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Augusta might get new external auditor

3 firms apply to conduct external report

Monday, March 26, 2012 7:56 PM
Last updated 11:13 PM
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Augusta may have a different external auditor for the first time in 14 years.

On Monday, a selection committee interviewed three firms for the state-mandated task of producing a public record in standard format of the city’s financial situation, an “external audit,” as collected and reviewed by the Georgia Department of Audits and Accounts.

Three qualified bidders, all certified public accountant firms, presented proposals to the selection committee Monday: Augusta-based Serotta Maddocks Evans; Cherry, Bekaert & Holland, which has an Augusta office; and Atlanta firm Mauldin & Jenkins, officials said.

The committee will recommend one firm at a Wednesday meeting of the Augusta Commission’s Pension and Audit Committee to go before the commission for approval.

If the choice is Cherry, it may not receive unanimous approval, as commissioners disagree on how often the auditor should be replaced. Cherry has been the external auditor since 1997, working on year-to-year extensions of a one-year contract.

Citing a Georgia Government Finance Officers timeline for replacing the external auditor, Commissioner Bill Lockett said Cherry ought to be replaced.

City finance officials “are much too close to their company as far as I am concerned,” Lockett said.

Mayor Pro Tem Joe Bowles, a CPA and former controller at Paine College, said retaining the same firm is appropriate so long as the managing partner overseeing the audit is rotated every three to five years.

The commissioners said they would reserve judgment until the committee returned with a recommendation.

The external auditor differs from the city’s internal auditor, who takes a focused look at internal controls and risk, Finance Director Donna Williams said.

The internal and external auditors also differ from a forensic auditor, for which the city recently sought bids to audit transactions associated with the Trade, Exhibit and Event Center and its parking deck.

Cherry has found little wrong in recent years with the city’s books.

Its 2008 audit report did find several departments overspending their annual budgets without sufficient ongoing controls in place, mismanagement of some federal Housing and Urban Development funds and noncompliance with procurement policies.

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Craig Spinks
Craig Spinks 03/27/12 - 05:41 am
Even if Bowles' remarks

Even if Bowles' remarks concerning the propriety of the retention of the same external auditing firm over time are true, is such a retention smart?

Fresh eyes, particularly fresh eyes belonging to a firm from outside a town dominated by a "go along to get along" philosophy, are needed to reveal The Truth about A-RC finances.

However, inasmuch as "there's not much courage in Augusta, GA," out-of-town eyes'll never see A-RC records.

Little Lamb
Little Lamb 03/27/12 - 08:57 am
I agree with Lockett on this.

I agree with Lockett on this. A fresh set of eyes usually finds new things to correct or improve.

So the current firm has found “little wrong in recent years.” That, in and of itself, is reason enough to hire another firm. Then after a few years, Cherry can get back in the running. Rotation of auditors is a good thing. You don't want the city and the auditor to get too cozy.

One problem is that they just audit the overall income and expenditures. They do not audit policies and procedures and management. If they were to audit Fred Russell's ‘What, me worry?’ management style, they would be able to identify millions of dollars in waste that has flown out the door. Fire Russell and the cash flow immediately improves.

Little Lamb
Little Lamb 03/27/12 - 09:03 am
Susan McCord wrote: Cherry

Susan McCord wrote:

Cherry has found little wrong in recent years with the city’s books. Its 2008 audit report did find . . . noncompliance with procurement policies.

No duh! Noncompliance with procurement policies has been going on for Russell's entire tenure. If Cherry, Bekaert and Holland has pointed out the noncompliance and Russell has not fixed it, Russell can be fired for cause (no severance) for that alone. And we have proof that Russell has not fixed it, because a superior court judge ruled against the city in a procurement policy lawsuit.

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