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Grand Island Town Board: Rancorous debate precedes selection of auditing firm

Sat, Oct 12th 2019 07:00 am

By Larry Austin

Island Dispatch Editor

A Grand Island Town Board debate over selection of the financial auditing services for the town sparked a rancorous debate and charges from a town employee of bullying and harassment by a councilman.

In two separate votes at Monday’s regular monthly meeting, the Grand Island Town Board chose to stick with the current auditors despite two council members pointing out the chosen firm’s bid was higher.

A motion by council members Jennifer Baney and Mike Madigan to appoint Drescher and Malecki failed 3-2, with council members Bev Kinney and Pete Marston and Town Supervisor Nate McMurray voting no. In another vote, the dissenting three voted to authorize McMurray to sign a contract to continue financial audit services with Bonadio & Co. LLP. Baney and Madigan voted no. Madigan said the Bonadio bid was more expensive by approximately $3,200 a year. Baney said the contract is for five years with two two-year extensions “if both parties agree, which was a pretty big commitment during a time of transitional leadership. I would still like to see us work with the right firm, at the right price.”

The council debate and votes about the merits of the firms came after Pam Barton, the town’s accountant, told the board during a public comment portion of the meeting, “You have the ability to vote however you choose, but I feel it necessary to address Mr. Madigan’s continued harassment and bullying, misrepresentations, half-truths and outright lies that he has perpetrated over three and a half years in office, culminating with his most recent one tonight.”

During public comments, a part of the meeting reserved for input on agenda items and usually limited to three minutes per speaker, Barton was allowed to speak for more than 20 minutes, concluding by telling Madigan, “You cast the first 40 stones and I’m throwing some back.”

Barton railed at published comments from Madigan that appeared in the news, including in the Oct. 4 Island Dispatch, in which Madigan called for “a fresh set of eyes” in auditing the town’s books. Citing the theft of approximately $100,000 from the Golden Age Center by its former director, Madigan said “The town recently suffered a significant theft in a high risk, high cash transaction area that had no accounting controls and it was not included in the annual audits as required by New York state municipal law.”

Barton, the town’s supervising accountant for 18 years, said Madigan “outright libels our current audit firm, clearly placing blame on them by stating the area was not included in the annual audits as required by New York municipal law.”

Barton said an independent auditor’s responsibility is to express opinions on the financial statements based on their audit. She said the auditor considers internal control relevant to the entities preparation and fair presentation of the financial statements in order to design other procedures that are appropriate, but not for the purpose of expressing an opinion on the effectiveness of the entities internal control accordingly, they can express no such a pity.

“An audit includes evaluating the overall presentation of our financial statements,” she said. “They simply audit our financial statements, the statements that I present to them.”

“The funds that were stolen from the Golden Age Center, never were part of the Town of Grand Island financial statements, so not subject to review by our auditors. Risk assessments need to be conducted by someone other than auditors who review our financial statements.”

She said she and others “have all made it abundantly clear to Mr. Madigan, that it was not, is not, the responsibility of the auditor of the town’s financial statements, to step out of areas to review activities that do not pass through our town’s financial statements, without specific direction of the governing body. Mr. Madigan refuses to accept that fact.”

“I’m sorry. I’m so angry at this whole presentation on the way you’ve misrepresented me,” she said.

Barton said, “I stand by the process and my suggestion for placement of services. I have nothing but a professional relationship with the proposed firm. I’m offended that Mr. Madigan would accuse me of a friends and family club deal. If anything, I’m on a friendlier basis with the firm Mr. Madigan is suggesting.”

“I’ve been in my position here with the Town of Grand Island for nearly 19 years. I’ve built many friendships and professional relationships. I don’t let any of them cloud my judgment when performing my duties.

“In my 18 years of directing the finance of the town of Grand Island, because of my efforts, we have experienced millions, yes, millions of dollars of savings in everything from health insurance premiums, thanks to the help of Helen Newkirk, to having a workers compensation reserve of over a million dollars due to a program that I encouraged the time to join in 2007.”

She said the town’s bond rating has risen during her tenure from A2 to AA1, a four-grade increase.

Bullying

“Last fall after suffering under suffering under Mr. Madigan’s harassing and blaming nature for all I could, I asked him sternly to leave my office,” Barton said.

She said Madigan is a bully and she had decided to never “have an in person conversation with him without at least a third person to witness it.”

“Mr. Madigan accuses me of improper practices regarding the recommendation of selecting an audit firm. My conscience is free. Perhaps Mr. Madigan should take a look in the mirror and ask himself those same questions and maybe a few others. Have you bullied pretty much every federal, state and local agency that does business with the town to the point where none of them want to be in the same room as you?”

Baney replied to the bullying label.

“As far as Mike not liked by people in town hall,” Baney said, “that would have to be asked to each town employee. Mike and I were able to work with Pam and legal to negotiate and settle all three union contracts last year. I do not think we would have been the council members to do it if there was an underlying disdain or hatred towards Mike.”

Cost

During the request for proposal process, during with four accounting firms were interviewed by the board, Madigan said, “it was found a substantial cost savings could be realized by changing firms. The failure to test the market cost the town tens of thousands over the years.”

He said the board “tentatively agreed that Drescher & Malecki earned the town’s annual audit business based on qualifications and price.”

“Following this meeting our current audit company was contacted by our town accountant and asked to reduce their price; no other company was contacted,” Madigan claimed. “Our current firm lowered its price $90,000 but remained uncompetitively priced by $30,000 – a premium price with zero taxpayer benefits.”

Baney said the Bonadio offer was high and the town went back to the firm to ask them if they could do better, and they responded with a lower price. “We count on vendors to give us their best price, especially someone serving our community for so long. Their price was well over the other applicants that we interviewed, so much so that even with the $10,000 drop they were still high,” Baney said. “I was of the mindset that if one was given the chance to offer a lower price, D & M should be as well, but that was not a direction the majority of the board spoke up to support. Regardless, I stuck to principles that I know Islanders would expect from their elected officials, and will never waver when it comes to those principles, even if I stand alone.”

Baney said, “When we interviewed, it was clear that Drescher and Malecki stood out to all of us in the room as we each had a chance to comment. I told Pam that I trusted her judgment in reaching the decision that we all did, as they were the right firm at the right price. She asked to go back to our current firm and ask for their best and final price. I was shocked to see that they were willing to drop $10,000 per year so quickly. I asked that Drescher and Malecki also be asked for their best and final, but the answer was no. With Drescher and Malecki’s specialty in municipal audits and their lower price, the decision was abundantly clear to me. I respect our department heads tremendously (I think they will confirm this), but the auditor of the town’s finances should be chosen solely by the Town Board. As the interviews were open workshops, I only wish others would have been present to observe the process, as I do feel that with increased transparency the results would have been different. As always, I am motivated solely by what I think is in the best interest of our residents, and in this case, I am incredibly disappointed.”

Madigan provided an email from Matt Montalbo of Drescher & Malecki to the board, which said, “While disappointed in the supervising accountant’s choice, we recognize it is ultimately a Town Council decision since the Town Council fulfills the vital role of serving as the audit committee for the town.

The primary role of an audit committee is to provide independence in communication and oversight relating to the audit process, including the selection of an independent external auditor. An audit committee is assigned this task to help maintain a level of independence between the external auditor and the custodian of the Town’s financial records.

The Town Council certainly has an obligation to employee satisfaction, however, its’ obligation to the taxpayer is paramount. The council is responsible to select the audit firm that provides the ‘best value’ for the Town of Grand Island’s taxpayers. Best value considers both the technical and financial aspects of a service. Drescher & Malecki LLP certainly exceeds the competing firms in service to Erie County towns; we quoted a very competitive fair market price; we provide a thorough independent audit, reporting directly to the board; and enthusiastically commit to providing the town innovative, practical ideas. Drescher & Malecki LLP is the best value.

“We were notified that the supervising accountant’s recommended firm reduced their original bid by approximately $10,000 per year. Even after the revision, Grand Island taxpayers would be paying a premium of nearly $30,000 over the nine-year term.

“We appreciate the supervising accountant’s concern that her work life may be disrupted with a new auditing firm. However, our recent experiences indicate otherwise. The disruption is practically nonexistent and the overall transition experience can be refreshing.

“My hope is to ease any hesitation on the part of the Town Council or management that transitioning to Drescher & Malecki LLP would be anything but a smooth process for the town.”

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