February 25, 2021
Every year, the City must complete a financial audit. The audits are conducted by an external auditing firm, and typically presented to the City Commission in March or April. For the past several years, the City has employed Purvis Gray to conduct the annual audits. The soon-to-be-scheduled audit presentation, however, is the last audit for Purvis Gray under the current three-year contract.
How the City solicits and selects the next auditing firm has changed due to revisions to state statutes. In the past, an audit selection committee was formed by the Comptroller. The committee would then make a recommendation to the City Commission to make a selection and negotiate an operating agreement.
That process apparently drew the scrutiny of enough state legislators to warrant changes to the audit selection process. As was the case here in Fernandina Beach, with the audit selection committee being hand-picked by the Comptroller, it created the perception that the Comptroller had inordinate influence over the selection of the auditor, whose primary task was to review and validate the work of the Comptroller.
General accounting practices recommend that auditing firms be changed sporadically. Over-familiarity between City staff and auditors can lead to critical lapses. I experienced such a failure while serving in Connecticut upon discovering that the Town’s Finance Director had embezzled millions of dollars from the Town coffers, undetected by the auditors who had served the City for decades. I believe that Mr. Centrella is now about halfway through his twenty-year prison term.
Fresh auditors bring fresh eyes and a fresh perspective. At a minimum, if the same auditing firm is retained, it is imperative that an entirely different partner and team be assigned to review the City’s financial records.
The new state-mandating audit selection process requires that no City staff can sit as a voting member of the selection committee. A member of staff can sit in an advisory capacity.
The selection committee must include at least three people. One of those three must be a member of the governing board (the City Commission) and that member also serves as the chair of the audit selection committee.
Tentatively scheduled for the City Commission’s March 16 agenda is the appointment of community members to an audit selection committee. The intent is to have a five-member committee, but again, the minimum required is only three. If you have a professional background that you believe can assist with the City’s audit selection effort, please visit the City’s website, and under the Your Government tab, click on Boards and Commissions to find a Board/Committee Member Application (both a printable and online version are available). Please complete and submit the application as soon as possible.
If the City Commission receives sufficient and appropriate applications, the members will be appointed on the evening of March 16. On March 17, City staff will provide the previously utilized Request for Proposals to the new members of the audit selection committee. Another state statute change is that the Request for Proposals must be crafted by the committee, not City staff. Hopefully the committee can prepare the necessary Request for Proposals so that it can be published by the end of March.
The tentative schedule would then be to have interested firms submit their responses and qualifications by the end of April. The Audit Selection Committee would then review, evaluate, and score the submissions, making a subsequent recommendation to the City Commission in May. The City Commission would then act upon the recommendation in early June. All-in-all, service time on this committee should entail a commitment of a little over two months.
The City’s annual audit is a critical document, validating the financial condition of the City. It is a trove of figures and facts. If you are interested in playing a small role in the completion of this document, your participation would be welcome.
As always, vacancies on other volunteer boards and commissions exist, too. If you have any questions or wish to learn more, please contact me ([email protected]), Ms. Pauline Testagrose (Comptroller; [email protected]), or Ms. Caroline Best (City Clerk; [email protected]). Thank you for your consideration.