While Quincy officials say they are making progress with accounting practices, a recently released report has a city councilor questioning if the city is doing enough.
According to an independent auditor's management letter by Powers & Sullivan LLC, released to the city this past January for fiscal 2011, the city has “certain deficiencies in internal control that we consider to be significant deficiencies and material weaknesses.”
Among them, the city has only “partially resolved” a problem of deficits within the police and fire detail fund and has yet to implement a set of procedures for recording such details. Although the city has implemented a billing system for police details, they have yet to do so for fire details.
Additionally, the city has yet to implement a process that would make the compiling of financial statements more accurate and timely; has developed but not implemented an internal policy for day-to-day handling of finances within departments; and has yet to institute a continually up-to-date database for capital expenditures, the report said.
However, the city has mostly fixed allocation problems within the water and sewer account and has taken appropriate action to handle escrow accounts in the failed Honeywell project, the management letter states. The Honeywell account involved an account that was supposed to pay for energy upgrades for city buildings.
While the auditing letter was completed months ago, it was only recently brought to light through Councilor Brian McNamee’s newsletter, after the councilor requested the documents from the city.
The reports are addressed to the city council as well as to the mayor, but McNamee said they were never provided to the council.
“This is something addressed to the City Council -- it should have been disseminated immediately. This suggests that management does not want this to be a document in the public domain, as it should be, so this can be the subject of City Council oversight,” McNamee said in an interview. “The auditor probably should be before the City Council every year with this document and explaining each area so that we have the greatest level of transparency.”
Beyond the lateness of the document availability, McNamee cited other problems within the document.
An auditor by trade, McNamee said that the number of unresolved issues, which have been problems over time, shows a lack of due diligence by the city. The language of the document is also quite strong and points to a necessity that these things be fixed.
“I believe [city officials] need to bear down further to make sure more of these items are closed in the upcoming fiscal year,” McNamee said. “I think that also what causes me concern was management has an opportunity to respond to these [problems] and they haven’t availed themselves of the opportunity.”
Director of Municipal Finance Mark Cavanagh didn’t return calls for comment. However, mayoral spokesperson Christopher Walker said the auditing letter actually shows progress.
“The most serious issue is something that goes back as far as the 1990s, and the auditors themselves say the city is on its way to resolving those issues,” Walker said. “All other issues are historic in nature and quite contrary to what the council suggested, the report shows that the city is systematically dealing with all of these issues and correcting them. There are some issues where work remains, and there will always be, but overall this report shows the progress we have made in the last several years.”
Walker said the reason the issues have yet to have been resolved was because of their complexity, but said many of these issues should be resolved in the external audit being compiled now for fiscal 2012, which ended June 30.
“These issues are being dealt with. If there were serious problems identified by our outside auditor, then it would affect our bond rating, which remains incredibly positive,” Walker said.
Councilor Joseph Finn, chairman of the Finance Committee, said he had not seen the letter, but said it wasn’t unusual for the city to have things they need to work on.
“It’s come up in council meetings. A few years ago, I walked through one management letter point by point and asked what have you done to fix things. This is not unusual,” he said. “More telling is how long have they existed and why has nothing been done. But having management letters with things to improve, that’s par for the course. Human institutions are imperfect, that’s why we have independent auditors.”
Finn was surprised that the letter hadn’t been disseminated to the council and said he planned to ask about it.
“The critical thing is they aren’t hidden from the public,” he said.
To read the document, click here.