THE VIRGINIAN-PILOT 
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Tuesday, January 17, 1995              TAG: 9501170325
SECTION: LOCAL                    PAGE: B1   EDITION: NORTH CAROLINA 
SOURCE: BY THOMAS YORCUM, CORRESPONDENT 
DATELINE: BUXTON                             LENGTH: Short :   43 lines

ACCOUNTANT DROPPED BY POWER FIRM AFTER AUDIT

Special auditors investigating fees charged by the accounting firm that has handled the books of the Cape Hatteras Electrical Cooperative for more than 15 years have told the power company that it was overcharged by more than $100,000 since November of 1993.

As a result, the board of directors of the cooperative voted unanimously Monday night to terminate all contracts with the firm they had retained since 1979.

The action was based on a preliminary report from Coopers & Lybrand, an outside auditing firm retained by the cooperative after news reports disclosed that the accounting firm of Johnson and Dooley of Danville, Va., had been paid more than $430,000 for the year ending last October.

The independent auditing firm, with offices in Richmond and Washington, D.C., checked records of the cooperative here and in Johnson and Dooley's Danville office.

James D. Sherfey of Florida, named as acting manager of the cooperative last month, said the report from the outside auditors ``showed that more than $100,000 has been overbilled since November 1993.''

The report, Sherfey said, also showed billing procedures ``were not in accordance with the contract.''

Possible legal action is being studied, Sherfey said, ending a hectic first day on the job after being hired to replace manager John A. Echols, who resigned in October and disclosed the payments to Johnson and Dooley.

Sherfey said his first day started at 5:30 a.m. with a power outage. ``It's been an interesting day.''

Sherfey was picked to get the cooperative back on track in the wake of heavy criticism from Echols and residents of Hatteras Island who also are members of the cooperative. Members have complained that the board was not open in its operations, and because of problems overcharged power customers for electricity. by CNB