WILLIMANTIC – It appears that local residents who grumbled about the mishandling of finances in this small Piscataquis County town had reason to worry.

A preliminary audit of the books ending fiscal year June 2006 revealed that about $42,000 in funds can’t be located, Selectman Susan Bennett said Tuesday.

An investigation into the missing funds is being conducted by the Maine State Police.

Jacqueline Gorey, the longtime town treasurer and tax collector, voluntarily resigned from those positions effective Oct. 9, according to Bennett.

Selectmen held an emergency board meeting on Monday to discuss the matter. No action was taken.No charges have been filed in connection with the unaccounted-for funds, according to the Piscataquis County District Attorney’s Office.

“Selectmen will be working closely with the Maine State Police and the town’s auditor to accurately reconstruct the facts,” Bennett said Tuesday.

Bennett, who was elected to the position in August, joins Jeff Morin and Bruce Thomas on the board.

Morin is the son-in-law of Gorey. It could not be immediately determined if Morin plans to recuse himself from action related to the situation. He could not be reached for comment Tuesday night.This is the first year the audit has been done by Loiselle, Goodwin & Hinds of Bangor, according to Bennett. She said that Jim Hinds and Donald Higgins of the firm found the discrepancy during an audit last week.

Higgins, a partner in the auditing firm, said on Tuesday that the missing funds were discovered when the receipts at year end were examined.

“When we did the bank reconciliation, we noticed a very large amount of outstanding deposits, and we reviewed the subsequent receipts and determined that the subsequent receipts were being recorded as if they were outstanding deposits,” he said.

The process is known as “kiting,” Higgins said.

While the matter is under investigation, selectmen have asked property owners to defer paying their real estate taxes until a new treasurer and tax collector is in office. The selectmen expect to appoint a successor or successors to the positions. The search is under way, Bennett said.Residents who need to register or reregister their vehicles may do so at the Monson town office until further notice.

Bennett said selectmen will hold a special meeting at 7 p.m. Thursday at the town hall to vote on accepting Gorey’s resignation and to determine if a special town meeting should be held to see if residents want a forensic audit to be conducted on the town’s finances.