San Bernardino Re-Hires Controversial Auditing Firm

When you find yourself  in a hole, before you can get out you need to stop digging.

That’s how the old adage goes.

But once you stop digging do you buy the rope to climb out from the same person who sold you the shovel?

That was more or less the question before the San Bernardino City Council on June 17, 2013.

Ryan Hagen of The Sun reports:

The City Council voted Monday to expand its contract with the firm that audited the city in the years before it filed for bankruptcy and also audited San Bernardino International Airport, despite the firm drawing criticism for both those jobs.

Rogers, Anderson, Malody & Scott would audit the financial statements of the successor to the city’s Economic Development Agency for the year that ended in July 2012. The firm had already been approved to audit the city’s financial statements for that period.

Councilman John Valdivia was the only dissenting vote on the City Council.

John Valdivia voiced concerns about the firm’s potential role in failing to warn the City Council about San Bernardino’s precarious financial position before the City was forced into bankruptcy.

As reported by The Sun:

“They have a track record here and are complicit, I think, in the whole bankruptcy,” Valdivia said earlier this month.

When the city announced last year that it was filing for bankruptcy, City Attorney James F. Penman said budgets were falsified for 13 of the previous 16 years and that laws may have been broken by borrowing from restricted funds and not repaying the debt within a year.

The Sun restated the auditing firm’s response to these allegations:

In an interview following that announcement, RAMS partner Terry Shea said audits had reported years of deficit spending but weren’t designed to find fraud.

“We don’t audit the budget, the preparation of the budget or what’s in the budget,” said Shea, who was on the team that prepared San Bernardino’s Comprehensive Annual Financial Report.

Given the enormous problems with both the San Bernardino International Airport and the San Bernardino Economic Development Agency under the failed leadership of Mayor Pat Morris it’s definitely time for a fresh set of eyes on the City’s books.

Fortunately, if there is a bright side to the City Council’s action at their last meeting it is that proposals for new auditing firms are being sought for future audits.

Maybe then we will know exactly how much damage Pat Morris has done to the City of San Bernardino these last eight years.