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City selects two agency auditors as Comptroller Pratt cries foul

City Comptroller reiterates her claim that the audits will not be “independent.” Rawlings-Blake says the process was set in place by the City Council.

Above: In this file photo, City Auditor Robert McCarty and Comptroller Joan Pratt speak to the media.

The mayor and Board of Estimates today awarded contracts for the first of 13 voter-mandated departmental audits over the objections of the city comptroller, who said the audits will lack “independence” because the executive branch is in a position to manipulate the outcome.

“We would not be here today if you had given the funds to the Department of Audits to do the audits,” Comptroller Joan M. Pratt complained, while assistant city auditor, Gail Adams, bluntly told the board that letting the Department of Finance oversee the auditors was akin to “leaving the fox to guard the henhouse.”

Henry J. Raymond, director of finance, said his office was only carrying out the mandate of the 2012 charter amendment, which allows city agencies to choose whether their financial books will be examined by the city Department of Audits or an outside accounting firm.

Last year, Raymond’s department qualified four accounting firms to do the departmental audits.

Today the Board of Estimates awarded $138,680 to Hamilton Enterprises to perform financial and performance audits of the Department of Transportation, and $164,592 to SB & Co. (SBC) to audit the Department of Recreation and Parks.

A third audit, of the Finance Department, will be conducted by city auditors because Finance otherwise would be appointing its own auditor. The estimated cost of this audit is $114,210, the Board of Estimates was told today.

“Cherry Picking” Topics

City Auditor Robert L. McCarty Jr. objected to the engagement letter with SBC, saying it let the Finance Department “cherry pick” what topics the auditor would examine in the performance part of the audit.

“I take exception to the term ‘cherry pick,’” Raymond shot back, saying the Finance Department had compiled a list of “performance matrices” that could be examined at Rec and Parks, but “will not dictate which measures are reviewed” by the auditor.

Mayor Stephane Rawlings-Blake noted that the decision to allow outside agency audits came from the City Council. “It was not something I was supporting, but it was done,” she said, referring to the 2012 legislation that brought the audit matter to a referendum vote. “I didn’t support it [the charter amendment], but the public did.”

Pratt has repeatedly said that if given sufficient funds, the audits department (which reports to her) is fully capable of doing the work. Pratt has been city comptroller since 1995 – and audits of city agencies were not conducted over this period.

“We Made the Best Decision”

Raymond said the audit office’s request for 28 new positions and $2.3 million to conduct agency audits was not reasonable. “We made the best decision for the time that [outside auditors] would cost less,” he told the board.

McCarty said Raymond’s figure included the initial plan to audit all city departments every year.

The plan was whittled down to 13 agency audits (conducted every fourth year) in the bill’s final passage, greatly reducing the price cited by Raymond, McCarty said.

The Rawlings-Blake administration has promised to conduct audits of the Police and Public Works departments this year, but the engagement letters, which would start the process, have not been presented to the Board of Estimates.

A Slow Process at Rec and Parks

So far, only one agency audit has been completed under this process – for Rec and Parks. This audit was essentially grandfathered under the 2012 legislation, conducted in 2013, and completed by McCarty’s office in April 2014.

The audit uncovered multiple errors, inconsistencies and other financial lapses. Rec and Parks has agreed to improve its fiscal controls and financial reporting, but has not yet notified the Board of Estimates that the reforms have been fully instituted.

Tomorrow, the Taxation, Finance and Economic Development Committee, chaired by Councilman Carl Stokes who spearheaded the 2012 legislation, will hold a hearing on the progress of the auditing program.

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