Questions Arise Over Recent Audit of the Town’s Finances

A recently released audit of Islip Town's financial practices by the New York State Comptroller has the town's two Republican council members raising questions about why information included in the draft audit was not included in the final report.

Trish Bergin Weichbrodt is focused on information contained in the comptroller's draft audit report that, she said, found that the Town's CPA moved $23 million from non-existent encumbrances (purchase orders) for fiscal year 2008 into the unreserved and designated portion of the town's fund balance.

While reviewing the preliminary audit, Bergin Weichbrodt said she noticed the $23 million in question and had planned on inquiring about it during the exit interview portion of the audit, which she said is standard practice during an audit procedure.

"I was prepared for the exit interview and it was abruptly cancelled after Supervisor (Phil) Nolan had a closed door meeting with Comptroller (Tom) DiNapoli in Albany," she said.

Republican Councilman Steve Flotteron was also surprised that his exit interview was "abruptly" cancelled and questioned certain information that was missing from the final audit. According to Flotteron, the original draft included phrases like "unnecessarily raised taxes" and "deliberate" misstatement of the books. These phrases, he said, were not included in the final audit. "What changed?" he asked.

 "When I finally did have my exit interview, I asked where all of the information had gone," he said. "The second draft had missing information and what was there was softened."

Nolan, a Democrat, denies having a face-to-face meeting with Comptroller DiNapoli, a Democrat, but did say he met with members of the comptroller's staff in Albany to discuss the preliminary audit. "When I reviewed it, I read it very carefully and saw a number of things that I wanted to clarify," he explained. "That's why it is a draft. Changes are then made." 

Bergin Weichbrodt has sent a letter to District Attorney Thomas Spota and New York State Attorney General Andrew Cuomo requesting an investigation into the audit. A Spota spokesperson said he could not confirm the existence or non-existence of a criminal investigation. Calls to Cuomo's office were not returned at press time.

When asked about the $23 million being questioned by the town's GOP council members, Bill Reynolds, spokesperson for the comptroller, did not specifically address the dollar amount, but did say, "All of our audits are done by professional auditors, according to government auditing standards, and go through many levels of review and quality control. Whatever changes were made to the report were the result of the auditing process. Draft reports are subject to changes until they are published as final reports."  He added that no follow up regarding the town's audit is scheduled at this time.

Islip Town Comptroller Joe Ludwig reported that the funds in question were reclassified. "The $23 million had been improperly reported as a reserve for encumbrances, or purchase orders, a long-standing incorrect accounting practice in the Town of Islip," he said. "What we did was re-classify these funds properly under reserve accounts specifically designated for each purpose, such as health insurance or retirement costs."

Nolan added that his administration has brought in new staff and changed auditors in an effort to "straighten out the mess that was left by the previous administration. That money is now properly being accounted for and I am proud of that."

Councilman John Edwards, a Democrat, said changes between the draft audit and final report is standard procedure. "The town receives the preliminary draft, we make comments, request revisions and then there is a final draft," he said. "That first draft contained numerous mistakes and they were corrected in the final version."

Also, Edwards said by the time the final audit was released, the town had already corrected many of the problems indicated in the report. "Some of the problems that were included in the audit had to do with our system for reporting finances," he said. "We were using an out-of-date computer program and we already replaced it to correct the problem."

Edwards said that he welcomed the audit as it, "showed a lot of the problems that existed in the previous administration."

Although Bergin Weichbrodt said she welcomed the audit, Flotteron was not as open to it. "I hoped it was done based on factual information and not on politics," he said referring to the Democratic state comptroller. "I thought we should bring in an outside source and not a political entity."

As previously reported by Patch.com, the state comptroller recently completed an audit of Islip Town that was requested by Nolan soon after he took office as supervisor in early 2007. The audit, which covered January 2007 to August 2008, found long-standing finance and management problems – some dating back 20 years when Republicans were in charge at Town Hall.