Opinion · Middleborough

Residents pay the bills. They should see the same documents the auditors see.

John Barrella – The G.O.A.T. News

Middleborough’s fiscal 2025 results have been reported four different ways. The unaudited year-end report showed a positive variance of about $1.3 million. The original FY2027 budget book showed a $1,654,734 surplus. The corrected book showed $1,544,797. The town’s Schedule A filing with the state showed a $57,668 shortfall. Same closed year, four answers.

Earlier this month I sent the town’s auditors a 14-page memo laying that out, along with other financial risks I believe belong in the FY2025 audit. I am posting every page of it, and I want to tell you why.

Here is how it came about. As part of the audit, the town’s auditors inquired of those charged with governance, the people responsible for oversight, about fraud and significant risks. Select Board Chair Teresa Farley reached out to me for my input. Town counsel was consulted on that outreach and approved it. I was more than happy to provide feedback, and I answered in writing. That is how it should work.

Let me say plainly what the memo is. I am not reporting direct knowledge of fraud, and no one should read it that way. The memo says these are my views as one member of the Finance Committee, and that they are not the views of the Committee. What it contains are documented concerns, each tied to a source document, and a request that the auditors examine them.

I am not looking to point fingers at anyone, past or present. Town employees have had a lot to manage, from staff turnover to a mid-year software conversion. The standard I care about is simple: when a closed year can be told four different ways, residents deserve to see the work behind each one.

The memo collects other things I believe are worth a look. The original FY2027 budget balanced until corrections opened a gap of about $3.4 million, which grew to about $3.5 million and led to 19 layoffs. Since 2022, the Town Accountant, Assistant Town Accountant and both treasury positions have turned over or gone vacant. Every item in the memo is tied to a public document.

I have also asked in writing, since 2024, for access to the town’s financial system. The state Division of Local Services told me it is not aware of any municipal finance law that directly addresses local officials’ read-only access. The Finance Committee has since voted unanimously on the type and form of financial information members need, and Interim Town Manager Bob Nunes has said he will review access with the town’s IT department. He has also turned questions around quickly, and those answers were taken up at Monday night’s Finance Committee meeting. That is a stark contrast to the past, and it is certainly welcome.

These numbers are your money. The tax bills, water bills and sewer bills residents pay are what these figures describe. If the memo sat only in an auditor’s file, the people who fund the town would never see the questions being asked on their behalf. I would rather residents see all of it, read the source documents, check my math and tell me where I am wrong. If I have a fact wrong, I want it corrected, and so does the town.

The Finance Committee exists to be the town’s fiscal watchdog. That is the job I was elected to do: first as a member, then as its unanimously elected chair, and now as a member again. I am darn proud of it. A watchdog is only useful if residents can see what it sees.

Sunlight helps everyone who wants the town’s finances to be right. The more the town knows, the better off we all are. The full memo is posted with this piece. Read it, ask questions, and hold all of us to account.

Barrella serves on the Middleborough Finance Committee and the Town Manager Search Committee. The memo and this column reflect his views alone. The Finance Committee has not deliberated on the auditors’ inquiry, and the Search Committee has no role in it.

The document

Memo to Auditor: FY2025 Fraud and Risk Inquiry

The full text of the memo sent to the town’s FY2025 audit engagement team on Oct. 13, 2026, reproduced here in its entirety.

Purpose

The Select Board Chair referred me to you regarding your inquiry of those charged with governance about fraud and significant risks. Below are matters I believe are relevant to the FY2025 audit.

These are my views as one elected member of the Finance Committee. They are not the views of the Committee, which has not deliberated on this inquiry.

I am not reporting direct knowledge of fraud. The items below are documented concerns that I believe warrant your attention. I can provide copies of each document referenced.

Executive summary

• FY2025 results have been reported four ways. The unaudited year-end report showed a positive variance of about $1.3 million. The original FY2027 budget book showed a $1,654,734 surplus, the corrected book $1,544,797, and the town’s Schedule A filing with the state a $57,668 shortfall. The corrected surplus depends on a one-time $2,034,800 land sale; without it, FY2025 shows a $490,003 deficit.
• The original FY2027 budget did not hold. Prepared under then-Town Manager Jay McGrail, it balanced only until corrections cut revenue by $2,249,112 and added $1,129,762 in costs. The resulting $3,378,874 gap later grew to about $3.5 million and led to 19 layoffs.
• Town figures and state filings diverge, mostly in the town’s favor. Department spending in the budget book ties to Schedule A almost to the dollar. The differences fall outside it, including about $1.56 million in spending the book leaves out and lower enterprise spending in every fund, and most make the book’s result look better. For FY2024, the audited statements show about $2.0 million more spending than Schedule A after accounting for the state’s teacher pension payment, and opposite results for water and sewer.
• The enterprise funds are the common thread. The Interim Town Manager has said indirect cost charges to the water, sewer and sanitation funds changed method after 2022 and appear to have been inflated; the same amounts are labeled debt in one document and indirect charges in another. Reported water and wastewater retained earnings fell $2,033,311 and $998,681 between budget books, more than two years of Schedule A deficits combined. Schedule A shows $18.4 million of FY2025 water capital spending against $2.8 million of revenue. The corrected budget book dropped the FY2025 enterprise figures rather than restating them.
• Controls have been thin. The Town Accountant, Assistant Town Accountant and both treasury positions have turned over or gone vacant since 2022. The town had no Town Accountant for about five months in 2023, through the FY2023 close, and publicly listed the Town Manager as Town Accountant for about four of them; labor counsel found no resignation letter from the departing accountant. The March 2025 MUNIS conversion produced revenue errors that were fixed by hand. The FY2024 audited statements include negative expenses and employee payments shown as cash inflows. Naming the Finance Director acting Treasurer/Collector would put the ledger and custody of cash with one person.
• Independent oversight has been limited. My written requests for MUNIS access since 2024 have been refused on legal grounds no one has identified, and the Division of Local Services knows of no law on point. In May 2026 the Finance Committee voted 3-2 to recommend a forensic audit. A former Committee member said he was a special town employee; town records should confirm whether that is accurate.
• Incentives and unusual transactions. The Town Manager’s contract included a $7,500 stipend tied to the AA bond rating. Other items include the November 2025 sale of future 3M PFAS settlement payments, a $161,769 COVID-19 deficit the state is requiring the town to raise, free cash appropriated $47,036 beyond the certified amount, and the 2025 switch from Hague, Sahady to CBIZ.
• Requests. Reconcile the town’s Schedule A filings for FY2021 through FY2025 to the general ledger, audited statements and Annual Town Reports, and preserve system logs and the email accounts of departed finance and executive staff.

Fraud risk factors

In my view, five conditions raise the risk of misstatement in FY2025.

• Reported results reversed within months. The unaudited FY2025 year-end report showed a positive variance of about $1.3 million, with spending at about 97% of a $108.5 million budget. In March 2026, then-Interim Town Manager Joseph Perkins reported that the budget he inherited was out of balance by about $3.3 million. The gap grew to $3.5 million and led to 19 layoffs. The FY2025 surplus the town reported in its FY2027 budget book depended on a one-time $2,034,800 land sale.
• Revenue estimates. The inherited budget projected about $13 million in local receipts. Mr. Perkins said about $11.5 million was supportable.
• Compensation tied to financial outcomes. The Town Manager contract approved Aug. 19, 2024 included a $7,500 stipend tied to the town’s AA bond rating.
• System conversion. The town moved to MUNIS in March 2025, mid-fiscal year. The Interim Town Manager’s Aug. 19, 2026 memo says a former town employee reported revenue to Finance in incorrect amounts, with incorrect data entry, and that the errors were traced and reconciled by hand. The same memo credits the Finance Director with recreating historical financial data and mapping old debt, which suggests data was not fully migrated.
• Turnover and staffing. Since 2022, the Town Accountant, Assistant Town Accountant, Treasurer/Collector and Assistant Treasurer/Collector positions have all turned over or been left vacant, the town manager’s office has changed hands three times, and the Finance Director plans to retire this fall (timeline below). The town had no Town Accountant for about five months in 2023, through the FY2023 year-end close, and for about four of those months it publicly listed then-Town Manager Jay McGrail as Town Accountant, combining the chief executive and the accounting office in one person. As of Sept. 21, 2026, both treasury positions were vacant, and the Select Board took up naming the Finance Director acting Treasurer/Collector, which would place the general ledger and custody of cash with one person. The Aug. 19 memo also cites limited staffing as a cause of the audit delay.

Finance staff turnover, 2022–2026

Oversight and access to financial information

The Finance Committee’s ability to review financial data independently has been limited.

• MUNIS access. Since approximately April 2024, I have asked in writing for access to MUNIS. Then-Town Manager Jay McGrail told the Finance Committee access would be provided. The Committee was later told Massachusetts law prohibits it. No statute has been identified. I have understood that this interpretation originated with CBIZ; if that is not correct, I would welcome clarification. On Sept. 14, 2026, the Committee voted unanimously on the type and form of financial information members need, and the Interim Town Manager has said he will review access with IT.
• DLS response. On Aug. 19, 2026, I raised the question with the Division of Local Services, Mass. Department of Revenue. The Chief of its Municipal Finance Law Bureau replied in writing that he was not aware of any municipal finance law that directly addresses local officials’ read-only access to MUNIS.
• Management attendance. Beginning in 2024, the Town Manager and Finance Director stopped attending Finance Committee meetings and did not return after I asked them, as chair, to attend.
• Forensic audit. In May 2026, the Finance Committee voted 3-2 to recommend that the Select Board authorize and fund a scoped forensic audit covering FY2022 through FY2026, and sent a letter listing items to examine. A 2025 outside review, led by Mary Sahady at a cost of about $60,000 and prompted by concerns I raised, had found no reason for a forensic audit.
• Stipend list. In April 2025, I asked whether the list of FY2025 and planned FY2026 stipends provided to the Finance Committee was complete. I did not receive a response. Records request 25-214 (May 12, 2025) later sought salary and stipend records for FY22 through FY25.
• Special employee claim. Former Finance Committee member Ryan Downey, a corporate controller by profession, said he was a special town employee, in the presence of people who can corroborate the statement. He resigned from the Committee immediately after the town’s 2025 budget summit. In a town of Middleborough’s size, that status requires an express classification by the Select Board (G.L. c. 268A, § 1(n)). Town records should show whether he was classified, when and for what position, and whether he did paid or unpaid work for the town or had access to its financial system.

State filings vs. town records

For each fiscal year, I compared the results the town has published with what it filed with the Division of Local Services on Schedule A for the same year. For FY2024, the town’s only published results are the audited financial statements. The FY2026 and FY2027 budget books do not report FY2024 fund results, and the most recent Annual Town Report in the town’s online archive is for 2022. For FY2025, the town’s published results are the actuals in the FY2027 budget book (the Feb. 2, 2026 edition unless noted) and the unaudited year-end report. The figures do not match, and no reconciliation has been published.

Pattern

• Department spending ties. For FY2025, the budget book and Schedule A agree on general government, public safety, education, public works, human services and culture to within $2, and on fixed costs and debt service to within $22,427. Indirect-cost transfers into the general fund tie to within $1. Both appear to come from the same ledger.
• The differences fall outside department spending, and most favor the book. The book leaves out about $1.56 million that Schedule A reports as other expenditures, and it shows less spending than Schedule A in every enterprise fund (water $1,613,432, sewer $238,743, sanitation $48,569). Smaller items run the other way: the book shows state assessments $217,826 higher and carries $297,835 of overlay as spending, which is offset by a $350,000 overlay release counted as revenue. Net, the general fund result moves $1,712,402, from Schedule A’s $57,668 shortfall to the book’s $1,654,734 surplus.
• Enterprise transfers and debt recur. In FY2024, the gaps between the audit and Schedule A also centered on money moving from the enterprise funds to the general fund: sanitation revenue net of the indirect subsidy, and $394,061 more in transfers in. In FY2025, the water spending gap is within about $2,100 of the amount the FY2027 book labels water debt, the same amount voted in June 2026 as water’s indirect charge.

FY2024 (year ended June 30, 2024)

General fund

• State revenue and spending don’t tie. The $7,871,343 state revenue gap is likely the state’s on-behalf teacher pension payment, which audits include and Schedule A does not. The audit should then show the same amount as extra spending. Instead, education is $5,129,904 higher and general government $6,303,469 higher. Net of the likely pension payment, about $2.0 million more spending appears in the audit than on Schedule A.
• Transfers in. Transfers into the general fund, mostly enterprise indirect charges, are $394,061 higher in the audit than on Schedule A.

Enterprise funds

• Sanitation revenue. Schedule A trash revenue is $533,733 less than the audit’s cash receipts plus interest. That is within $3 of the $533,736 the audit labels “indirect subsidy” and transfers back to the general fund.
• Sanitation spending. Schedule A trash spending ($1,036,940) is less than the audit’s cash payments to vendors alone ($1,307,066).
• Water cash. Water cash fell $3,139,634, about $2.2 million more than the Schedule A enterprise deficit. Schedule A reports $2,444,335 of water capital spending separately, under capital projects. That is close to the $2,385,060 the audit shows paid from water enterprise cash, not the $711,194 the audit shows spent from the water construction projects fund. Counting that capital, Schedule A shows water about $3.4 million short in FY2024.
• Gas & Electric revenue. Schedule A shows $15,680,221 more electric revenue than the audit’s calendar-2023 figure. The periods differ, but a gap that size needs explaining.
• Opposite results. DLS shows water and sewer deficits; the audited statements show both funds gaining. The two use different accounting bases, so only a reconciliation can show whether the gap is basis or error.
• Negative expenses. The audited statements report negative “other operating expenses” for sewer (-$241,845) and sanitation (-$159,828), and negative governmental expenses for public works (-$2,890,827, after -$3,513,621 in FY2023) and culture and recreation (-$901,635).
• Employee payments shown as inflows. The proprietary cash flow statement reports positive “payments to employees and for related benefits” for water ($287,135), sewer ($182,694) and sanitation ($148,127).
• Indirect costs offset. Operating revenue labeled “Other (incl. indirect subsidy)” equals the indirect-cost transfer to the general fund for sewer ($586,841) and sanitation ($533,736), and nearly equals it for water ($966,006 vs. $925,465).
• Timing. The FY2024 audit report is dated July 22, 2025, about 13 months after year-end.

FY2025 (year ended June 30, 2025; audit not issued)

General fund

• Four general fund results. The unaudited year-end report showed a positive variance of about $1.3 million, with spending at about 97% of a $108.5 million budget. The February FY2027 budget book shows a surplus of $1,654,734. The final revised book (May 27, 2026) shows $1,544,797 for the same closed year, with revenue $330,000 lower and spending $220,063 lower. Schedule A shows spending exceeding revenue by $57,668.
• One-time revenue. The February book’s FY2025 revenue includes a $2,034,800 sale of land and a $350,000 overlay release. Without them, its FY2025 result is a deficit of about $730,066.
• Other expenditures. Schedule A shows about $1.56 million more in other expenditures than the budget book, likely including articles paid from free cash, which the book’s surplus calculation leaves out.
• Local receipts. FY2025 actual local receipts were $11,552,277. The FY2027 budget book projected $13.0 million and described the projection as conservative.

Enterprise funds

• Water spending. Schedule A shows $1,613,432 more water spending than the budget book. That is within about $2,100 of the $1,611,355 the FY2027 book lists as water debt, so the book’s figure may leave out debt service. Sewer’s $238,743 gap does not follow the same pattern.
• Water revenue fell. Water revenue dropped $302,259 from FY2024 despite a full year of the January 2024 rate increase; sewer revenue was flat.
• Gas & Electric. Revenue fell from $72,974,242 to $27,566,714 and spending from $61,574,315 to $30,271,113, turning an $11.4 million surplus into a $2.7 million deficit. A change that large suggests a partial-year filing or a change in what is reported.

Capital projects

• Water capital spending. Schedule A shows $18,426,806 in FY2025 water capital project spending against $2,794,721 in revenue, a $15.6 million gap that Schedule A does not show being financed. FY2024 water capital spending was $2,444,335. The East Grove treatment plant did not break ground until August 2025, after FY2025 ended. The audit should confirm what this spending was, how it was financed, and that it stayed within Town Meeting authorizations.
• Chapter 90. Schedule A shows no Chapter 90 highway revenue or spending under capital projects in FY2024, then $1,618,966 and $1,403,156 in FY2025. That suggests a change in where Chapter 90 is recorded.

Changes since the original FY2027 budget book

The original FY2027 budget book (Feb. 2, 2026) was prepared under then-Town Manager Jay McGrail. The April 3, 2026 correction plan and the corrected book (May 27, 2026) changed it as follows. The comparisons above use the original book unless noted.

FY2025 actuals (a closed year)

FY2027 budget

• FY2025 corrections moved toward the state’s figures. Corrected state assessments match Schedule A to the dollar, and the overlay release is no longer counted as revenue. The corrected surplus still depends on the $2,034,800 land sale; without it, FY2025 shows a deficit of $490,003.
• Every FY2027 revenue correction was a reduction. Together with $1,129,762 in added net costs, the corrections turned the original’s balanced budget into a $3,378,874 gap.
• Not carried forward. The corrected book omits FY2025 enterprise actuals, enterprise retained earnings, and the enterprise debt and indirect cost figures in the original. The April 3 plan carried the original FY2025 enterprise spending total ($10,398,478) unchanged, so those figures have not been restated.

Retained earnings in the budget books

Both budget books report enterprise retained earnings as a “current balance” or “FY24 balance” with no as-of date, so these figures cannot be tied to a fiscal year or matched to Schedule A.

• Same label, different amounts. Both books call sanitation’s figure the “FY24 balance,” $695,883 apart. The higher figure exceeds the fund’s audited cash at June 30, 2024 ($1,713,110).
• Declines. Between the two books, water fell $2,033,311 and wastewater $998,681. Each drop is larger than that fund’s Schedule A deficits for FY2024 and FY2025 combined (water $1,507,018; sewer $511,288).

Indirect costs and COVID-19 deficit

• Indirect costs. The FY2026 budget book listed water’s indirect cost charge at $3,444,118. The FY2027 charge voted in June 2026 was $1,611,355, and the Fall 2026 warrant would cut it to $1,296,636. Wastewater would fall from $1,865,206 to $883,292. The FY2027 budget book lists $1,611,355 and $1,865,206 as water and wastewater debt, not indirect costs; its indirect figures are $1,307,930 and $883,291. The Interim Town Manager has said the methodology changed after 2022 and that charges “appear” to have been inflated.
• COVID-19 deficit. The Department of Revenue is requiring the town to raise a $161,769 COVID-19 deficit this year. The Interim Town Manager said it appears to stem from incorrect information submitted by the School Department that was rejected.

Earlier years

• Free cash. The FY2027 budget book shows free cash certified July 1, 2022 at $7,889,078 and appropriated at $7,936,114, which is $47,036 more than was certified.
• FY2022 water. Schedule A shows revenue exceeding spending by $1.96 million; the 2022 Annual Town Report shows water retained earnings falling $3.37 million.
• FY2023 spending. Schedule A shows water spending rising from about $3.1 million to $6.7 million, and sewer spending more than doubling the same year. The PFAS projects came later and were borrowed for.

I suggest the audit reconcile the town’s Schedule A filings for FY2021 through FY2025 to the general ledger, the audited statements and the Annual Town Reports, including retained earnings by fund.

Sources: audited FY2024 financial statements; FY2026 budget book, Feb. 1, 2025; original FY2027 budget book, Feb. 2, 2026; FY2027 budget correction plan, Apr. 3, 2026; corrected FY2027 budget book, May 27, 2026; DLS Schedule A filings for FY2024 and FY2025.

Records and documentation

Several records I have requested were missing, delayed or remain outstanding.

• Capital Planning Committee minutes. In May 2024, as Finance Committee chair, I requested that committee’s minutes. More than 18 months of minutes were not available at the time; they were posted much later.
• Records request 25-172 (April 2025). I requested transaction detail on retained earnings from 2022 forward, and itemized detail on town borrowing up to $36,979,156, including authority and approvals. The request is still open on the town’s records portal.
• Carver water agreement. On Oct. 7, 2026, I wrote to the Interim Town Manager requesting the signed intermunicipal agreement with Carver (former North Carver Water District), including who signed it, when, and its term. My copy is dated Oct. 30, 2023, signed by North Carver on Dec. 1, 2023, and not signed by Middleborough.

I have filed the following records requests through the town’s portal since April 2025.

“Closed” is the portal’s status and does not mean the records were produced.

Areas I suggest the audit examine

• Manual, late or unusual journal entries and transfers between funds
• Completeness of data migrated in the March 2025 software conversion
• Reconciliation of cash, receivables and debt between the Treasurer/Collector and the Town Accountant
• Status of prior audit findings and management letter recommendations
• Transfers from enterprise retained earnings, revolving funds and grants, and their authorization
• Indirect cost charges from the general fund to the water, sewer and sanitation funds, including when and by whom the methodology was changed
• Enterprise fund results and retained earnings, reconciled to Schedule A, including the FY2023 spending increase
• Local receipts estimates compared with actual receipts
• Borrowing compared with Town Meeting authorizations
• Access to the financial system, including any granted to people who are not permanent town employees, such as board or committee members classified as special municipal employees
• Shared or borrowed credentials: whether any user ID, including administrative and senior-official accounts, was used by someone other than its holder. User activity logs and network login records can be compared with the account holder’s documented whereabouts.
• System activity during vacancies in the Town Accountant (between the 2022 retirement and Jan. 31, 2023, and from July to December 2023) and Treasurer/Collector offices, including who entered, approved, posted and reconciled transactions, and what accounting authority or system access the Town Manager held while listed as Town Accountant
• Stipends and other payments to board and committee members and the Town Manager, compared with authorizations, including the bond-rating stipend
• Terms, invoices, payments and billing under the Carver and Bridgewater water agreements, including water sold at 1.5 times the highest residential rate
• The assignment of future 3M PFAS settlement payments to a third-party purchaser for a discounted lump sum (joinder signed by the then-Town Manager on Nov. 25, 2025): its authorization and accounting, and its relation to the $1,350,455 held in a PFAS receipts-reserved fund
• COVID-19 relief reporting behind the $161,769 deficit
• Tax increment financing agreements, including REXA, and their disclosure
• The change of auditors from Hague, Sahady & Co. to CBIZ: the RFP; the June 24, 2025 letter, signed by the Town Manager, rejecting Hague, Sahady’s proposal under a requirement of at least ten Massachusetts municipal audits a year for three years; Hague, Sahady’s bid; who set that requirement and whether earlier solicitations had it; and the costs of the two firms. Hague, Sahady issued the FY2024 audit on July 22, 2025.

Preservation of system records

I ask that the audit team request preservation of system records before they are overwritten. These include the financial system’s audit trails and user activity logs, remote-access and network login records, and the legacy system’s logs from before the March 2025 conversion. If MUNIS is hosted by Tyler Technologies, the request should also go to Tyler.

The same request should cover the email accounts of departed and departing finance and executive staff: the former Town Manager, former Town Accountants, Assistant Town Accountant and Treasurer/Collectors, the former employee referenced in the Aug. 19, 2026 memo, and the Finance Director before her planned retirement.

Contact

I am available to meet with you or to provide copies of any document referenced above.

John A. Barrella III

Member, Middleborough Finance Committee

johnsonfincom@outlook.com