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In re Pike County Auditors Audit Report of 2008

February 26, 2010


The opinion of the court was delivered by: Senior Judge Flaherty

Argued: December 7, 2009



Pike County (County) appeals the decision of the Court of Common Pleas of Pike County (trial court) granting the Pike County Auditors' (Auditors) request for an extension of time to complete their fiscal year 2008 audit until October 31, 2009 and directing they be paid $189.59 for each six-hour workday through duration of the extension. We affirm.


In June of 2009, Auditors filed a Motion to Extend Time For Filing Annual Report (Motion) for the fiscal year 2008 until December 31, 2009.*fn1 In their Motion, Auditors indicated the request for additional time to conduct an audit and prepare the relevant report is "based on the increasing volume of work with which the Auditors have been tasked." Reproduced Record (R.R.) at 1a. Auditors further requested that their salaries and benefits continue during the extension period. County filed an answer denying that Auditors are unable to timely complete their work or that any salary or benefits should be paid during any extension period. In new matter, County averred that it believes Auditors already reviewed all relevant records. Furthermore, they had at least two months from the date the County books were closed to complete their audit and file a report. The County added that $70,890.00 was budgeted for Auditors salary and that the budget was exceeded as of June 12, 2009.

Mary Jane Strub, a Pike County Auditor for the past six years, testified at a June 16, 2009 hearing. According to Ms. Strub, Auditors review each account's receipts and make sure the transaction sheet is balanced. Testimony was given that the total budget in Pike County for 2003 was $24,000,000.00, for 2007 it was $33,000,000.00, and for 2008 it was $34,000,000.00. Since she has been an auditor, Ms. Strub indicated the volume of work has increased and more time must be spent doing the audit. When asked to quantify the increase in work, Ms. Strub stated the work increased "a lot." R.R. at 24a. When asked on cross-examination what exactly has increased from 2008 to 2009 that prevents a timely completion of the audit, she responded "I can't say." R.R. at 49a. Ms. Strub did specify, however, that more checks were being written by the County necessitating more time reviewing cash disbursements from the general fund. Per Ms. Strub, the first four years she acted as an auditor, the audit was not completed until December 31st of each year. An audit for fiscal year 2007 was completed by October 31, 2008.

Ms. Strub stated that in order to complete the 2007 audit by October 2008 as required by court order, Auditors worked on Saturdays and one hour extra two days per week. Ms. Strub stated that there is a "lot to do" on the current audit and that they "will be lucky to get it done by December 31." R.R. at 31a-32a. Discrepancies have been discovered when doing the audit, including this year.

Sharon Stuart, County's Director of Finance, testified that $137,650.00 was budgeted for the audit- $70,890.00 for salary, the remainder for expenses. This represented about a thirty percent reduction in the budget allocated to Auditors from the previous year. According to Ms. Stuart, as of the June 2009 hearing, Auditors were close to exceeding their budget. She stated that on May 18, 2007, Auditors had spent 296 total days working on the audit for fiscal year 2006. At that same point in 2008, they had spent 334 days on the audit for fiscal year 2007. As of May 29, 2009, Auditors had worked a cumulative 341 days on the fiscal year 2008 audit. According to Ms. Stuart, Auditors are behind the pace they worked at last year in terms of work completed. There are no County funds that are not otherwise appropriated.

Richard Caridi, Pike County Commissioner, testified that the budget was calculated based on the presumption that Auditors would work six-hour days up until July 1, 2009. Prior to the challenge of a petition to extend the time for completing the fiscal year 2007 audit, no challenges were made to any requests for an extension. Mr. Caridi explained that up until that point, he had never personally received notice of an extension request until it was too late to challenge.

On June 26, 2009, the trial court granted Auditors' request for an extension allowing them until October 31, 2009 to complete their audit. It instructed that Auditors are to continue to receive $189.59 per every six-hour workday, the amount previously set by County. The trial court found Auditors presented "good cause" for an extension of time to complete the audit. Dec. dated 6/26/09, p. 7. The trial court relied on the fact that since 2003, there has been approximately a 40% increase in expenditures for Pike County. It theorized that inflation could not account for all of this increase, thereby clearly establishing an increased workload. The trial court further examined the increase in hours worked by Auditors in recent years through May and concluded that the increase in hours corresponded closely to an increase in expenditures over that same period.

The trial court indicated that while County alluded to the fact that the Auditors have been less than diligent in completing the audit for the 2008 fiscal year so as to obtain further payment of compensation after July 1, 2009, it has not cited to any "factual example of auditor impropriety, delay, misfeasance, malfeasance, or indolence." Dec. dated 6/26/09, p. 3. It added, however, that no evidence was submitted justifying an extension beyond October 31, 2009 as the materials to review for fiscal year 2008 appeared similar to those of fiscal year 2007.

County appeals the trial court's decision to this Court. It contends that the trial court abused its discretion in granting Auditors an extension to complete their audit because they did not show "due cause" for the extension.*fn2

County further contends that the trial court erred in awarding any additional compensation for hours worked by Auditors after July 1, 2009 and that the compensation already paid should apply to the total amount of hours worked to complete the audit. At minimum, County contends that no more than $45.00 per six-hour day should be paid during the period of extension.*fn3

This appeal concerns a question of law, as to which this Court's review is plenary and the standard of review is de novo. Crandell v. Pennsbury Twp. Bd. of Supervisors, 985 A.2d 288 (Pa. Cmwlth. 2009). Moreover, we will find an abuse of discretion when there has been a misapplication of the law, a manifestly unreasonable exercise in judgment, or a final result that evidences partiality, prejudice, bias, or ill-will. ...

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