Post by novillero on Aug 14, 2008 7:24:49 GMT -5
This is not good... it's a general article (not about Freehold Borough) but it shows how things get done in NJ
www.pressofatlanticcity.com/186/story/228013.html
NJ report concludes audit firms too cozy with towns they audit
By DEREK HARPER Statehouse Bureau, 609-292-4935
Published: Wednesday, August 13, 2008
TRENTON - A report by the state comptroller is raising questions about the relationship between auditors and the local government agencies that hire them to monitor spending.
The report found that auditing firms and their employees have donated hundreds of thousands of dollars to local political campaigns during the past two years while hanging on to lucrative public contracts for years - sometimes decades.
Calling the process "deeply flawed," state Comptroller A. Matthew Boxer said Tuesday "the independence and effectiveness of external audits in New Jersey cannot be trusted unless changes are made."
The report recommends laws be changed so that all government agencies are required to use a competitive bidding process to pick an auditor at least once every five years and change firms at least once per decade.
The report, the first by the office since it began operation in January, also suggests that towns, school districts, counties and other agencies refrain from hiring any auditing firm that made state or local political contributions during the past year.
State government leaders welcomed the report and supported changing the law.
Assembly Speaker Joseph Roberts, D-Camden, commended Boxer and his staff on the report, saying he would work with the office and lawmakers when the Legislature reconvenes in September.
Gov. Jon S. Corzine, speaking at a bill signing in West Orange, noted that the Sarbanes-Oxley Act he co-wrote in 2002 while in the U.S. Senate requires public companies to change auditors every five years. Aides said he supported making the comptroller's proposals law.
"Hopefully we can stop some of the challenges we have had on ethics in the state by anticipating what might occur by putting checks and balances like the comptroller (suggests)," Corzine said.
A competent auditing system is important to ensure tax dollars are spent properly and accurately. New Jersey state and local governments spend almost $15 million annually auditing the public books.
The contracts can be lucrative - a review of area contracts showed firms were paid $126,000 to audit Cumberland County government, $50,000 for Egg Harbor Township government and $70,000 for the Pleasantville school district.
But the report questioned the long-term relationship between many firms and governments. In all, the report found 45 percent of the governmental agencies that responded had used the same auditor for more than 10 years, while fewer than 30 percent had an auditor for less than five years.
Rotating auditing firms is important because closeness to management could compromise an auditor's independence as it seeks the agency's approval for continued contracts, the report said. Additionally, an accounting firm may be more likely to enforce standards if it knows a second firm soon will be checking the work.
In all, 28 agencies had kept the same auditor for more than 35 years. The longest was the Haddon Township Board of Education, the report said, which has used the same firm since 1947.
Locally, Galloway Township Public Schools has used Voorhees's Bowman and Co. LLP for 40 years, while Cumberland County government has used Bowman for 36 years.
Bowman's Partner in Charge John F. "Jack" Dailey Jr. did not respond to questions left on his office voice mail. Galloway Township Superintendent Douglas B. Groff also did not return a call seeking comment.
Cumberland County Administrator Ken Mecouch defended Bowman's audits, saying, "I've never seen any indication that gives me any reason to not have confidence."
The report also found only 420, or about half of the 813 governmental agencies that responded to bid questions, competitively bid the contracts. Among fire districts, just three of the 32 that responded used competitive bids. Alternately, 17 of the 20 colleges and universities and 11 of the 14 counties that responded bid the work.
Mecouch said Bowman won the Cumberland contract over Ocean City's Ford Scott Seidenburg and & Kennedy LLC after its proposal offered more services for similar prices. It was awarded under the state's Fair and Open process, which sharply limits the political contributions the firm could make locally.
Still, the report states, "We question how competitive the process can truly be when the same result is achieved every year for several decades."
The report also suggests political contributions "may be the primary drive in some instances of auditor selection."
The office found that the top 10 firms and their employees contributed more than $1 million in 2006 and 2007, while auditing 609 agencies.
Bowman and Co. led the list with both 98 clients and $494,800 in contributions. Locally, Ocean City's Ford Scott firm placed seventh with 47 clients and $31,130 in contributions.
A call forwarded to Ford Scott auditor Glen Ortman was not returned.
Boxer said the office mailed out requests for information May 7 to slightly more than 1,900 state, county and local governmental agencies in New Jersey.
He said 996 questionnaires - fewer than half - were returned by the July 11 deadline, and 157 of them were missing answers to one or more questions. Boxer said the office was following up.
Boxer said it was the first public report on the auditing system, and while it may file similar future reports, the agency would generally concentrate on probing specific governmental units.
"We feel this is an important piece of work product," Boxer said, since auditors are responsible for overseeing "literally billions of taxpayers' dollars."
Staff writers Diane D'Amico, Juliet Fletcher, Michelle Lee, Emily Previti, Dan Walsh and Donald Wittkowski contributed to this report.
E-mail Derek Harper:
DHarper@pressofac.com
www.pressofatlanticcity.com/186/story/228013.html
NJ report concludes audit firms too cozy with towns they audit
By DEREK HARPER Statehouse Bureau, 609-292-4935
Published: Wednesday, August 13, 2008
TRENTON - A report by the state comptroller is raising questions about the relationship between auditors and the local government agencies that hire them to monitor spending.
The report found that auditing firms and their employees have donated hundreds of thousands of dollars to local political campaigns during the past two years while hanging on to lucrative public contracts for years - sometimes decades.
Calling the process "deeply flawed," state Comptroller A. Matthew Boxer said Tuesday "the independence and effectiveness of external audits in New Jersey cannot be trusted unless changes are made."
The report recommends laws be changed so that all government agencies are required to use a competitive bidding process to pick an auditor at least once every five years and change firms at least once per decade.
The report, the first by the office since it began operation in January, also suggests that towns, school districts, counties and other agencies refrain from hiring any auditing firm that made state or local political contributions during the past year.
State government leaders welcomed the report and supported changing the law.
Assembly Speaker Joseph Roberts, D-Camden, commended Boxer and his staff on the report, saying he would work with the office and lawmakers when the Legislature reconvenes in September.
Gov. Jon S. Corzine, speaking at a bill signing in West Orange, noted that the Sarbanes-Oxley Act he co-wrote in 2002 while in the U.S. Senate requires public companies to change auditors every five years. Aides said he supported making the comptroller's proposals law.
"Hopefully we can stop some of the challenges we have had on ethics in the state by anticipating what might occur by putting checks and balances like the comptroller (suggests)," Corzine said.
A competent auditing system is important to ensure tax dollars are spent properly and accurately. New Jersey state and local governments spend almost $15 million annually auditing the public books.
The contracts can be lucrative - a review of area contracts showed firms were paid $126,000 to audit Cumberland County government, $50,000 for Egg Harbor Township government and $70,000 for the Pleasantville school district.
But the report questioned the long-term relationship between many firms and governments. In all, the report found 45 percent of the governmental agencies that responded had used the same auditor for more than 10 years, while fewer than 30 percent had an auditor for less than five years.
Rotating auditing firms is important because closeness to management could compromise an auditor's independence as it seeks the agency's approval for continued contracts, the report said. Additionally, an accounting firm may be more likely to enforce standards if it knows a second firm soon will be checking the work.
In all, 28 agencies had kept the same auditor for more than 35 years. The longest was the Haddon Township Board of Education, the report said, which has used the same firm since 1947.
Locally, Galloway Township Public Schools has used Voorhees's Bowman and Co. LLP for 40 years, while Cumberland County government has used Bowman for 36 years.
Bowman's Partner in Charge John F. "Jack" Dailey Jr. did not respond to questions left on his office voice mail. Galloway Township Superintendent Douglas B. Groff also did not return a call seeking comment.
Cumberland County Administrator Ken Mecouch defended Bowman's audits, saying, "I've never seen any indication that gives me any reason to not have confidence."
The report also found only 420, or about half of the 813 governmental agencies that responded to bid questions, competitively bid the contracts. Among fire districts, just three of the 32 that responded used competitive bids. Alternately, 17 of the 20 colleges and universities and 11 of the 14 counties that responded bid the work.
Mecouch said Bowman won the Cumberland contract over Ocean City's Ford Scott Seidenburg and & Kennedy LLC after its proposal offered more services for similar prices. It was awarded under the state's Fair and Open process, which sharply limits the political contributions the firm could make locally.
Still, the report states, "We question how competitive the process can truly be when the same result is achieved every year for several decades."
The report also suggests political contributions "may be the primary drive in some instances of auditor selection."
The office found that the top 10 firms and their employees contributed more than $1 million in 2006 and 2007, while auditing 609 agencies.
Bowman and Co. led the list with both 98 clients and $494,800 in contributions. Locally, Ocean City's Ford Scott firm placed seventh with 47 clients and $31,130 in contributions.
A call forwarded to Ford Scott auditor Glen Ortman was not returned.
Boxer said the office mailed out requests for information May 7 to slightly more than 1,900 state, county and local governmental agencies in New Jersey.
He said 996 questionnaires - fewer than half - were returned by the July 11 deadline, and 157 of them were missing answers to one or more questions. Boxer said the office was following up.
Boxer said it was the first public report on the auditing system, and while it may file similar future reports, the agency would generally concentrate on probing specific governmental units.
"We feel this is an important piece of work product," Boxer said, since auditors are responsible for overseeing "literally billions of taxpayers' dollars."
Staff writers Diane D'Amico, Juliet Fletcher, Michelle Lee, Emily Previti, Dan Walsh and Donald Wittkowski contributed to this report.
E-mail Derek Harper:
DHarper@pressofac.com