           IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Watts Township Board of Auditors,                 :
                       Appellant                  :
                                                  :
                v.                                :   No. 1429 C.D. 2017
                                                  :   Submitted: April 13, 2018
Karl Raudensky, Watts Township                    :
Supervisor                                        :


BEFORE: HONORABLE P. KEVIN BROBSON, Judge1
        HONORABLE MICHAEL H. WOJCIK, Judge
        HONORABLE ELLEN CEISLER, Judge


OPINION BY JUDGE BROBSON                          FILED: December 13, 2018


                The Watts Township Board of Auditors (Board of Auditors) appeals
pro se from the September 18, 2017 order issued by the Court of Common Pleas of
the 41st Judicial District, Perry County Branch (trial court), which sustained the
appeal of Watts Township Supervisor Karl Raudensky (Raudensky). In that appeal,
Raudensky challenged the Board of Auditors’ authority to impose a surcharge
against him pursuant to The Second Class Township Code (Code).2 For the reasons
discussed below, we affirm.3

       1
           This opinion was reassigned to the authoring judge on July 17, 2018.
       2
           Act of May 1, 1933, P.L. 103, as amended, 53 P.S. §§ 65101-68701.
       3
          This matter is one of four related (but not consolidated) appeals brought before this Court
by the Board of Auditors, relating to the trial court’s dismissal of various surcharges that the Board
of Auditors attempted to impose on three Watts Township Supervisors. The other matters are
docketed as Watts Township Board of Auditors v. Glenn Smithgall, 1430 C.D. 2017, Watts
Township Board of Auditors v. Patricia Gutheil, 1431 C.D. 2017, and Watts Township Board of
Auditors v. Patricia Gutheil, 1432 C.D. 2017. In each of these appeals, the Board of Auditors
raises the same issues. The Pennsylvania State Association of Township Supervisors filed amicus
                On May 6, 2016, the Board of Auditors filed in the trial court a “Report
of the Board of Auditors/Surcharge By Auditors” (Surcharge Report), seeking to
impose upon Raudensky a surcharge in the amount of $338.65. The Board of
Auditors averred in the Surcharge Report that, on January 5, 2016, the Township
Supervisors approved a check payable to Raudensky for $338.65 for his attendance
at meetings of the Township Supervisors in 2015 in violation of Section 606(a) of
the Code,4 53 P.S. § 65606(a), which provides, in part, that “[s]upervisors may
receive as compensation an amount established by ordinance.”                     As no such
ordinance existed at the time Raudensky attended the meetings, the Board of
Auditors asserted that Raudensky could not receive compensation for his attendance.
                The Board of Auditors further averred that the Township Supervisors
knew that such payment constituted illegal compensation. As detailed in the Board
of Auditors’ Surcharge Report:
                [Raudensky] was also made aware of these payments
                being illegal throughout the year of 2015 at both public
                meetings and through written correspondence. On
                February 11, 2015, Brian Reifsnyder submitted a letter to
                the [Township Supervisors] requesting that an ordinance
                be drafted to legalize their pay. On March 4, 2015,
                [Raudensky], at the monthly [Township] Supervisors’
                Meeting, stated that an ordinance is required to be paid.
                At the end of the meeting, the Supervisors ([Raudensky],
                Pat Gutheil, Glenn Smithgall) unanimously agreed to pay
                themselves, along with the rest of the bills. On
                June 3rd, 2015, the Township Solicitor was attending the
                monthly [Township] Supervisors’ Meeting. At that
                meeting, Brian Reifsnyder discussed the requirement of an
                ordinance for the Supervisors[’] payments with the
                Solicitor. The Supervisors agreed to suspend their pay and

curiae briefs in all four matters, supporting the positions of the Watts Township Supervisors
(Township Supervisors).
       4
           Section 606 of the Code was added by the Act of November 9, 1995, P.L. 350.

                                                2
               have the Solicitor review the situation.               On
               August 5, 2015, the Township Solicitor explained that the
               [Township] Supervisors could pass an ordinance to be
               paid and that after the passage of such an ordinance their
               pay can resume after the election cycle.               On
               September 2, 2015, and after disregarding the advice of
               the Township Solicitor, the Township Supervisors
               ([Raudensky] and Glenn Smithgall) approved paying
               themselves along with the rest of the bills.

(Reproduced Record (R.R.) at 1a-2a.)
               Thereafter, on June 1, 2016, Raudensky filed a Motion to Strike and
Appeal, wherein he challenged the Board of Auditors’ authority to impose the
surcharge. Specifically, Raudensky asserted that because the Township Supervisors
chose to appoint an accounting firm to perform the audit for the 2015 fiscal year,
Section 917(c) of the Code,5 53 P.S. § 65917(c), divested the Board of Auditors of
its authority to impose a surcharge.           (Motion to Strike and Appeal ¶¶ 8-10.)
Alternatively, Raudensky challenged the merits of the surcharge, alleging that the
payment did not violate any provisions of the Code. Accordingly, Raudensky sought
dismissal of the surcharge. (Id. ¶¶ 13-17.)
               On June 7, 2016, the Board of Auditors filed an Opposition to Motion
to Strike and Appeal. In so doing, the Board of Auditors asserted that, pursuant to
Section 907 of the Code, 53 P.S. § 65907, it must impose a surcharge any time an
elected or appointed officer causes a loss to the Township through a violation of the
law. (Opposition to Motion to Strike and Appeal ¶¶ 1-3.) With respect to the
appointment of an accounting firm, the Board of Auditors noted that the Township
Supervisors appointed an accounting firm to audit the 2015 fiscal year, whereas the
surcharge stemmed from a payment made in the 2016 year. Accordingly, the Board


      5
          Section 917 of the Code was added by the Act of November 9, 1995, P.L. 350.

                                               3
of Auditors argued that, because the Township Supervisors did not appoint an
accounting firm for the 2016 fiscal year, the Board of Auditors retained the authority
to impose the surcharge.6 (Id. ¶¶ 4-5.) Further, the Board of Auditors asserted that
it asked the accounting firm to investigate the payment, but the accounting firm
declined. The Board of Auditors viewed this as a violation of the accounting firm’s
duty. Specifically, the Board of Auditors averred:
               On or about February 8th, 2016, the [Board of Auditors]
               delivered a letter to [the accounting firm] to inform [the
               accounting firm that] the [Township Supervisors] were
               paying themselves in violation of Section 606 of the
               [Code] and requested that a surcharge be issued. On or
               about March 4th, 2016, [a representative of the accounting
               firm] verbally informed [a Board of Auditors’ member]
               that [the accounting firm] was not going to investigate the
               allegations of the [Board of Auditors].
(Id. ¶ 7.) In light of this, the Board of Auditors apparently believed that Section 907
of the Code compelled it to impose the surcharge on its own accord.
               After briefing and oral argument, the trial court sustained Raudensky’s
motion and dismissed the surcharge. In so doing, the trial court concluded that a
board of auditors may issue a surcharge “only in conjunction with an audit.” (R.R.
at 18a.) As the surcharge here did not stem from the findings within an audit, the
trial court concluded that the Board of Auditors lacked authority to impose the
surcharge. (Id.) The trial court further held that a board of auditors is divested of
its surcharge authority when the township supervisors appoint an outside accountant


       6
           We note that, at the time the Board of Auditors made this assertion, the
Township’s 2016 fiscal year had not yet been completed. See Section 3201 of the Code, added by
the Act of November 9, 1995, P.L. 350, 53 P.S. § 68201 (“The fiscal year in townships commences
on the first day of January in each year. All receipts, disbursements, contracts, and purchases shall
be entered as of record in the fiscal year in which made.”).


                                                 4
to perform the audit. (Id.) The Board of Auditors now appeals the trial court’s
decision.
               On appeal,7 the Board of Auditors argues that the trial court erred in
concluding that the Board of Auditors lacked the authority to impose a surcharge
against Raudensky when the Township Supervisors appointed an independent
accountant to perform Watts Township’s annual audit. The Board of Auditors
further argues the merits of its surcharge, specifically that a surcharge is warranted
because: (1) the Township Supervisors violated the Code when they compensated
themselves for supervisory duties in the absence of an ordinance authorizing the
compensation; (2) the Township Supervisors cannot be compensated retroactively
for supervisory duties; and (3) the Township Supervisors must wait until the next
term of office to be compensated at the rate prescribed by an ordinance passed during
their current term of office.8
               As to the Board of Auditors’ authority, the Board of Auditors argues
that Section 907(a) of the Code authorizes a board of auditors to surcharge a
township officer any time the officer causes a loss to the township through violation
of the law. Section 907(a) of the Code provides, in pertinent part, that “[t]he board
of auditors shall surcharge any elected or appointed officer for the amount of any
loss to the township caused in whole or in part by the officer’s act or omission in
violation of law or beyond the scope of the officer’s authority.” Conversely,

       7
        Because the issue on appeal is purely a question of law, our standard of review is de
novo and our scope of review is plenary. In re Appeal of 2012 Fin. Audit of Greene Twp.,
113 A.3d 372, 374 n.5 (Pa. Cmwlth. 2015).
       8
         The Board of Auditors also argues that the trial court erred when it ruled in favor of
Raudensky without hearing oral argument from the Board of Auditors, but the Board of Auditors
waived that argument by failing to raise it in its statement of errors complained of on appeal filed
pursuant to Pa. R.A.P. 1925(b). See Pa. R.A.P. 1925(b)(4)(vii) (“Issues not included in the
[s]tatement . . . are waived.”).

                                                 5
Raudensky maintains his position that a board of auditors may only surcharge an
officer when that surcharge flows from the findings of an audit performed either by
a board of auditors or an appointed outside accountant. Further, Raudensky asserts
that, pursuant to Section 917(c) of the Code, the township supervisors’ appointment
of an outside accountant to conduct the audit divests a board of auditors of its
surcharge authority. Section 917(c) of the Code provides:
               When an accountant or firm is appointed under subsection
               (a) or (b) [of Section 917], the board of auditors shall not
               audit, settle or adjust the accounts audited by the appointee
               but shall perform the other duties of the office. The
               accountant or firm has the powers given to the board of
               auditors under this act, except the audit shall be made in
               accordance with generally accepted auditing standards,
               and further provide that the accountant or firm appointed
               under subsection (a) or (b) shall not have the power to
               determine compensations, and they are subject to the same
               penalties as the elected auditors under [the Code]. The
               report of the accountant or firm is subject to appeals the
               same as reports of the board of auditors under [the
               Code].[9]
Accordingly, this Court must determine whether a board of auditors is authorized to
surcharge an officer only in connection with an audit, or whether it may surcharge
an officer at any time. If we conclude the latter, we must then determine whether


       9
         It appears that the final sentence of Section 917(c) of the Code provides for the right to
appeal a report prepared by an appointed accountant in the same manner as appealing a report
prepared by a board of auditors under Section 909 of the Code. Section 909 of the Code provides:
       The board of supervisors or any elector or taxpayer of the township or any officer
       whose account is settled or audited by the board of auditors may appeal from any
       settlement or audit of the board of auditors to the court of common pleas within
       forty-five days after the settlement has been filed in the court of common pleas.
Although the parties did not brief the issue, we note that Section 917(c) of the Code appears to
provide a mechanism for challenging a report prepared by an appointed accountant, provided that
the appeal is filed within 45 days of the audit’s filing.

                                                6
the township supervisors’ appointment of an accountant to perform an audit divests
a board of auditors of this surcharge authority.
             We begin our analysis by reviewing general principles of statutory
construction. When interpreting a statute, this Court is guided by the Statutory
Construction Act of 1972, 1 Pa. C.S. §§ 1501-1991, which provides that “[t]he object
of all interpretation and construction of statutes is to ascertain and effectuate the
intention of the General Assembly.” 1 Pa. C.S. § 1921(a). “The clearest indication
of legislative intent is generally the plain language of a statute.”        Walker v.
Eleby, 842 A.2d 389, 400 (Pa. 2004). “When the words of a statute are clear and
free from all ambiguity, the letter of it is not to be disregarded under the pretext of
pursuing its spirit.” 1 Pa. C.S. § 1921(b). Only “[w]hen the words of the statute are
not explicit” may this Court resort to statutory construction. 1 Pa. C.S. § 1921(c).
“A statute is ambiguous or unclear if its language is subject to two or more
reasonable interpretations.”      Bethenergy Mines, Inc. v. Dep’t of Envtl.
Prot., 676 A.2d 711, 715 (Pa. Cmwlth.), appeal denied, 685 A.2d 547 (Pa. 1996).
Moreover, “[e]very statute shall be construed, if possible, to give effect to all its
provisions.” 1 Pa. C.S. § 1921(a). It is presumed “[t]hat the General Assembly
intends the entire statute to be effective and certain.” 1 Pa. C.S. § 1922(2). Thus,
no provision of a statute shall be “reduced to mere surplusage.”              Walker,
842 A.2d at 400. Finally, it is presumed “[t]hat the General Assembly does not
intend a result that is absurd, impossible of execution or unreasonable.” 1 Pa. C.S.
§ 1922(1).
             Here, the Code is silent as to when a board of auditors may impose a
surcharge. To that point, Section 907 of the Code is subject to two reasonable
interpretations as to when this may occur. Section 907 of the Code provides:


                                          7
                    (a) The board of auditors shall surcharge any
             elected or appointed officer for the amount of any loss to
             the township caused in whole or in part by the officer’s act
             or omission in violation of law or beyond the scope of the
             officer’s authority. If the auditors find an absence of intent
             to violate the law or exceed the scope of authority and find
             the result of the officer’s act could have been achieved by
             legal means and authorized procedures, the surcharge
             imposed shall be limited to the difference between the
             costs actually incurred by the township and the costs that
             would have been incurred had legal means and authorized
             procedures been employed. Provisions of this section
             which limit the amount of surcharge do not apply to cases
             involving fraud or collusion on the part of the officers or
             to any penalty ensuing to the benefit of or payable to the
             Commonwealth.
                    (b) Any balance in any report of board of auditors
             against any officer of the township constitutes a surcharge
             against the officer as fully as if expressly stated in the
             report to be a surcharge. The board of auditors shall direct
             the clerk of court of common pleas to certify the amount
             of every balance or surcharge from which no appeal has
             been taken under [S]ections 909 and 910 [of the Code,
             53 P.S. §§ 65909 and 65910,] to the court of common
             pleas, and the prothonotary shall enter the balance or
             surcharge as a judgment against the officer in favor of the
             township.
(Emphasis added.) While Section 907(a) may be interpreted to mean that a board of
auditors has authority to impose a surcharge any time an elected or appointed officer
causes a loss to the township through a violation of the law, Section 907(b) seems to
suggest that a surcharge only stems from a report of a board of auditors, i.e., an audit
report. When read alone, Section 907 provides little guidance in determining when
a board of auditors may impose a surcharge. We are mindful, however, that statutory
language must be read in its context, and “every portion of statutory language is to
be read ‘together and in conjunction’ with the remaining statutory language, ‘and
construed with reference to the entire statute’ as a whole.” Commonwealth v. Office

                                           8
of Open Records, 103 A.3d 1276, 1285 (Pa. 2014) (citing Bd. of Revision of Taxes,
City of Phila. v. City of Phila., 4 A.3d 610, 622 (Pa. 2010)). Therefore, we must
review Section 907’s context within the Code.
             In determining when a board of auditors may impose a surcharge, we
are guided by the governing provisions found in Article IX of the Code,
53 P.S. §§ 65901-65917, entitled      “Auditors;   Accountants.”       Preliminarily,
Section 901 of the Code, 53 P.S. § 65901, provides general guidelines regarding a
board of auditors’ operating procedure and duties.         Specifically, Section 901
mandates that a board of auditors (1) conduct an annual meeting; (2) audit, settle,
and adjust the accounts of all elected or appointed officials of the township and its
boards or agencies that received or disbursed funds of or owing to the township
during the immediately preceding calendar year; (3) determine the compensations
for supervisors employed by the township; (4) audit the dockets, transcripts and
other official records of the district justices to determine the amount of fines and
costs paid over or due the township; and (5) audit the accounts of officials who have
passed away or resigned.
             Section 902 of the Code, 53 P.S. § 65902, sets the compensation for a
board of auditors. Sections 903 and 904 of the Code, 53 P.S. §§ 65903-65904, vest
a board of auditors with authority to issue subpoenas in order to complete the audit,
in addition to establishing a deadline by which a board of auditors must complete
the audit. Section 905 of the Code, 53 P.S. § 65905, provides for penalties for
auditors who fail to comply with Article IX of the Code. Section 906 of the Code,
53 P.S. § 65906, provides that a board of auditors may petition for the appointment
of counsel if a disagreement occurs between a board of auditors and any official it is




                                          9
required to audit.10 Section 907 of the Code, as previously mentioned, governs the
imposition of a surcharge, and Section 908 of the Code, 53 P.S. § 65908, governs
the collection of a judgment entered for a surcharge. Sections 909 through 915 of
the Code,11 53 P.S. §§ 65909-65915, govern the surcharge appeal process.
Section 916 of the Code,12 53 P.S. § 65916, forbids any member of a board of
auditors from having a financial interest in township transactions.                          Finally,
Section 917 of the Code permits the township supervisors to appoint a certified or
competent public accountant or a firm of certified or competent public accountants
to perform the audit. When the township supervisors appoint an accountant to
perform the audit, Section 917(c) serves to limit a board of auditors’ power to
perform other duties. Specifically, Section 917(c) of the Code provides, in part, that
when an accountant is appointed, “the board of auditors shall not audit, settle or
adjust the accounts audited by the appointee but shall perform the other duties of
the office,” and that “[t]he accountant or firm has the powers given to the board of
auditors under [the Code], except the audit shall be made in accordance with
generally accepted auditing standards.”
                Here, a review of the above provisions of the Code reveals a statutory
scheme indicating that a surcharge flows from an audit. Specifically, the seemingly
purposeful order of the sections within the Code aids us in coming to this conclusion.
Section 901 of the Code details the general duties of a board of auditors, among

       10
           While not directly applicable to the central issue, we note that we are troubled by the fact
that the Board of Auditors is proceeding pro se in this matter. Although the Board of Auditors
petitioned for the appointment of counsel—which the trial court denied—the Board of Auditors is
not, ipso facto, authorized to proceed pro se.
       11
            Sections 913 through 915 of the Code were added by the Act of November 9, 1995,
P.L. 350.
       12
            Section 916 of the Code was added by the Act of November 9, 1995, P.L. 350.

                                                 10
which is the duty to audit. Section 903 of the Code vests power within a board of
auditors to issue subpoenas in order to complete its audit, while Section 904 of the
Code provides a deadline by which a board of auditors must complete the audit.
Thereafter, Section 907 of the Code authorizes a board of auditors to impose
surcharges, while the subsequent sections primarily govern the surcharge appeal
process. We determine that the General Assembly intentionally structured the Code
in this manner, as each section builds logically on the prior, following the general
procedure of (1) a board of auditors performing an audit, (2) a board of auditors
imposing surcharges stemming from the audit, and (3) the ability of a surcharged
party to appeal.
              We find no case law that contradicts our conclusion that a surcharge
must flow from the findings of an audit. To the contrary, in over 100 years of case
law wherein a board of auditors imposed a surcharge, the surcharge stemmed
directly from findings in an audit or auditor’s report.13 See, e.g., Audit of Hanover
Twp. Sch. Dist., 108 A. 656, 657 (Pa. 1919); Commonwealth, to Use of Clarion Cty.
v. U.S. Fid. & Guar. Co., 69 A. 550, 551 (Pa. 1908); In re Appeal of 2012 Fin. Audit
for Greene Twp., 113 A.3d at 373 n.2; In re 1995 Audit of Middle Smithfield Twp.,
701 A.2d 793, 793-94 (Pa. Cmwlth. 1997), appeal denied, 727 A.2d 134 (Pa. 1998);
In re Report of Audit of S. Union Twp. for 1975, 407 A.2d 906, 910 (Pa.
Cmwlth. 1979) (“The action of imposing surcharges in conjunction with the
auditors’ report . . . is civil in nature[.]”); Brady Twp. v. Ashley, 331 A.2d 585, 586
(Pa. Cmwlth 1975). While none of these cases directly stand for the proposition that
a surcharge must stem from the findings within an audit, we do not believe their

       13
         We note that “audit” and “auditor’s report” have been used interchangeably. See In re
Appeal from Settlement and Audit of Auditors of Buckingham Twp., Bucks Cty., 460 A.2d 904, 906
(Pa. Cmwlth. 1983).

                                             11
identical postures are a matter of coincidence. Further, insofar as Section 907(a) of
the Code can be interpreted to require a board of auditors to impose a surcharge at
any time an officer violates the law and causes a loss to the township without first
conducting an audit, we have found no case law—or any other persuasive
authority—to support that alternative interpretation.
               Here, it is clear that the Board of Auditors did not impose the surcharge
in connection with an audit. As set forth in the Board of Auditors’ Opposition to
Motion to Strike and Appeal, the Board of Auditors requested that the accounting
firm investigate the payment as part of its fiscal year 2015 audit, but the accounting
firm declined to do so.14 (Opposition to Motion to Strike and Appeal ¶ 7.) The
Board of Auditors, therefore, opted to impose the surcharge on its own accord, using
the findings of its own investigation instead of those from an audit. As we have
concluded that any imposition of a surcharge must flow from the findings of an audit,
we must conclude that the Board of Auditors lacked authority to impose a surcharge
upon Raudensky.          Accordingly, we affirm the trial court’s dismissal of the
surcharge.15




                                                 P. KEVIN BROBSON, Judge




       14
          The record is silent as to whether the Board of Auditors attempted to appeal the substance
of the 2015 audit under Section 917(c) of the Code.
       15
         As we dispose of the matter on these grounds, we need not address the remaining issues
on appeal relating to the merits of the surcharge.

                                                12
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Watts Township Board of Auditors,     :
                       Appellant      :
                                      :
            v.                        :   No. 1429 C.D. 2017
                                      :
Karl Raudensky, Watts Township        :
Supervisor                            :



                                    ORDER


            AND NOW, this 13th day of December, 2018, the Order of the Court of
Common Pleas of the 41st Judicial District, Perry County Branch, is AFFIRMED.




                                      P. KEVIN BROBSON, Judge
