More than $240,000 in funds approved by Town Meeting were not set aside correctly due to an accounting error, town Financial Analyst Derek Sullivan told the Board of Selectmen on Tuesday.

The issue concerns a $242,065 line in the fiscal year 2012 budget, which runs from July 1, 2011 until June 30, 2012, that was approved during the 2011 Spring Town Meeting, said Sullivan. The money was reserved for settlements that were to be paid by the town to various parties, said Selectmen Chair Steve Holmes.

Though the item was approved by Town Meeting, it was not entered into the accounting system, said Sullivan. This meant that the money that was used to pay the settlements was taken from other accounts in the budget, he explained.

The $242,065 reserved for the settlements, but not entered into the accounting system, is currently unaccounted for.

"I'm really upset about this," said Holmes, adding that Baystate Municipal Accounting Group, the firm headed by Justin Cole and appointed in October of 2011 to run Wareham's accounting office, did not show up at the meeting even though it was requested to appear.

"For the record, this is the second time that we asked [Baystate Municipal Accounting] to be here," Holmes said, "and they failed to appear."

A new town accountant, Brian Kudish, was hired last month.

The issue came up because the Selectmen were discussing sending a letter to the Massachusetts Department of Revenue about the method that was used to pay the settlements.

The Board must seek authorization from the Department of Revenue because the accounts used to pay the settlements were put into deficit as a result of the payments, said Holmes.

There were two settlements -- one for $42,500 and one for $207,636 -- that were paid, said Holmes. Both payments were made in July or August of 2011, said Sullivan.

The $42,500 was taken out of the account designated for legal payments, said Holmes. The $207,636 was taken out of the police budget.

Because money earmarked to pay the town's legal fees was used to pay a settlement, Holmes said the town is currently not paying Blatman Bobrowski & Mead, the law firm that takes care of the town's legal matters.

The Board did not discuss to whom the settlements were paid.

Holmes said that he did not feel comfortable sending a letter to the Department of Revenue until the Selectmen were given more information about the issue.

The board decided to spend time over the next week learning more about what happened before making any decision on the matter.

"It [needs to be] thoroughly vetted so that a week from now we have an understanding of what occurred," said Selectman Cara Winslow.

In other town business:

• Interim Town Administrator John Foster said that the former house and current rubble pile located at 118 Sandwich Road should be cleaned up by June 30. The former house was destroyed in a fire in January 2011. Town officials have said that the owner of the property does not have the financial means to clean up the mess.

• The Board of Selectmen voted to accept a $12,000 gift from A.D. Makepeace for a grinder that will be used to break up solids in the town's sewer system. It will be installed at the sewer pump station at Lopes Field in Onset "This is a tremendous addition to our pump in Lopes Field," said Water Pollution Control Facility Director Guy Camphina. "We’re really excited about it."