Virtual Incompetence and to all a Good Night

Folks: (Please say it isn't so)

Finance office blasted
Web-posted Dec 24, 2004

Auditor's letter sharply critical of city's fiduciary governance
By AL ELVIN
Of The Daily Oakland Press

Several City Council members -upset about a recent assessment of Pontiac's financial records -are questioning the credentials of employees and are worried about the future of the city's fiscal well-being.

The assessment came in the form of a letter written by a representative of Plante & Moran, PLLC, in Southfield. Excerpts from the letter were read during Wednesday night's council meeting.

"It says to me that there are non-qualified people working in our Finance Department," said Councilwoman Susan Shoemaker. "It says right in there that they are not qualified. The proof is in the pudding."

The letter questioned the city's audit readiness, saying staff members suffer from "a lack of urgency" in the audit preparation process. Furthermore, much of the audit process is being handled by just one city employee, Roger Warner, who only works part time.

The document was also extremely critical of City Comptroller Lawrence Feagin, who "was not familiar with the steps needed to run an income statement," it said. Later in the five-page document, Feagin's office was singled out again.

"At no time during the year does the controller print or reconcile any general ledger balances," the letter said. "He stated he was not even sure how to generate a revenue and expenditure report, mainly because he was never trained by his predecessor. He also stated that, due to budget constraints, he and his staff were not sent to any training on how to use the general ledger software."

Apparently, the only person in the city who is able to perform reconciliations is Warner, a former internal auditor, who did not train anyone before he was asked to resign by the city. Pontiac Mayor Willie Payne said he was not aware of Warner's unique skills when he was asked to leave.

"To me, it shows where there is a malfeasance on behalf of the financial director, that he's allowed this to take place for this long," said Councilman Koni Bowman.

Added Councilman Charlie Harrison III, "This document is quite alarming. It really spells out what my thoughts have been for quite some time, that the reason we don't have an audit from fiscal year 2002-03 is because of ineptness and lack of knowledge and urgency on the part of the administration."

Part of the reason the audit is late is because of new accounting standards that make for a more tedious process, said Payne.

"Because of (the new standards), it has made the accounting even more difficult," Payne said.

"Plante & Moran has told us that we're unique in that we're doing it without any outside assistance. We recognized the need to implement the new standards because we were consistently late with getting our audit report in on time."

The 2002-2003 audit is not the first one that was late, Payne said. In fact, the city's audits have been late for at least the past 10 years, Payne maintained.

The letter gives Pontiac a couple of options on what the city can do to rectify its problems with respect to paperwork blunders in the Finance Department.

Alternatives include continuing along the same course - "having a single person responsible for reconciling all accounts on a part-time basis." However, if this continues, the 2003-04 audit will be filed late, and "may end much as the 2003 audit, being (more than) a year overdue," the letter said. The second alternative is for Plante & Moran to perform account reconciliations and prepare the required audit schedules, albeit at an additional fee.

So far, the city has already paid $125,000 to Plante & Moran for its analysis of Pontiac's financial records status, Finance Director Ed Hannan said.

"This is just another step toward improving our Finance Department," said Payne, who remained optimistic that the department would continue to improve.

"The next step is addressing the problems, whether it involves firing individuals or outsourcing, allowing (Plante & Moran) to do our accounting for us."