A recently released report from the Pennsylvania Department of the Auditor General identified multiple issues involving the Borough of Shenandoah’s Liquid Fuels Tax Fund during 2023 and 2024, including unsupported transfers, improper expenditures, and delays in receiving state funding.
The attestation engagement report, issued in April 2026, reviewed the borough’s use of Liquid Fuels funds from January 1, 2023, through December 31, 2024, and found several recurring compliance problems.
Unsupported $100,000 Transfer
According to the report, auditors found that $100,000 was electronically transferred from the borough’s Liquid Fuels Tax Fund to its General Fund on January 2, 2024. However, no supporting documentation was available to justify the transaction.
Auditors stated that without documentation, they were unable to determine whether the expenditure complied with state law governing the use of Liquid Fuels funds. The report recommends that the borough reimburse the full amount back into the fund.
Improper Retroactive Expenditures
The audit also identified $81,227.83 in retroactive expenditures related to street lighting costs.
According to the report, a portion of a $103,030.96 payment made in December 2024 included invoices dating back to 2023 and earlier in 2024. Under PennDOT guidelines, Liquid Fuels funds cannot be used for retroactive payments or expenses incurred more than 90 days prior.
Auditors recommended that the borough reimburse the $81,227.83 back into the fund.
Delayed State Allocations
The report further cited delays in receiving and depositing state Liquid Fuels allocations.
Funding that is typically distributed in early March was not received until July 2023 and May 2024. The delays were attributed to failures to submit required financial reports on time, which are necessary to qualify for funding.
Auditors noted that the delays limited the borough’s ability to use the funds for road maintenance and may have reduced potential interest earnings.
Prior Findings and Reimbursements
The report also confirmed that similar issues had been identified in a previous audit.
A total of $19,588.76 related to unsupported expenditures and retroactive payments from prior years was required to be reimbursed to the Liquid Fuels Tax Fund. That repayment was completed on February 19, 2025, after the period covered by the current audit.
Auditors noted that multiple findings—including lack of documentation, retroactive expenditures, and delayed allocations—were recurring issues that had not been fully corrected from prior audit periods.
Borough Leadership During Audit Period
During the timeframe covered in the report, the borough’s administration included Borough Manager Anthony Sajone in 2023, with Borough Council led by President Katie Catizone.
The current borough administration stated that the findings relate to actions that occurred prior to its tenure and indicated that corrective measures have been implemented.
Statement from Borough Manager Mike Cadau
“When I started in January of 2025, it became immediately clear that serious financial irregularities existed throughout Borough operations. This audit confirms exactly what we have been saying years of poor controls, weak oversight, and improper financial management created major compliance issues that taxpayers are now forced to deal with.These findings did not occur under the current administration. In fact, my formal response to the Auditor General clearly states that I was not employed by the municipality in 2024 when these violations occurred.
Our administration has been working aggressively to correct these issues, implement stronger financial controls, improve documentation, increase transparency, and cooperate fully with all ongoing forensic accounting reviews, special counsel investigations, and state agency oversight.
The residents of Shenandoah deserve accountability, not excuses. We will continue releasing records, reports, and facts so the public can see exactly how this Borough was managed—and how we are fixing it.”
The Borough reminds residents that this report is separate from the ongoing forensic accounting investigation involving broader financial matters, including MABS transactions, pension funding concerns, and additional compliance reviews currently being examined. The PA Attorney General, Public Corruption Division and IRS Criminal Division are actively investigating the borough currently.
Report Availability
The full report, issued by Auditor General Timothy L. DeFoor, can be read through the link below.
Read the report here