/articles/officials-investigate-missing-city-funds

The citizens of Malden deserve an update on this theft, since the investigation in January was handed over to Mayor Christenson, from Mayor Howard.

This report was posted to prove a point to our Mayor. I am not sure if you watched the last Council meeting when Mayor Christenson's budget was attacked in a very unprofessional, grandstanding way, by the very same councilor who sent this report to Patch.com. This report was not posted by the City of Malden, and was not meant for our eyes. It was posted by this Councilor who angered our new mayor so much so, that instead of addressing this Councilor by name, Mayor Christenson referred to him as "the Councilor on my right" several times during the debate. This tells me that we have a very serious problem amongst some of our City Council members and our Mayor, which does not give me hope that things are going to change too quickly. I hope that I am wrong. I would love to be as optimistic as you.

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Eddie A

11:18 am on Saturday, July 21, 2012

Carol the councilor doing the attack has managed to create his own little empire. Conflict of interest doesn't apply to him or his court. Just google some of his staff who have their names in this paper to see what I mean. How many friends and family have jobs at the MVRCS? Now he wants to dump on the new Mayor? Can his ward 4 friend be any more of a tag along? Any original thoughts Jim?

david mokal

9:07 am on Saturday, July 21, 2012

Christenson seems very honest and I think that alot of councillors out there at City Hall got lots to hide and know too much. Not all but some. You dont loose $518,000 and other 6 figured monies, Money missing,,,,They all blow town..no one accountable..You dont have to be a rocket scientist to figure that one out. Where were the procecuters? Oh Golf Buddies. Hey what happened to the Drug Dealin Narc Detective? Another brother ..Freind and Inlaw. Theres a huge web of evil doings thats been going on for a long time and we are all stuck in it.

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Dan O'Brien

9:59 am on Saturday, July 21, 2012

As Carol said; this report wasn't put out there by the Mayor, he speaks about transparency; why wasn't it put on the city website for everyone to read? It took Kinnon to bring it to light. David mokal talks about friends and family members working in city hall, look at the current administration, the positions that were created for his friends. This current Mayor knew what was going on in city hall, he was part of the problem as a Councilor, I didn't see him exposing the wrong-doings of city hall. The web of evil will continue, don't let anyone fool you into believing otherwise.

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Kathleen Sullivan

11:54 am on Saturday, July 21, 2012

To Carol--I did watch the last council meeting. I did not like what I saw. No person, let alone the Mayor of our city, should be treated in such a belittling and disrespectful manner. There are other ways to solve issues without such a disgraceful public personal attack on the leader of our city.

You are right, the second theft was not disclosed. We as citizens, have to demand transparency, integrity, and accountability on all levels. This should be how we measure our choice to vote for or re-elect our leaders.

As I said previously, we can handle the truth, fix the issues, and learn from our errors. However we never learn if we don't face our errors and change our way of doing business. All this can be done while treating each other with respect.

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Michael Victor

12:05 pm on Saturday, July 21, 2012

As I watched the mtg also I saw a Councilor clearly in the Minority making some motions to spend less and put money away. In my eyes I did not see him attacking the Mayor but the budget. The mayor was quite upset because which is normal human behavior and made his defense strongly. This is good for the city. beware when all our pols vote together. Based upon this report it would seem some points were on and my question is why were there not more discussion given this report

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Kathleen Sullivan

3:28 pm on Saturday, July 21, 2012

I absolutely agree Michael that we need to hear all points of view. At no time will everyone be on the same page, nor should they be. The norm should always be respectful disagreement. That wasn't what I felt took place at that meeting. Of course, that is my opinion. Once again, we all offer different views which is fine.

The fiscal facts are out there and now we need to move forward with those facts so our community can also move forward. A trust factor between city hall and Malden's citizens needs to be restored while being cognizant that at no time will everyone feel pleased.. Citizens want to be assured that city hall is operating with fiscal responsibility and oversight is in place so these types of issues do not arise in the future.
Our job as citizens is to insist that our government is run efficiently while investing in forward thinking to bring people to Malden as business owners, shoppers, to eat in our wonderful array of restaurants, and to become residents because this is a great city to live in with a lot to offer.

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Carol J. Merletti

2:57 pm on Sunday, July 22, 2012

Kathleen, once again, well stated. I love your point of views.

Michael, I believe that you are referring to Councilor D'Arcangelo, correct? I adore David. I have helped him in the past, when I could, with his campaign. When I saw the last Council meeting, I was shocked, and saddened, at the same time. I then became very upset with him. You are correct, he did not attack the Mayor. However, it hit me that he was ganging up with Mr. Kinnon, and the other councilor, whom I refer to as being in bed with him. My first thought was, “Oh no, they have lured David into a threesome!” I felt that it was way too soon for David, as a new Councilor, to be ticking off our new Mayor. I had thought that David had a good relationship with Mayor Christenson. At least that was the impression that I had formed while attending some of David’s campaign events. And from some of the not-so-nice comments that Kinnon said at the meeting, he made it clear that this was planned way before the meeting even started. It got to a point that when every single item came up for a vote, I already knew what the vote was going to be from all three Councilor’s, even before they opened up their mouths.

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Carol J. Merletti

2:57 pm on Sunday, July 22, 2012

Having said that, I was so upset with David, that when I finally did decide to return his calls, I told him how I felt. He knows that I am upset with him. I told him that if he believes that he will now have Mayor Christenson under his wing after going against his budget, I believe that he is mistaken. He told me that I am wrong and that they are still friends. That remains to be seen.

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Michael Victor

9:32 pm on Sunday, July 22, 2012

Carol actually I should hav e put plural as I was referring to the three Councilors but mostly Kinnon. Again I may not have agreed with all his points but none after reading this report were unreasonable and putting money away well anyone believe they should nt be after reading it? I think if not mistaken only Councilor DArcagelow was on the finance subcommittee so when else were those not going to get to debate it and make there motions if I understand how it works which I may not. Knowing what I know jsut from reading this report I am glad some stood up and voted against it. Without this information it would be a lot harder to make that decision.

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howard mcgowan

11:31 am on Wednesday, August 8, 2012

The matter of the Treasurers Office in "old Hat" I was the lack of interest on Malden Citizens that led to this crisis.
N0 Mention of having employees handling city money be BONDED. i AM SURE THE INSURANCE COMPANY would check and let you know the worthiness of the city employee to handle money
The city councillors spent time in the "back room" at city council chambers trying to set up criteria for a financial officier over other business and seems to be at odds of what was needed. GOOD BOOKEEPER

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Carol J. Merletti

12:24 pm on Wednesday, August 8, 2012

Pretty sad that the citizens of Malden would consider two thefts in the Treasurer's Office "old hat" Howard. I find it disgraceful that no one cares due to their "lack of interest". This is their money, and they should demand answers. I guess that after the first theft, people just weren't shocked that a second one occurred. So much so that it was swept under the rug and just dropped. Very, very sad.

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howard mcgowan

12:47 pm on Wednesday, August 29, 2012

You see how this link has "died on the vine"

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