Auditor's Criticism Starts Party Skirmish

04/15/02 12:00AM By John Dillon



(Host) Republicans are crying foul over a state audit that says Vermont Treasurer James Douglas has failed to balance the state's books on time. They say the report is politically motivated, since Douglas is now running for governor. But Elizabeth Ready, the auditor of accounts and a Democrat, says the same criticism was contained in three previous reports.

VPR's John Dillon reports.


(Dillon) The first serious skirmish of the 2002 gubernatorial campaign came over an issue that rarely makes the headlines. Each spring, the state auditor produces an arcane volume called the "Report on Compliance and Internal Control." This year's report didn't gather any dust. It triggered a flurry of outraged press releases from both Democratic and Republican candidates.

The report maintains that Vermont's various financial accounts are not balanced in a timely fashion. That means it's hard to reconcile how much money is coming in and going out of state accounts handled by the Treasurer's Office. The report noted that some accounts that handle tens of millions of dollars were not balanced for up to ten months.

The document says this failure to reconcile the accounts is a serious weakness that was noted in previous years, yet was still not fixed. Elizabeth Ready, the state auditor, says state government, like a family or a business, needs to balance its books:

(Ready) "For the past three years, there has been a problem with the reconciliation of accounts – it's $1.6 billion. The standard for reconciliations is 60 days after the close of the month. These reconciliations have been delinquent for four to ten months. And it's a serious material weakness involving the state's accounts."

(Dillon) Ready's report quickly became an issue in two political campaigns. Douglas Racine, the Democratic lieutenant governor who's running for governor, charged that the report shows Douglas has done a poor job of managing the state's books. Jeb Spaulding, the Democrat who's running for state treasurer, promised to do it better.

And Douglas, the Republican who's running for governor, says he's outraged by what he calls a negative political attack:

(Douglas) "This is a coordinated and vicious attack on my integrity.... I have a reputation for ethical standards and integrity and competence. They understand that that's the strategy they need to develop in a political campaign and they're going about it in a coordinated way."

(Dillon) The Republicans struck back against Ready. They distributed an editorial that criticized the auditor for politicizing her office.

Douglas agrees there's a problem with balancing the accounts. But he says that doesn't justify the political attacks:

(Douglas) "We are behind in reconciling bank accounts. But the key point is that never during this period have we been far enough behind that it has disadvantaged the state in any way."

(Dillon) Ready says she's not alone in her criticism. She says an outside auditing firm, KPMG of Burlington, agrees with her assessment.

According to Ready, she's worked with Douglas to ask the Dean administration for help with a computer accounting system that hasn't worked as promised:

(Ready) "But I think it's important to note that it doesn't matter whether you're talking about a Democratic governor who needs to do better to implement information management and technology, or a Republican treasurer who needs to do better in the way that he is reconciling the accounts in a timely fashion. My job is to bring up these issues, to make these findings and to put forward a series of thoughtful recommendations for improvement. And that's exactly what I've done."

(Dillon) Douglas still questions Ready's motives. While the auditor and her allies blame poor fiscal management, Douglas complains that they took a cheap shot at his reputation. Douglas insists that the state's accounts are fundamentally healthy and the issue is one of computer problems and understaffing.

For Vermont Public Radio, I'm John Dillon.
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