License of Hallowell auditor who managed Rumford’s books questioned


LEWISTON — A Hallowell man who has been auditing the town of Rumford’s books for the past two decades may not have been properly licensed to do some of that work.

The accountancy firm license held by Harold Blake, who owned Harold E. Blake Accounting Services, was revoked in 2009 by order of the Maine Board of Accountancy, in a two-vote move suspending that license back to November 2003.

Blake has continued to present himself to his clients as fully licensed to audit their accounts.

The company’s license revocation stems from a poor peer review of accounting practices in 2002. In 2008, when Blake applied to the Board of Accountancy to renew his company’s license, the review board discovered that Blake never provided required documentation that he had completed a successful peer review following the poor performance reported in 2002, which was required in his 2003 renewal application and all subsequent applications.

Between 2007 and 2009, Blake was warned by letter at least three times by the New England Peer Review Program to provide the required documentation and did not comply.

In a 2009 order of the state licensure board, Blake’s applications of 2003 and 2008 to renew his firm’s license were denied.

That decision also noted that in February 2008, Blake’s failure to comply with the paperwork requirement prompted the New England Peer Review program to report his refusal to the American Institute of Certified Public Accountants, which requires a successful peer review for membership.

According to Springvale CPA Joel Patterson, who serves on the board of the Maine Association of Professional Accountants, CPAs undergo routine peer reviews to ensure their work is in keeping with constantly evolving professional rules and standards.

CPAs also are required to attach peer review letters to applications for jobs, including municipal audits.

Blake acknowledges that his firm’s license was revoked in 2009, but he is relying on state law in Title 30-A that allows any “qualified public accountant” to perform a municipal audit.

According to Eric Conrad, communications director for the Maine Municipal Association, it is MMA’s position that “state laws relating to accountants require that they be licensed in order to perform municipal audits.”

And, according to state auditor Neria Douglass, CPAs must have personal licenses “and his firm must have a license. They both need to exist” for Blake to be considered a qualified professional accountant.

“A CPA can’t use those letters for this sort of work without being actually credentialed,” she said.

According to Rumford Town Manager Carlo Puiia, Blake’s letterhead and signature line as recently as last fall note that he is a licensed CPA.

Blake also does the audit work for Waldo County. According to Deputy Treasurer Karen Trussell, Blake has included CPA credentials for the work he’s done there for the past five years.

Blake insists, though, that he is not breaking the law. He disputes the 2009 finding of the Board of Accountancy. “I disagreed with and still disagree with them revoking my firm license,” he said. “I believe the decision they reached was incorrect.”

Blake also disputes state records that indicate his personal license was not active for a period in 2001 and again in 2008-09, saying he’s had an active personal CPA license since 1991. Since he was licensed, Blake said, he developed a speciality in municipal audits and works with clients across the state, including audits in Peru and Palermo.

According to state records, Blake’s last personal license was renewed in January 2009 and expired Sept. 30, 2010. Blake said that’s not correct. That license was issued Oct. 1, 2009, to last through 2010, he said.

“I don’t care what their records show,” he said. “I have a copy of my license right here in my hand.”

“Their records,” he said, “have got to be wrong.”

Blake said he let his personal license expire last September, but he intends to apply for renewal so he can go to work for another company under its license, either as an employee or a junior partner. He knows he’ll pay a penalty for the lapse and will have to complete required education to qualify for the license, he said, but he is certain that he’ll be able to become a licensed CPA again.

According to Douglass, the status of Blake’s license was brought up with her office in 2007, and the state has since taken Blake’s name off their resource list of accountants who perform municipal audits.

According to Puiia, Blake has done Rumford’s audits for 20 years, and various town managers and boards of selectmen have found his work to be thorough and his recommendations sound.

Former Rumford Town Manager Steve Eldridge, who now works in Lisbon, agreed.

“I was always comfortable with his audits,” Eldridge said. “(Blake’s) management letters gave us good direction.”

Puiia is confident the town’s books are correct, based on the municipal Finance Department’s attention to detail, and it is that work that is audited by Blake. “We don’t think there’s anything amiss on our part,” he said, “(but we) are still not clear as far as Mr. Blake’s authority to do that work, or not.”

The question of Blake’s current license was brought to the town’s attention by community activist Candice Casey, who said she questioned some of the town’s accounting practices and eventually checked Blake’s license status.

On her blog, Casey asserts that the license discrepancy makes Rumford’s audits “invalid,” but Douglass would not go that far.

Towns are required to have an audit, she said, and are subject to a $100 fine if they don’t. She’ll have to consider whether the audits already submitted are acceptable, she said.

“The biggest issue is that a town should have an audit and it should be by a qualified public auditor, and that means there is a need to be licensed. And, if he’s not, that’s a problem,” Douglass said.

Puiia has asked town lawyer Tom Carey to review the situation. Carey said Monday that he intends to do that work as quickly as possible.

Puiia said he would tentatively list Carey’s findings on Thursday’s selectmen’s meeting agenda, but they may have to table discussion until they have the information they need.

Puiia said the town would proceed cautiously in investigating the problem because “we’re talking about an individual’s livelihood and reputation. We wouldn’t want to do any harm.”

Douglass suggested that the town consider hiring a CPA to review the past two years’ worth of audits, and that “the town is looking at a more comprehensive audit for the coming year than they would otherwise.”

“I want to be sure the citizens of Rumford can be assured that their town is financially secure,” Douglass said, and she will be looking into Blake’s work.

While there is one question about Blake’s license to perform audits, she said, “the other would be what happens to the towns that paid him money for services for which he wasn’t qualified.”

Douglass said the question of Blake’s license status to perform audits will prompt her to remind municipalities to check the licenses of their auditors and ensure that CPAs have both a personal license and a company license to practice.

“The bottom line,” she said, “is to protect the financial condition of the town.”

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