NT council signs again with accounting firm linked to Lockport’s missing million
Going against the professional opinion of NT chief accountant Amanda Reimer (above), North Tonawanda’s common council voted 3-1 to retain the services of Amato, Fox & Company to perform the city’s annual audit.
Amato, Fox & Company — NT’s audit firm for the last 39 years — was examining the books for the City of Lockport in 2012 when its council balanced the budget with a surplus that proved to be a mirage.
In 2014, the State Comptroller’s Office said the City of Lockport could have avoided some of the resulting layoffs and program cuts if the audit had been carried out differently and if Amato, Fox & Company had informed the city about the million-dollar negative balance.
Reimer recommended municipal auditing firm Bonadio Group, which now oversees the finances of the City of Lockport following its fiscal fiasco as well as the City of Niagara Falls, where last year the firm found a $1.8 million shortfall in the community development program due to inaccurate accounting practices.
“In the private sector, every five years you need to have a new auditor,” said Reimer, who appeared before the council last week to push for her recommendation of Bonadio Group. “You’ve had the same one for 39 years.”
Reimer was highly critical of the auditing practices of Amato, Fox & Company.
“There have been issues with their reporting and sending drafts back time and time again. One year I reviewed had errors ten times in drafts. Just over and over. And there’s a lot of turnover with the staff.”
Reimer said Amato, Fox & Company’s RFP (request for proposal) was incomplete and filled with errors and said their work was unprofessional.
“I can get into the other issues as far as … “ Reimer says before she’s interrupted by council president Eric Zadzilka.
“Who came up with the rating system on the right hand side?” asked Zadzilka.
“I did,” said Reimer, who previously worked at a municipal auditing firm prior to her six years with the city’s accounting office. “That’s standard, and I made some modifications.”
(Last year she was made chief accountant and praised for her work heading up the city’s first-ever budget committee.)
Reimer’s rating system put Amato, Fox & Company last and Bonadio Group first.
Zadzilka (above): “As far as so we’re disregarding the lowest responsible bid and spend $45,000 more dollars in a limited budget year to go with Bonadio is what you’re suggesting?”
“It’s $45,000 over three years,” said Reimer. “And I do understand your concerns with the budget but I’ll give you some examples.”
“My first year, we were self-insured for workers compensation. Which is currently on our books for a $4.3 million liability. When I first started here and I reviewed our financials, we made it through with a clean audit and a clean opinion that didn’t even have a worker’s comp liability.”
“If you’re a professional firm and you’re an auditor you should be able to look at the financials and say we are missing a $4.3 million liability. So instead of restating our financials they pushed those things through current year activity.”
“In my six years here I’ve been working on several re-statements. I’ll just go through this list with you.”
“Our compensated absences liability was understated by $500,000.”
“Our longterm retirement liability was underrated by $175,000. We have no long-term retirement liability on our books.”
“They have never reported on any of our internal controls. I would think for you guys that would be a concern. They come in here, and you’re not really hearing the real truth about the internal controls. We have one bond that hasn’t been balanced since 1975. You’ve got a shortfall of cash on that.”
“I’m not sure if you want me to go on too much with this; I can continue … “
“When I first started, our capital accounts didn’t reconcile the cash by $2.2 million dollars. We had one year that their testing didn’t pick up an error in revenues by $462,000.”
“Every year since I’ve been here we’re gotten a clean opinion on our federal programs before they even went out and did any testing. This is my second year in a row where they didn’t even complete our DOT audit. During the time of the audit I had to track them down to the last minute on those things. With the deferred compensation audit I viewed the numbers they just completed for it and never came out and did any testing.”
“Does anybody have any questions?”
“No questions,” said Alderman at Large Robert Pecoraro (below left).
Austin Tylec made the motion to accept the city accountant’s recommendation to hire municipal auditing firm Bonadio Group but failed to get a second.
Pecoraro made the motion to retain the services of Amato, Fox & Company, seconded by councilwoman Donna Braun and passed with Zadzilka’s vote. They are all up for re-election next year, and said they will re-visit the issue in one year.
Zadzilka made a motion to “accept Amato Fox as the lowest responsible bid.”
“Responsible?” Tylec asked.