by Mike Sharkey
Staff Writer
The initial steps have been taken and now Ernst & Young can get get down to business as it begins the 2008 City audit.
Monday, Mike Pattillo of Ernst & Young gave a synopsis about how the months-long process will proceed to members of the City Council’s Finance Performance and Audit Sub-Committee. The Committee consists of Chair Jack Webb and Stephen Joost and Clay Yarborough.
“We will produce a very large audit at the end,” said Pattillo, who is based in Orlando, but will work with Kathleen Dulko of the local Ernst & Young office. “There is a good bit of government auditing standards required of us.”
According to Pattillo, the audit will take between 3,000 and 3,500 hours to complete and should be done in late March. He also said his office will work closely with Council Auditor Kirk Sherman and his staff.
Ernst & Young actually began the audit in June and is still performing what Pattillo calls “interim field work.” The “heavy lifting” he said will begin in November.
According to the audit plan submitted by Pattillo and staff, the “audit is designed to express opinions on various opinion units comprising the (City’s) 2008 basic financial statements. We will consider the City’s current and emerging business risks, perform an assessment of risks that could materially affect the financial statements, and align our audit procedures accordingly. In accordance with professional standards, we will obtain a sufficient understanding of the internal controls to plan the audit and to determine the nature, timing and extent of tests performed. However, we were not engaged to and are not performing an audit of internal control over financial reporting.”
One of the main issues the audit will examine is the City’s health care plan. According to City Finance Director Mickey Miller, new state requirements are going to make it even more expensive for municipalities to pay for health care.
“There is a state requirement that all retirees participate in the health care plan,” said Miller, adding the cost is capped at $150 a month, but it will “substantially jack up” the City’s obligation.
Pattillo said the audit will look at policy estimates and the effect certain changes have had on the bottom line.
“This is the first audit under a reconstructed government,” said Webb. “I am interested to see that.”
Pattillo said the audit isn’t “forensics” but he and his staff will look into anything that could be construed as fraud, intentional or not. He said an example of purposeful fraud is what Enron did to its employees and shareholders while unintentional fraud consists of accounting errors.
“We do review internal controls, but we do not opine and we do not report deficiencies or material weakness,” said Pattillo. “Looking at payroll, it makes more sense to test the processes and controls rather than transactions.”
Joost said one of the City’s biggest issues now, and looking into the future, is the debt being accrued as a result of the City’s obligation to the pension plans of its retired policemen and firefighters.
“I think it’s a big issue with a lot of cities, not just us,” said Joost.
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