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Officials: No audit repeat after Bell scandal

Burbank has dropped accounting firm accused of mismanagement by state regulators.

May 29, 2012|By Maria Hsin, maria.hsin@latimes.com

Burbank officials say there are no plans to redo city financial audits performed by the same accounting firm that state regulators claim failed to catch mismanagement at the city of Bell.

The state Board of Accountancy filed disciplinary proceedings last week against the firm Mayer Hoffman McCann, which regulators said acted more like a “rubber stamp” than an auditor in the city of Bell.

Mayer Hoffman McCann also audited Burbank's books from fiscal year 2006 to 2010 before its contract was dropped by the city.

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But Burbank Financial Services Director Cindy Giraldo said the Mayer Hoffman McCann audits do not need to be redone, especially since the data that was reviewed was originally prepared by city officials, in which she had complete confidence.

Giraldo added that the firm of McGladrey & Pullen reviewed Burbank's financial statements beginning in fiscal year 2010-11 and gave the city the highest ranking possible.

“We definitely highly value the public trust and confidence and obviously having a reputable audit firm is something we value,” Giraldo said. “Once Mayer Hoffman McCann's reputation came into question, it was clear we were going to make a change.”

In recent weeks during budget discussions, Mayor Dave Golonski said the City Council chose to continue working with a firm that is looking at the city's internal control processes to make sure all the checks and balances are in place for each city department.

“We had a pretty long discussion with the new auditors about their audit … we came away with a high degree of confidence that they understood what we were looking for [was] their independent opinion … of what the city deems acceptable practice, and I think that's where the Bell audit fell short,” Golonski said.

Through December 2010, Burbank paid Mayer Hoffman McCann about $575,730. The annual fee for the firm's services grew from $83,312 five years ago to $99,529 in 2008, according to city records. The 2010 contract came in at $92,832.

Mayer Hoffman McCann, which audited the books for dozens of cities in California, could be fined $1 million and lose its license to practice in the state.

The firm has asked for a formal hearing before an administrative law judge.

The 13-page accusation charges the firm with repeated instances of negligence and lack of documentation for the year ending June 30, 2009, the year the state board chose to examine.

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